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American LCC's... Not Enough "cojones"?  
User currently offlineJIWNCO From , joined Dec 1969, posts, RR:
Posted (6 years 10 months 1 week 2 days 11 hours ago) and read 5974 times:

Today I was thinking than other than Jetblue, Spirit and Frontier (should I mention Ted?) the other American LCC's (Allegiant, Airtran, Virgin America, Skybus, Southwest-ATA) have stayed away from international routes as opposed to their European, (Easyjet, Ryanair....) Asian, (Jetstar, Tiger, Nok...) and South American (GOL) counterparts. Being the US market so saturated and international routes (Canada, Mexico, Central/South American and the Caribbean) so profitable I wonder what is going on? Is it distance, company culture, landing fees? Airtran tried the Bahamas but they are all back to domestic (although now going to PR), and ATA... well, who knows about them (they go to Mexico sometimes although they have been consistent in HI, still domestic)... and I don't believe for a second that WN is pulling it off in this decade... So seriously, what is it? Are B6 and NK great visionaries or plain crazy... or is it the other way around?

[Edited 2007-12-27 22:13:25]

51 replies: All unread, showing first 25:
 
User currently offlineCupraIbiza From Australia, joined Feb 2007, 836 posts, RR: 6
Reply 1, posted (6 years 10 months 1 week 2 days 11 hours ago) and read 5967 times:

Excellent post, brilliant question. Looking forward to some great answers.

Could it be that the US market is so massive that exploring overseas is almost like an afterthought?



Everyday is a gift…… but why does it have to be a pair of socks?
User currently offlineCubsrule From United States of America, joined May 2004, 23155 posts, RR: 20
Reply 2, posted (6 years 10 months 1 week 2 days 11 hours ago) and read 5946 times:

The U.S. has the most developed domestic air travel system in the world. This stems from the relatively low population density of the U.S., the size of the U.S., and our lousy interurban train system. That means that there were more opportunities for LCCs to expand domestically, which is somewhat easier for a variety of operational and regulatory reasons.

Still, some LCCs have tried international service, and most (FL is the exception) have done fairly well. Mexico is one of the few things TZ has left, and the CUN focus city seems to work for F9. The opportunities, though, are limited. CUN is popular, but we couldn't have 3 F9-sized LCC operations there. The NK FLL model cannot work anywhere besides South Florida. I haven't answered your question, but I think the answer is that there have historically been enough opportunities in the U.S. that it wasn't worth it to go to the trouble of flying internationally. That may be changing.

FWIW, there are some foreign LCCs which confine themselves to domestic flying. H2 in Chile comes to mind.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineJIWNCO From , joined Dec 1969, posts, RR:
Reply 3, posted (6 years 10 months 1 week 2 days 11 hours ago) and read 5918 times:



Quoting Cubsrule (Reply 2):
FWIW, there are some foreign LCCs which confine themselves to domestic flying. H2 in Chile comes to mind.

Sure, but I believe I can count them with one hand... Just think North America: Westjet in Canada is developing a solid international network and Vivaaerobus in Mexico is planning to do the same... Even Australian LCC's fly International!


User currently offlineCubsrule From United States of America, joined May 2004, 23155 posts, RR: 20
Reply 4, posted (6 years 10 months 1 week 2 days 11 hours ago) and read 5915 times:



Quoting JIWNCO (Reply 3):
Sure, but I believe I can count them with one hand...

Yeah, I think you can. Nonetheless, they're out there.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineCupraIbiza From Australia, joined Feb 2007, 836 posts, RR: 6
Reply 5, posted (6 years 10 months 1 week 2 days 11 hours ago) and read 5908 times:



Quoting JIWNCO (Reply 3):
Even Australian LCC's fly International!

So that rules out distance as an issue.

further to what i said earlier I dont think US corporations in general (note I said in general) have a global outlook. Like I said the US market is massive. for example XYZ Corp that makes widgets is flat out making widgets for the enormous US market, they dont need to seek global markets.

Conversely companies in countries with a much small domestic market need to look globally to be competitive



Everyday is a gift…… but why does it have to be a pair of socks?
User currently offlineCubsrule From United States of America, joined May 2004, 23155 posts, RR: 20
Reply 6, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5895 times:



Quoting CupraIbiza (Reply 5):
further to what i said earlier I dont think US corporations in general (note I said in general) have a global outlook.

