What I said about the 717s was that at the time of the merger, 2010, they said they were going to look at AIrtran's business and learn from it, and keep the 717s, but not add first class and not add bag fees.
By 2014, they were blaming "high fuel costs" as the reason for dumping the 717s and dehubbing ATL, which I think was Kelly's expectation all along. In other words, they "looked at" Airtran's business and practices and "learned" that they didn't like them, even if Airtran's technology was light-years ahead of theirs.
Ok, it seems our theories are more similar than different.
We both agree that WN was going to buy AirTran mainly to get rid of a competitor and to get its hands on valuable assets such as 737s with trained crews and LGA/DCA slots.
The difference comes when you suggest GK had an expectation that 717s would not work out.
The way I read the comments I quoted:
I think the smaller is, we've looked at many times and always concluded that the cost and the market opportunity just weren't right for us and it was also a distraction from what has now turned out to be over the past 5 years, a vast opportunity to continue to grow with just what we've got.
... suggests to me they did have an expectation that the 717 would work out in smaller markets, but in the end it was a "distraction" from what they "got", an all 737 fleet.
The 717 costs more to operate than an A220. The 717 would not have worked at WN. In the future, the A220 just might.
The 717 had similar costs per seat to the 737NG that WN was operating at the time. The A220 will have similar costs per seat to the MAX that WN plans as its NG replacement.
The issue is that WN's labor costs
don't make sense in the sub-MAX market where they will have to compete with regionals, and the opportunity
for WN isn't like DL who uses 717s as cost leaders to feed its mega-hubs. Add to that the cost of training and spares and disruptions due to a mixed fleet, you can see why the CEO called small markets a distraction for WN.
If it makes anyone feel better, I think Moxy's approach of targeting underserved markets with A220 and keeping costs low is pretty promising. The big difference with WN is that WN pays pilots and crew at the high end of the scale and they can't make that up when targeting small markets.