LAXintl wrote:

I am not sure there is anyone today that can with a straight face says we have "too much" capacity domestically to warrant the dismemberment of a strong competitor as JetBlue proposes.

VS11 wrote:

janders wrote:

My $0.02

JetBlue acquisition will remove one of their stronger competitors and reduce marketplace competition.

A Frontier deal will create a much stonger and viable national ULCC.

Todays JetBlue is far from the darling a decade ago and has lost it way.
This proposal which has a ton of airline and finance experts shaking their head at is just the latest sign of how lost they are in my view.
They should focus and fix their own operation before dreaming of a merger that surely will run into roadblocks.

Of the 3 carriers - B6, NK, F9 - it is Frontier under the most competitive pressure. Hence, why they initiated the merger. You only need to look at the threads in this forum regarding their network/routes to see the eyebrow raising about their strategy.

JetBlue on the other hand has been hitting the sweet spot for decades - targeting overall affluent, middle to upper middle class customers with a value product. This strategy (made very successful by Virgin Atlantic Upper Class, subsequently copied by literally every long haul airline by expanding the business class offering at the expense of First Class, and of course the launch of Premium Economy) is now applied by JetBlue over the Atlantic and is largely copied by Delta in their massive premium product investments especially for the Boston market - it is no accident that Delta’s brand new A321 NEOs are based in Boston.

So, jetBlue has not lost its way. It knows where the money is and has been milking it for decades. Spirit is a good airline, well established in its niche, it is Frontier that has been challenged for decades even before Indigo came along. Frontier will be further pressured by Avelo, Breeze and Allegiant as these carriers appear to be focusing on underserved markets for now, something that Frontier was trying to do by the frequent launch and discontinuation of routes.

santi319 wrote:

rj777 wrote:

So did anything substantial come out of that webcast?

I found this interesting:

Elsewhere, executives clarified that if the deal with Frontier is not consummated, the airline would revert to a standalone carrier.

https://seekingalpha.com/news/3841988-s ... icited-bid

Is this normal? To have basically like a “either vote for what we want or lose it all” technique allowed? Can jetBlue and the shareholders do something with this sort of comments?

VS11 wrote:

LAXintl wrote:

I am not sure there is anyone today that can with a straight face says we have "too much" capacity domestically to warrant the dismemberment of a strong competitor as JetBlue proposes.

I think there is a domestic overcapacity situation brewing in the US. In the next couple of years, it will be airlines catching up to their natural 1% of US GDP (per Doug Parker) but then there will be tons of new aircraft coming in to Breeze, Frontier, Allegiant, Spirit, jetBlue, not to mention the big 4, which may decide to delay certain aircraft retirements/replacements.

LAXintl wrote:

fastmover wrote:

But what are they going to do with those assets?
They are going to dismember it but use that to grow across the country. There is a difference. And again you assume everywhere spirit and F9 overlap they will maintain the same “amount of seats”

According to Airline Weekly, just reconfiguring the current NK 320 and 321 fleets into B6 configurations and based on B6 rates of utilization would mean a loss of over 8mil annual seats from the U.S. marketplace. Add in the hundreds of aircraft Spirit has on order, the impact of B6 takeover becomes quite significant.

I am not sure there is anyone today that can with a straight face says we have "too much" capacity domestically to warrant the dismemberment of a strong competitor as JetBlue proposes.

Mainland wrote:

santi319 wrote:

rj777 wrote:

So did anything substantial come out of that webcast?

I found this interesting:

Elsewhere, executives clarified that if the deal with Frontier is not consummated, the airline would revert to a standalone carrier.

https://seekingalpha.com/news/3841988-s ... icited-bid

Is this normal? To have basically like a “either vote for what we want or lose it all” technique allowed? Can jetBlue and the shareholders do something with this sort of comments?

A board is always going to say "it's in the best interests of shareholders" to do/vote for any merger they endorse. Sprit here is just saying the converse "soft part" of that standpoint out loud here in "if you don't support, you get nothing and we go back to square one." However, the JetBlue tender offer for Spirit shares runs until June 30, so there's an immediate "fall back" option for Spirit shareholders if the vote fails and Frontier walks away.

