G4 definitely has a strong model, but they’re flying used aircraft that are 50% larger than the E95 which makes a big difference in leisure markets. And to my third point, I’ve never seen a successful G4 market with 50% LFs. F9 & SY aren’t public obviously so it’s tough to tell how well they’re doing. But SY’s CEO said this week that they aren’t growing the passenger business this year, which I think is telling regardless of the opportunities in charters and cargo. F9 on the other hand has canceled an IPO in recent years while having industry leading route turnover in their non-DEN markets.
As far as using a low utilization model, historically that hasn’t mixed well with new aircraft. We’ll have to wait and see if that’s a systemwide thing or limited to mostly E95 routes.
So basically, if you have fewer seat to fill like on a e95, you will be able to make even more markets work. And unlike md88, e series maintenance isn't going anywhere with all the new e75s coming online.
And he didn't say they are aiming for 50% load factor. But rather if they compete with e75 on the same route and get the same fare level, they can make it work with lower lf since the cost is essentially the same as a legacy e75.
Given his track record, they are unlikely to be targeting the bottom of barrel market.
Oh and Sy has been doing great since they abandoned the msp only model and onto a opportunistic all over the country o and d model.
If E90/95s are actually market creators, I think we’d see fewer airlines trying to dump them. And E-jets aren’t exactly maintenance darlings from everything I’ve seen/heard.
All the Allegiant mentions by DN tell me they plan on serving the leisure passenger. And if that’s true, good luck getting legacy fares with sub-daily service.
For SY, what have you seen that indicates their non-MSP scheduled service has been successful? IMO it’s been a mixed bag at best.
A lot of LCCs have gone in the new A320 or 737 route when they start service. G4 has shown you can be successful using old used aircraft that no one wants, because acquisition cost is basically 0. There is no reason to believe that E90/95 CASM won't be alot better than the E75 that are everywhere for the legacy carriers. And there is no reason to believe E90 maintenance cost will necessarily be higher than E75.
I don't think G4/F9 necessarily get lower fares with their subdaily service than NK with their daily service. ULCC just get lower fare due to their bare bone model and their inferior product.
Based on what he described here, Breeze is definitely not going for the lowest product level. It will have first class. It will have free wifi, more comfortable seating than most airlines. I mean 145 seats on A220-300 is going to a pretty comfortable configuration. Azul has a very comfortable configuration with its E series aircraft and it doesn't seem like they will change it much for Breeze. So maybe it won't get legacy fares. But there is a lot of markets there that could get decent yield at the right season at right frequency.
With E95 and A220-300, they could have a combination that opens door for a lot of market that F9 or G4 can't serve right now because either A320 don't have the range or have too many seats.
It's a lot different trying to fill 128 or 145 seat vs 180 seat A320 or 230 seat A321.
We will see what they do at the end. JetBlue started off being a JFK focused airline with a lot of O&D focus city action. Breeze won't get a goldmine like JFK slots to start off. But let's see what kind of focus city strategy they come up with. There is a lot of market in the middle of hte country where legacies only offer hub service and LCCs have aircraft that simply have too much capacity for a lot of the routes.
Remember a new airline will start off with really low cost.
E195 cost per seat is too high to make these leisure markets work. They talk about stimulating new demand on all these routes - you cant do that with high fares, which the E195 will require because of its high seat cost.
Same reason why JetBlue is getting out of E190. Only works in business markets where it can command a high enough fare to make money. E190 kills leisure markets.
E90 will stick around with JetBlue a lot longer than people think. The lease rate on E90 will be next to 0 by the time they are ready to dump it. And E90 trip cost is low enough for these short haul shuttle routes that you really don't need to stick A220 in there. Sure, the trip cost of E90 and A220 is about the same. So if the route only can fill 70 passengers per flight, it doesn't make a lot of sense to stick a A220 there.
As for stimulating demand with high fares, you can definitely do that with LCC cost and also O&D traffic vs connection itinerary. Let me give you an example here.
Let's look at BOS-MEM. A market that have let's say 120 to 140 PDEW a day with average fare of $250 through connections on legacy carriers. With LCC cost, they can make the market profitable with 85% LF at $110 average fare + $50 ancillary revenue. Now on peak days of MTFSu, there might be 150 PDEW at average fare of $250. If fare go down to $120, maybe that will increase the demand to 200 PDEW on peak days. Now if you serve it with E95, you can get 85% LF with 105 to 100 passengers and still leave 100 passengers that travel via legacies or WN because are loyal to their airlines.
Now if they try to do this with 180 seat A320 on NK everyday. This is a lot harder to work. They'd have to discount to like $75 average fare.