What makes you say that? It's all about the ability to grow. General Motors, for instance, cannot grow any further in the US, so they must look abroad. Up until fairly recently, LCCs had plenty of opportunities to grow in the US, so there was no reason to look abroad. Your statement might be a fair one if made about LCCs, but to expand it to all corporations is, IMO, pushing it.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineJIWNCO From , joined Dec 1969, posts, RR:
Reply 7, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5894 times:

Quoting CupraIbiza (Reply 5):
So that rules out distance as an issue.

further to what i said earlier I dont think US corporations in general (note I said in general) have a global outlook.

You might be into something. I work for one of those LCC's (that don't fly international) and I honestly think that is a cultural problem... It seems to me (they think) that they cannot pull it off. International travel for them is like going to Mars...

(PAUSE) Sorry, you know that you have to go night night when you edit a 20-word-post 4 TIMES! Very interesting discussion, will check again tomorrow.

[Edited 2007-12-27 22:24:37]

[Edited 2007-12-27 22:25:46]   

[Edited 2007-12-27 22:28:55]  tired   tired 

[Edited 2007-12-27 22:34:44]

User currently offlineCupraIbiza From Australia, joined Feb 2007, 836 posts, RR: 6
Reply 8, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5882 times:



Quoting Cubsrule (Reply 6):
but to expand it to all corporations is, IMO, pushing it.

OK lets go to the other extreme. Singaporean companies have to have a totally global outlook. The domestic market is virtually non existant. I am not sure if this even exists but if a poll was taken of "level of global outlook by a developed countries corporations" I would think the US would rank fairly low.

Believe it or not this isnt a usual "attack the US post"



Everyday is a gift…… but why does it have to be a pair of socks?
User currently offlineAcey559 From United States of America, joined Jan 2007, 1538 posts, RR: 2
Reply 9, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5877 times:

I think some LCCs have turned to international service because otherwise they might not survive on domestic routes alone. WN has exclusively flown domestically since they began in the late '60s (I think, correct me if I'm wrong), and they've obviously been doing well enough to not have to look outside of our borders. I don't know much about the business aspect of airlines, but I guess if you do one thing, and do it well, you can do alright. I still think there are untapped markets domestically, though, but nobody has the "cojones" to try them for fear of losing money.

User currently offlineWhappeh From United States of America, joined Mar 2006, 1563 posts, RR: 2
Reply 10, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5864 times:

Lets be honest, its kind of hard to be a purely domestic European airline.


-Travel now, journey infinitely.
User currently offlineNational757 From United States of America, joined Jul 2007, 720 posts, RR: 1
Reply 11, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5855 times:



Quoting JIWNCO (Reply 7):
It seems to me they think they cannot pull it off.

I respectfully disagree. Southwest Airlines, for one, revolutionized the entire airline industry with a highly profitable LCC business model. With a fleet of over 500 planes, they manage to make sizable profits only flying domestically. Southwest, as an American LCC, doesn't lack "cojones," what Southwest lacks is a history of bankruptcy and substantial losses.



Formula 1 Grand Prix Trips: YUL '08, MEL '09, BCN '10, SIN '11, and LGW '12
User currently offlineSilentbob From United States of America, joined Aug 2006, 2128 posts, RR: 1
Reply 12, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5849 times:

Most LCCs do more point to point flying and it's tough to generate enough passengers in a given city pair to make that work. The traditional hub and spoke system makes it much easier to fill aircraft to those locales and maintain decent yields. You also have a lot of travelers who use the miles from business travel to "pay" for their Caribbean or Mexican vacations. I believe that all of those factors together present a hurdle that most LCCs aren't interested in taking on while they haven't harvested the lower hanging fruit in the continental US.

User currently offlineJIWNCO From , joined Dec 1969, posts, RR:
Reply 13, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5842 times:



Quoting National757 (Reply 11):
I respectfully disagree. Southwest Airlines, for one, revolutionized the entire airline industry with a highly profitable LCC business model. With a fleet of over 500 planes, they manage to make sizable profits only flying domestically. Southwest, as an American LCC, doesn't lack "cojones," what Southwest lacks is a history of bankruptcy and substantial losses.


DING! Here we go!


User currently offlineAa757first From United States of America, joined Aug 2003, 3350 posts, RR: 8
Reply 14, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5806 times:



Quoting JIWNCO (Thread starter):
Today I was thinking than other than Jetblue, Spirit and Frontier (should I mention Ted?) the other American LCC's (Allegiant, Airtran, Virgin America, Skybus, Southwest-ATA)

Like others have said, a US LCC flying only domestically can fly extremely long distances and to many cities. If, say, a French airline flew domestically, it would be limited to a handful of cities over a relatively short distance. It would be similar if an LCC flew only within Texas or California.