Polot wrote:

F9 may have publicly initiated the merger first but if you believe JetBlue they say they have been talking to Spirit about merging for years.

TYWoolman wrote:

Polot wrote:

F9 may have publicly initiated the merger first but if you believe JetBlue they say they have been talking to Spirit about merging for years.

But at same time throughout all those years they made a play for Virgin America and not Spirit? They low-balled/didn't do their homework and lost to Alaska. Evidence B6 might only be interested in scuttling mergers or not getting financials rights in regards to NK. The synergies of B6/Virgin America would have been stellar.

TYWoolman wrote:

Polot wrote:

F9 may have publicly initiated the merger first but if you believe JetBlue they say they have been talking to Spirit about merging for years.

But at same time throughout all those years they made a play for Virgin America and not Spirit? They low-balled/didn't do their homework and lost to Alaska. Evidence B6 might only be interested in scuttling mergers or not getting financials rights in regards to NK. The synergies of B6/Virgin America would have been stellar.

Polot wrote:

TYWoolman wrote:

Polot wrote:

F9 may have publicly initiated the merger first but if you believe JetBlue they say they have been talking to Spirit about merging for years.

But at same time throughout all those years they made a play for Virgin America and not Spirit? They low-balled/didn't do their homework and lost to Alaska. Evidence B6 might only be interested in scuttling mergers or not getting financials rights in regards to NK. The synergies of B6/Virgin America would have been stellar.

I don’t think B6 lowballed Virgin America. IMO Alaska overpaid to block a B6/VX merger, which indeed would have had great synergy and given B6 a good foothold in the west coast in competition to AS.

Polot wrote:

VS11 wrote:

janders wrote:

My $0.02

JetBlue acquisition will remove one of their stronger competitors and reduce marketplace competition.

A Frontier deal will create a much stonger and viable national ULCC.

Todays JetBlue is far from the darling a decade ago and has lost it way.
This proposal which has a ton of airline and finance experts shaking their head at is just the latest sign of how lost they are in my view.
They should focus and fix their own operation before dreaming of a merger that surely will run into roadblocks.

Of the 3 carriers - B6, NK, F9 - it is Frontier under the most competitive pressure. Hence, why they initiated the merger. You only need to look at the threads in this forum regarding their network/routes to see the eyebrow raising about their strategy.

JetBlue on the other hand has been hitting the sweet spot for decades - targeting overall affluent, middle to upper middle class customers with a value product. This strategy (made very successful by Virgin Atlantic Upper Class, subsequently copied by literally every long haul airline by expanding the business class offering at the expense of First Class, and of course the launch of Premium Economy) is now applied by JetBlue over the Atlantic and is largely copied by Delta in their massive premium product investments especially for the Boston market - it is no accident that Delta’s brand new A321 NEOs are based in Boston.

So, jetBlue has not lost its way. It knows where the money is and has been milking it for decades. Spirit is a good airline, well established in its niche, it is Frontier that has been challenged for decades even before Indigo came along. Frontier will be further pressured by Avelo, Breeze and Allegiant as these carriers appear to be focusing on underserved markets for now, something that Frontier was trying to do by the frequent launch and discontinuation of routes.

You are too focused on product and not financials. JetBlue certainly has not been “milking it for decades”. That’s not to say they have been doing horribly, but their financial performance has long been middle of the road at best.

Prior to Covid (and post ULCC transformation) F9 was routinely outperforming B6.

F9 may have publicly initiated the merger first but if you believe JetBlue they say they have been talking to Spirit about merging for years.

sxf24 wrote:

VS11 wrote:

LAXintl wrote:

I am not sure there is anyone today that can with a straight face says we have "too much" capacity domestically to warrant the dismemberment of a strong competitor as JetBlue proposes.

