Posts: 415
Joined: Tue Jul 22, 2003 9:52 am

Warning About Low-cost-carriers

Sat Aug 16, 2003 11:14 pm

i live in boston and usually only fly to large cities, so for me, low-cost-carriers are a wonderful thing. this is the case for the majority of american travelers, as lcc's have brought fares down and choice up. but for those of you who fly out of small towns and cities with only a prop flight or two a day, lcc's are endangering your commercial service.

the smallest aviation markets, like those of northern michigan, wyoming, and the dakotas are often funded by the profits of larger, high demand routes. this subsidization (in addition to gov't subsidization) was successful for the larger hub-and-spoke carriers, because there was demand on larger routes to justify high airfares, whose profits were then passed on to the lower margin commuter routes. this is one reason why, even with deregulation, each of the majors has its own sphere of influence (ual the rockies, nwa in michigan, co in eastern texas, and aa in western/northern texas, delta in the southeast and so on). because these routes are not profitable on their own, competition does not arise. with the rise of low-cost-carriers, the profits made on the high demand routes are decreasing as yields decrease. as a result, there is less revenue to be passed onto the commuter routes and in turn, these commuter routes are losing their subsidies. subsequently, those of you who fly from those small strips are losing a lot of your service.

so what is the answer? certainly the rise of low-cost-carriers is a good think, especially on the national scale. but are we to lose service to these smaller markets, or are low-cost-carriers going to grow to the point that they take on these smaller markets and in turn become high-cost-carriers? while i understand the problem, the solution is mirky at best. i'd love to hear your suggestions.
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RE: Warning About Low-cost-carriers

Sun Aug 17, 2003 12:00 am

If There is money to be made from those small cities then someone will start flying. There are still a few airlines like BigSky and Great Plains That fly mostly to smaller cities. In My case, Our Local airport had Continental Connection, US Airways Express, United Express and Northwest Airlink a few years ago. Now we have nothin. All commercial airlines are gone. But the main reason is we are 45 mins away from Akron/Canton, 1 hour away from CLE and 1 hour away from PIT. Most people drive to CAK to get AirTran, or CLE to get Southwest.

D E L T A 7 7 7
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RE: Warning About Low-cost-carriers

Sun Aug 17, 2003 12:06 am

Time will tell, tho look at some of the most popular cities served by low cost carriers, like MDW was almost nothing before the LCC's revived it. So if small secondary markets are losing service who says it will be permanent?
You can cut the irony with a knife
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Joined: Tue Aug 05, 2003 6:18 am

RE: Warning About Low-cost-carriers

Sun Aug 17, 2003 12:22 am

you are correct in seeing that unbridled competition will force network carriers to abandon less profitable (or money losing spoke cities). These cities are totally dependent on being a part of a large network in order to survive. Even AMA recognized they needed a network carrier (AA) in there even though they have WN and were willing to subsidize AA. Eventually, many cities will realize that they will come out on the short end of the stick when unbridled competition dictates that they are no longer big enough to pay the cost of providing air service. It's going to be a hard lesson but we are likely to see it happen.
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RE: Warning About Low-cost-carriers

Sun Aug 17, 2003 3:45 am

No need to worry, Capt. The smallest commuter routes are subsidized courtesy of your federal government.

Posts: 2327
Joined: Thu May 20, 1999 6:04 am

RE: Warning About Low-cost-carriers

Sun Aug 17, 2003 4:08 am

Its called inefficiency.

Its inefficient for ppl to subsidise a service. If you fly NYC - LAX regularly why should u be paying for somebody who lives in whop whop?
You shouldn't.....The thing is a LCC needs to be extended to these cities too...And that's the next step. LCC- regional. Did you know that the dash 8-400 (Q400) only costs a few hundred dollars more to operate on most routes than the -300, but its got a good 25 extra seats? Do the math....With the right Aircraft, its a possibility. I think as long as there is some demand, sooner or later an enterprising person will fill the void...Particularly if they've got government dollars to help meet their operating costs!
(which I don't like because its inefficient! And not fair. If you choose to live
in whop whop, your going to be inconvenienced!)
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Joined: Tue Mar 20, 2001 1:32 pm

RE: Warning About Low-cost-carriers

Sun Aug 17, 2003 4:28 am

With LCCs like AirTran and Frontier now having RJ services (JetConnect and Jet Express), eventually small markets will start seeing LCC services. Add to this the fact the Frontier does do codeshares with Great Lakes into smaller towns in the west. Some smaller markets that are loosing commerical service is mainly because their airports cannot support the a/c the regionals fly. With more and more of the smaller turboprops being retired from many regional carriers, some markets are being dropped because those airports do not have runways long enough to allow RJ operations. A case in point is Killeen, TX. When ASA retired the last Brasilia out of DFW, ILE was dropped as an ASA destination. Some airports may be able to fill an RJ, but the a/c can't operate out of them. Smaller airports will see the loss of airline service because they have not upgraded their facilities, not because of LCCs. Other smaller airports will see the lose of service because of the close proximity of a larger field. ASA used to fly ATL-AHN, a really short hop. With the extension of GA-316 up to Athens, the time to drive to Hartsfield from Athens was shortened enough for people to drive to Atlanta from Athens then to fly it. AHN now only has three flights a day to CLT using B-1900s of US Airways Express.
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Joined: Tue Jul 22, 2003 9:52 am

RE: Warning About Low-cost-carriers

Sun Aug 17, 2003 11:47 am

i think that a few of you are missing the point. i was talking about the smallest markets; markets that do not have any significant demand; markets that cannot support regional jets. yes, the federal government subsidizes some markets, but not all. the federal government uses a rubric (along with the lobbying power of local business interests and politicians) to determine which routes to subsidize, but there is certainly not enough federal money dedicated to subsidize all markets. i was merely putting on the table that there exist certain markets subsidized primarily by the profits of larger-demand markets, and with the rise of low-cost-carriers decreasing the yields on these routes, the low-demand markets are jeopardized. this is not a matter of economics, as we all know that subsidized intervention effects the market demands of an industry, and in this case, i am talking about larger airlines superceding market forces to lure customers onto their larger demand, higher-yield routes.
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Joined: Tue Feb 12, 2002 8:27 am

RE: Warning About Low-cost-carriers

Sun Aug 17, 2003 1:23 pm

Capt078--I think that cost cutting, not the LCC's(well, I guess the LCC's necessitated the cost cutting...) will doom air service to backwater towns.

Cash is king and if the gov't. doesn't subsidize service and they can't charge big enough bucks, the writing is on the wall.TC
FL450, M.85
Posts: 415
Joined: Tue Jul 22, 2003 9:52 am

RE: Warning About Low-cost-carriers

Sun Aug 17, 2003 1:48 pm

AA717driver: you said it man. thanks for being brief instead of verbose like i am.

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