Allegiant has a very specific business model that focuses a lot on selling rental cars and hotel rooms. International travel wouldn't make sense this early in their history. Virgin America and SkyBus are very new airlines. ATA did fly internationally pretty extensively -- to most major vacation spots in Mexico. Their financial problems may have put a halt to that (I have no idea where they fly). Southwest's hasn't really needed to begin flying internationally, especially with their ATA codeshare.


User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5514 posts, RR: 7
Reply 15, posted (6 years 10 months 1 week 2 days 10 hours ago) and read 5781 times:



Quoting CupraIbiza (Reply 5):
further to what i said earlier I dont think US corporations in general (note I said in general) have a global outlook.

This was certainly true once, but it's less true every day. What US companies STILL don't have is the perseverance to stay in a market that is slow to develop. They are too quick to cut their losses and go home.



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineNational757 From United States of America, joined Jul 2007, 720 posts, RR: 1
Reply 16, posted (6 years 10 months 1 week 2 days 9 hours ago) and read 5759 times:



Quoting Aa757first (Reply 14):
Allegiant has a very specific business model that focuses a lot on selling rental cars and hotel rooms. International travel wouldn't make sense this early in their history.

Don't underestimate Allegiant's very capable management team. Not only do they have experience launching and marketing five distinct destination cities, they also have the required certifications and experience with international charters to fly internationally on a scheduled, regular basis.

As you said, Allegiant has a specific business model focusing on ancillary revenue from, among other sources, hotel rooms and car rentals, both of which would be successful with international travel. Allegiant would easily sell hotels and car rentals to the international leisure travelers they would target.

Look for Allegiant to open up at least one international destination within the following year.



Formula 1 Grand Prix Trips: YUL '08, MEL '09, BCN '10, SIN '11, and LGW '12
User currently offlineMariner From New Zealand, joined Nov 2001, 25458 posts, RR: 86
Reply 17, posted (6 years 10 months 1 week 2 days 9 hours ago) and read 5707 times:
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Quoting JIWNCO (Thread starter):
Are B6 and NK great visionaries or plain crazy... or is it the other way around?

No, because Frontier was the first US LCC to fly to Mexico.

As to the rest the US is vast, and there has been sufficient business for the LCC's within their own country.

It is different in Europe. Ryanair would look a bit sick if they flew only within Ireland. The only way they could grow was to fly "international".

It has nothing to do with "cojones".

mariner



aeternum nauta
User currently offlineM404 From United States of America, joined Nov 2003, 2227 posts, RR: 5
Reply 18, posted (6 years 10 months 1 week 2 days 7 hours ago) and read 5628 times:
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Hypothsis:

LCCs model destinations on multiple flts per day and choose destinations that can support that. Often, countries limit foreign operations to match what that nations carriers can equal in lift and price. Most "flag" carriers in these countries don't want competition that will underprice them and depend on their governments air treaties to keep competition to a bare minimun. That would equal the reason so many carriers are seeking "profitable" foreign routes = no LCCs. LCCs simply see the pickings so much easier in the domestic market. They already have the US legacies on the run so why bother with all the red tape and restrictions of International flying?

Eventually, with Open Sky treaties and such (which many countries don't want for all the above reasons) possibly proliferating the time LCCs do go International will eventually happen and likely make profits just that much more elusive to established high debt carriers.



Less sarcasm and more thought equal better understanding
User currently offlineSevenair From United Kingdom, joined Feb 2001, 1728 posts, RR: 0
Reply 19, posted (6 years 10 months 1 week 2 days 7 hours ago) and read 5589 times:

I would say that European and US LCCs are similar. If you look at Europe and the US as a collection of states/countries which are linked economically (i.e. EU) - you see that most EU LCCs have flight within the EEC or countries very close to it. In fact, only a small proportion of EU LCCs route networks fall outside of the EEC and friends. The mainland US and EU are quite similar in terms of size, population, and concentration of populations.

EU LCCs could not provide domestic only flights (there are a few small exceptions im sure) within their home countries in order to expand. In the same way that not many US LCCs could survive with intra-state flying only. The populations sizes are similar between the EU and the USA.

So in essence, there is no real need for a US LCC to go international for its flights. And without international flights, EU LCCs would be very small.