I think there is a domestic overcapacity situation brewing in the US. In the next couple of years, it will be airlines catching up to their natural 1% of US GDP (per Doug Parker) but then there will be tons of new aircraft coming in to Breeze, Frontier, Allegiant, Spirit, jetBlue, not to mention the big 4, which may decide to delay certain aircraft retirements/replacements.

Is your rationale a reason to remove ULCC capacity from the market and enable higher fares?

I think the DOJ cares more about perceived consumer financial benefit than avoiding overcapacity.

fastmover wrote:

LAXintl wrote:

fastmover wrote:

But what are they going to do with those assets?
They are going to dismember it but use that to grow across the country. There is a difference. And again you assume everywhere spirit and F9 overlap they will maintain the same “amount of seats”

According to Airline Weekly, just reconfiguring the current NK 320 and 321 fleets into B6 configurations and based on B6 rates of utilization would mean a loss of over 8mil annual seats from the U.S. marketplace. Add in the hundreds of aircraft Spirit has on order, the impact of B6 takeover becomes quite significant.

I am not sure there is anyone today that can with a straight face says we have "too much" capacity domestically to warrant the dismemberment of a strong competitor as JetBlue proposes.

It’s not like JetBlue won’t use those planes to grow. Also I was told on here the F9 would be fine either way and grow into the areas that JetBlue might leave. Interesting how that works yet not.

VS11 wrote:

Polot wrote:

VS11 wrote:

Of the 3 carriers - B6, NK, F9 - it is Frontier under the most competitive pressure. Hence, why they initiated the merger. You only need to look at the threads in this forum regarding their network/routes to see the eyebrow raising about their strategy.

JetBlue on the other hand has been hitting the sweet spot for decades - targeting overall affluent, middle to upper middle class customers with a value product. This strategy (made very successful by Virgin Atlantic Upper Class, subsequently copied by literally every long haul airline by expanding the business class offering at the expense of First Class, and of course the launch of Premium Economy) is now applied by JetBlue over the Atlantic and is largely copied by Delta in their massive premium product investments especially for the Boston market - it is no accident that Delta’s brand new A321 NEOs are based in Boston.

So, jetBlue has not lost its way. It knows where the money is and has been milking it for decades. Spirit is a good airline, well established in its niche, it is Frontier that has been challenged for decades even before Indigo came along. Frontier will be further pressured by Avelo, Breeze and Allegiant as these carriers appear to be focusing on underserved markets for now, something that Frontier was trying to do by the frequent launch and discontinuation of routes.

You are too focused on product and not financials. JetBlue certainly has not been “milking it for decades”. That’s not to say they have been doing horribly, but their financial performance has long been middle of the road at best.

Prior to Covid (and post ULCC transformation) F9 was routinely outperforming B6.

F9 may have publicly initiated the merger first but if you believe JetBlue they say they have been talking to Spirit about merging for years.

jetBlue has been a sustainable business for over 20 years. They have not been aggressive in their growth, which is probably why they are still around. When current Frontier will have been around for 20 years without bankruptcy we can take a look and compare financial performance. Until then it is a one trick pony riding a bull market driven by increased money supply, low interest rates and tax cuts. It ain't a unicorn, sorry.

VS11 wrote:

sxf24 wrote:

VS11 wrote:

I think there is a domestic overcapacity situation brewing in the US. In the next couple of years, it will be airlines catching up to their natural 1% of US GDP (per Doug Parker) but then there will be tons of new aircraft coming in to Breeze, Frontier, Allegiant, Spirit, jetBlue, not to mention the big 4, which may decide to delay certain aircraft retirements/replacements.

Is your rationale a reason to remove ULCC capacity from the market and enable higher fares?

I think the DOJ cares more about perceived consumer financial benefit than avoiding overcapacity.

I don't think that ULCC capacity will be substantially reduced. There is no vacuum in the marketplace - those ULCC seats are offered by every airline on every flight. Fares will be rising one way or another due to inflation, increased demand and reduced supply per crew shortages.

