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Joined: Sat Oct 06, 2001 10:47 am

LCC's That Are Not Profitable!

Wed Aug 11, 2004 1:00 pm

How come Frontier and ATA can't post a profit. Aren't they LCC's? What's up with that?

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RE: LCC's That Are Not Profitable!

Wed Aug 11, 2004 1:03 pm

LCC does not equal profit. The problem with LCCs is that there is often less margin for a route to be profitable is the planes aren't almost full. They are volume operators. If there is a dip in demand on a route, they're screwed.

Contrast with many full-service airlines, which can afford to fly with Monkey Class half empty as long as First and Biz are full and they haul a lot of cargo.
"There are no stupid questions, but there are a lot of inquisitive idiots." - John Ringo
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RE: LCC's That Are Not Profitable!

Wed Aug 11, 2004 1:08 pm

I don't believe it's so much of a dip in demand, but FUEL COSTS right now. The LCC's can handle a higher price/barrell than the legacy carriers can, but now that we're at $45/barrel and approaching $50, even the LCC's are going to take a bite out of that giant shit sandwich.

There was a recent thread that proved TED was regaining market share in DEN, so that may have contributed a small part to F9's performance, but again...FUEL is the big knife in everyone's back right now.

And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
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RE: LCC's That Are Not Profitable!

Wed Aug 11, 2004 1:22 pm

MOST LCC's are no more profitable than conventional airlines. In fact, most fail within a few years after they are launched. Many others just squeek by from year to year or until they finally die. Vanguard and National come to mind. Some have as wierd and twisted, Chapeter 11 filled histories as the majors - America West comes to mind here.

The reason that LCC's have a reputation for profitability is that the only consistantly profitable, reasonably sized airlines in the US (and increasingly, Europe as well) are LCC's. Regional operators used to be able to make consistant profits as well, but now even this is in doubt. Only some of the best LCC's seem to be able to consistantly make a profit, or at least come close to doing so.

IN SHORT......Most LCC's are NOT consistantly profitable. But those airlines that are consistantly profitable tend to be LCC's. That is the source of their reputation.
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RE: LCC's That Are Not Profitable!

Wed Aug 11, 2004 1:34 pm

Two words: fuel costs. Costs of jet fuel have gone up over 33% since January. F9 is also faced with the costs of converting its fleet from Boeing to Airbus, which adds training and parts storage costs as they have to operate two types of planes at once. F9 said they would be profitable this quarter if it wasn't for fuel costs. As it is, they are expected to break even.

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RE: LCC's That Are Not Profitable!

Thu Aug 12, 2004 12:15 am

In the long term, F9 is doing just fine.
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