User currently offlineEXTspotter From United Kingdom, joined May 2007, 992 posts, RR: 1
Reply 20, posted (6 years 10 months 1 week 2 days 4 hours ago) and read 5487 times:

There is something else to add though, when comparing the EU and US as very similar in size, the distrobution of people is very different, i.e. in the US, by far the majority of people live in urban areas and there are huge areas where population is less than 10 people per square kilometre, whereas in europe, the population is more evenly distributed.

Another diference is the demographic, in the US, there are few areas where there are huge amounts of incoming passengers compared to a small number of outgoing passengers, places like Orlando and Las Vegas spring to mind - lesuire destinations, whereas in Europe there are huge amounts more, part of this is due to the way people travel, in the US, relatively few people will go abroad on holiday, the majority will go somewhere within the US, whereas many more people in the EU will travel to places outside the EU, North Africa, Turkey, Canary Islands (Part of Spain, but not part of the EU), Caribean and Indian Oceans. The way that this is linked to the way people travel, if they go on holidays, people in Europe are much more likely to go on a package holiday, with flights on an in-house airline included, this is the reason there are so many Charter Carriers in the EU, whereas barely any in the US (Only USA3000 (Apple Vacations) I can think of). Because of this, people have a smaller frame of mind when choosing where to go for a holiday as they have never really experienced outside their own country, which due to Multinationalism means that most of the things you get at home, you get wherever you go - Retail is a good example, so people know exaclty what to expect, meaning they do not want the unexpected and therefore will go wherever they feel comfortable - in the US, this may mean the same language, food, culture,... Meaning people are more close minded, whereas in Europe, because countries are smaller and customs quite different, people can't really stay in their own country the whole time and have to travel.

In a roundabouty kind of way this relates to how LCCs grow. Taking the two most prominent from each area, Ryanair and Southwest, Southwest flies within its own country as the majority of people (i.e. people born in that country, with few or no relations outside of the country) would never have to venture outside of it, therefore there is less need to be able to travel outside of the country. Whereas in Europe, there is more need to travel both inside and outside of the EU, also due to the wider distrobution of population, Ryanair flies to much smaller cities, whereas Southwest usually has only Major cities in its network. The other Difference is the frequency of flights, on Southwest, there is a more frequent service than on Ryanair as certain cities cannot fill more than a few flights a day. The other difference is size, Ryanair has 150ish Aircraft and flies to 132 destinations, an average of 1.1 aircraft per city, whereas Southwest has 520 aircraft flying to about 70 destinations, about 7 aircraft per city. This shows that the two LCCs operate in ways to suit the areas they serve.

Alex @ EXT.



AF BE BY FR MV PD SZ U2 VZ DHC6, 8-3/4Q, 732/8, 763ER, A319, A380
User currently offlineJIWNCO From , joined Dec 1969, posts, RR:
Reply 21, posted (6 years 10 months 1 week 2 days 2 hours ago) and read 5356 times:



Quoting National757 (Reply 16):
Look for Allegiant to open up at least one international destination within the following year.

Amen!

Still, I still think that there is a cultural think associated with it. How would you explain that Southwest is one of the few American airlines* (Including LCC's) that doesn't go to SJU (Really a DOMESTIC destination).


*All majors + TED, Spirit, JetBlue (owns PR!), Airtran, USA3000.... serve SJU (successfully)


User currently offlineJIWNCO From , joined Dec 1969, posts, RR:
Reply 22, posted (6 years 10 months 1 week 2 days 2 hours ago) and read 5350 times:



Quoting Aa757first (Reply 14):
Virgin America and SkyBus are very new airlines.


Skybus applied (and got) NAS and CUN. Still wonder what happened...


User currently offlineJIWNCO From , joined Dec 1969, posts, RR:
Reply 23, posted (6 years 10 months 1 week 2 days 2 hours ago) and read 5282 times:



Quoting EXTspotter (Reply 20):
Southwest has 520 aircraft flying to about 70 destinations

64


User currently offlineRichierich From United States of America, joined Nov 2000, 4280 posts, RR: 6
Reply 24, posted (6 years 10 months 1 week 2 days 2 hours ago) and read 5260 times:

Here we go again with another US LCC versus the Rest-of-the-World LCC thread.