VS11 wrote:

I don't think that ULCC capacity will be substantially reduced. There is no vacuum in the marketplace - those ULCC seats are offered by every airline on every flight. Fares will be rising one way or another due to inflation, increased demand and reduced supply per crew shortages.

PA727 wrote:

Somebody help me understand how NK merging with B6 is bad for the marketplace? Every time something comes up, people on both sides scream "THE END IS NIGH", when in the long run - at least in the U.S. aviation industry - the gloom and doom never comes to pass.

Now understand, my argument here is from the POV of the consumer, not employees, since assuming contracts are worked out, the consumer is the focus of the DOJ.

Should NK and B6 merge, we will have MORE competition between the majors, with AA, DL, UA and WN all facing a new challenger. Of course, that will also have the dual effect of speeding up the race to the bottom while on the other side, allowing for more innovation and better fares. Seems like the usual trade-off, and price-wise a win for the consumer. Long run, more competition and incremental change while fares are kept somewhat in check.

Now, let's move to the ULCC space, where there will be a giant void. Sure, it might be tough for the short-term as the existing ULCC's scramble to fill the markets abandoned and increase their footprints. But they surely won't sit static, the smart ones will seize the opportunity and grow. The great thing about the free market (since we routinely focus on the bad) is if there's money to be made, someone will fill the void. Whether it's an established player or investment groups just looking to burn cash on a startup.

I'm a pragmatic person by nature, but in my estimation, travel options for Americans have improved drastically over the years in terms of price, destinations, options and if you want to pay for them, luxurious amenities. Aside from the dips in the economy that happen everywhere, all the time, there has never been a better time to be an American traveler. This is mainly because of the free market, expansion and contraction.

I know our system isn't perfect and it's driven by greed, but in the end, it does work better than anything else. I see either merger having a positive effect in the long-term, I just happen to believe the NK/B6 merger offers more green space and disruption to the system, therefore I like it more. I don't claim to have all the answers, but that's my take based on history and logic.

PA727 wrote:

Somebody help me understand how NK merging with B6 is bad for the marketplace? Every time something comes up, people on both sides scream "THE END IS NIGH", when in the long run - at least in the U.S. aviation industry - the gloom and doom never comes to pass.

Now understand, my argument here is from the POV of the consumer, not employees, since assuming contracts are worked out, the consumer is the focus of the DOJ.

Should NK and B6 merge, we will have MORE competition between the majors, with AA, DL, UA and WN all facing a new challenger. Of course, that will also have the dual effect of speeding up the race to the bottom while on the other side, allowing for more innovation and better fares. Seems like the usual trade-off, and price-wise a win for the consumer. Long run, more competition and incremental change while fares are kept somewhat in check.

Now, let's move to the ULCC space, where there will be a giant void. Sure, it might be tough for the short-term as the existing ULCC's scramble to fill the markets abandoned and increase their footprints. But they surely won't sit static, the smart ones will seize the opportunity and grow. The great thing about the free market (since we routinely focus on the bad) is if there's money to be made, someone will fill the void. Whether it's an established player or investment groups just looking to burn cash on a startup.

I'm a pragmatic person by nature, but in my estimation, travel options for Americans have improved drastically over the years in terms of price, destinations, options and if you want to pay for them, luxurious amenities. Aside from the dips in the economy that happen everywhere, all the time, there has never been a better time to be an American traveler. This is mainly because of the free market, expansion and contraction.

I know our system isn't perfect and it's driven by greed, but in the end, it does work better than anything else. I see either merger having a positive effect in the long-term, I just happen to believe the NK/B6 merger offers more green space and disruption to the system, therefore I like it more. I don't claim to have all the answers, but that's my take based on history and logic.

VS11 wrote:

sxf24 wrote:

VS11 wrote:

I think there is a domestic overcapacity situation brewing in the US. In the next couple of years, it will be airlines catching up to their natural 1% of US GDP (per Doug Parker) but then there will be tons of new aircraft coming in to Breeze, Frontier, Allegiant, Spirit, jetBlue, not to mention the big 4, which may decide to delay certain aircraft retirements/replacements.