I don't think you can compare European LCCs flying internationally versus US LCCs remaining largely domesticated because that is comparing apples to oranges. As pointed out in other posts, you really can't expect Ryanair, EasyJet or others to stay in one country because there really is no one European country that could support them. Likewise, the US is big enough where until recently, you haven't really seen the need for LCCs to venture too far outside the domestic USA. For one, it is costly and complicated to do this, adding complexity to a business model that thrives on keeping it simple (a la WN). Let me ask you this: how many European LCCs do you see flying outside the EU? Probably less than you see US airlines flying outside the USA.

I'm not trying to derail this thread and I enjoy people's responses, but I find it a much better discussion on how different European and North American LCCs are from a customer service perspective. The completely no-frills approach and pay-as-you-go pricing really has not caught on in North Amercia (yet) and one could argue it might not ever. Yet that seems to be the blueprint for all the European LCCs.

I'm not forgetting about the rest of the world - I know there are LCCs in Australasia and the Far East as well. And it might only be a matter of time before one LCC grows the "cojones" to make it trans-Atlantic and push the envelope for this business model even further.



None shall pass!!!!
25 JIWNCO : Many, to Africa and the Middle East.
26 GCT64 : Going slightly "off topic" and looking at the UK LCC market. The three densest markets for flights from/to/in the UK are (using UK CAA 2006 statistics
27 Richierich : I haven't done the metrics, but is that more or less than US LCC flights to Canada, Mexico and the Caribbean? My point is that the two markets are qu
28 Post contains links and images JIWNCO : Quoting Richierich (Reply 27): it is sort of misleading to say a blanket statement like 'American LCCs don't have cojones for staying largely domestic
29 Tango-Bravo : Are flights between cities of countries who are members of the European Union still considered to be international routes? IIRC, at FRA (since 2002 o
30 FATFlyer : Allegiant has already stated they have plans for international routes. But by staying in the US they have grown in 5 years from operating only FAT/CO
31 R2rho : I suspect there's a misunderstanding in the way the thread was introduced. You can't really call flying intra-EU as being "international". It's all on
32 Luv2fly : 1971 was when they took to the skies! With a fleet of three planes and only flying in the great State of Texas! Now they have 500+ planes and cover t
33 A330323X : PSA might argue with you over that.
34 Luv2fly : I think America West would also have some issues with that statement.
35 Mariner : That's fair. And I think maybe Airtran (or Valujet?) was the first to fly to Canada. Or announce it, anyway. But PSA was not on the OP's list. marine
36 Luv2fly : I believe they did serve Canada out of all places IAD!
37 Post contains images Acey559 : Thanks! I should know because I just had to do a report on Southwest for one of my classes last semester, but it was late and I didn't want to look i
38 Chase : Lots of good answers/theories in this thread. I'd like to throw in a few more: 1) Only 30% of people in the US hold a passport. This is up from 27% a
39 AABB777 : What traditionally made an LCC a low cost carrier/airline were low operating costs, not just low fares. Today these carriers should really be called l
40 Luv2fly : Also another point to mention is that long distance flights, such as deep South America and Europe would require another fleet type and that usually g
41 GCT64 : In my opinion (backed up by the gradual expansion going on at the moment e.g. LGW-SAN/FLL on Zoom), LCC operations Transatlantic are definitely going
42 Jfr : I'll throw this out: The majority of international destinations which American LCC's can serve are vacation destinations. LCC style fares already exis
43 Steeler83 : Hey, mate! I haven't seen ya in a while. Anyway, ya beat me to it, by a very large amount of time... I believe the first flights were to IAH and AUS
44 Richierich : I don't disagree with this... Unless something drastic changes, I don't see any of the current US LCCs making it across the pond. More likely there w
45 ScottB : Speaking specifically about Southwest here (as the oldest of the carriers listed) -- Southwest has historically been a business-travel-oriented airli
46 DL767captain : You can't really compare US LCC with those in Europe, yes in Europe they have "international" routes. But when you fly from the UK to France i don't r
47 Steeler83 : Are there any that fly to the Middle East or down to Africa? I agree with you that going from the UK to France, Germany, Italy, etc is not internatio
48 EYFlyer88 : Yes, I agree with that (i.e. SQ, no domestic flights - not possible) they only fly international.
49 Viscount724 : I would hardly call Westjet's international network "solid". Their US routes are generally highly-seasonal leisure routes with very little business t
50 COSPN : When did WN 'Move' form IAH to HOU in the 'old' days ????
51 Post contains links and images Steeler83 : From the WN website, http://www.southwest.com/about_swa/airborne.html: Hope this answers it! Of course, I thought it was later than that...
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