Is your rationale a reason to remove ULCC capacity from the market and enable higher fares?

I think the DOJ cares more about perceived consumer financial benefit than avoiding overcapacity.

I don't think that ULCC capacity will be substantially reduced. There is no vacuum in the marketplace - those ULCC seats are offered by every airline on every flight. Fares will be rising one way or another due to inflation, increased demand and reduced supply per crew shortages.

Abeam79 wrote:

PA727 wrote:

Somebody help me understand how NK merging with B6 is bad for the marketplace? Every time something comes up, people on both sides scream "THE END IS NIGH", when in the long run - at least in the U.S. aviation industry - the gloom and doom never comes to pass.

Now understand, my argument here is from the POV of the consumer, not employees, since assuming contracts are worked out, the consumer is the focus of the DOJ.

Should NK and B6 merge, we will have MORE competition between the majors, with AA, DL, UA and WN all facing a new challenger. Of course, that will also have the dual effect of speeding up the race to the bottom while on the other side, allowing for more innovation and better fares. Seems like the usual trade-off, and price-wise a win for the consumer. Long run, more competition and incremental change while fares are kept somewhat in check.

Now, let's move to the ULCC space, where there will be a giant void. Sure, it might be tough for the short-term as the existing ULCC's scramble to fill the markets abandoned and increase their footprints. But they surely won't sit static, the smart ones will seize the opportunity and grow. The great thing about the free market (since we routinely focus on the bad) is if there's money to be made, someone will fill the void. Whether it's an established player or investment groups just looking to burn cash on a startup.

I'm a pragmatic person by nature, but in my estimation, travel options for Americans have improved drastically over the years in terms of price, destinations, options and if you want to pay for them, luxurious amenities. Aside from the dips in the economy that happen everywhere, all the time, there has never been a better time to be an American traveler. This is mainly because of the free market, expansion and contraction.

I know our system isn't perfect and it's driven by greed, but in the end, it does work better than anything else. I see either merger having a positive effect in the long-term, I just happen to believe the NK/B6 merger offers more green space and disruption to the system, therefore I like it more. I don't claim to have all the answers, but that's my take based on history and logic.

I think your assessment hit the nail on the head, and thus why B6 is thinking it will be better as a bigger airline emerging out of NK/B6 rather than a smaller (Smaller combines F9/NK vs Nk/B6) will be better for the market overall. If we all truly believe in a free market, then let it play out its course. IF B6 acquires NK, the free market will evolve with more ULCC's to fill in the space. As was always done in the past. What the market really needs more of now is a true challenger to the legacies that control 80% of the market, rather than just a bigger ULCC.

Vicenza wrote:

[quote="VS11"those ULCC seats are offered by every airline on every flight. Fares will be rising one way or another due to inflation, increased demand and reduced supply per crew shortages.

tphuang wrote:

I'm surprised that no one has posted this, but at least some NK shareholders are not happy. We will see how the June 10th vote goes. If this vote does not go through, I don't see how NK board can stick around.
https://www.paddleyourownkanoo.com/2022 ... -frontier/

usflyer msp wrote:

I'm still confused as to why you think basic economy = ULCC seats. It is not the same thing. The other carriers only offer this in reaction to ULCC presence so I'd the ULCC presence is greatly diminished, why would the other carriers continue to have this offering?

VS11 wrote:

usflyer msp wrote:

I'm still confused as to why you think basic economy = ULCC seats. It is not the same thing. The other carriers only offer this in reaction to ULCC presence so I'd the ULCC presence is greatly diminished, why would the other carriers continue to have this offering?

It is the same thing. ULCC carriers simply have entire aircraft with basic fare seats, while the others have a limited number of such seats. As to the other question: because it appears there is demand for it. All of the airlines are now setup to offer it so why would they discontinue it if there is demand for it?

luckyone wrote:

Vicenza wrote:

[quote="VS11] "those ULCC seats are offered by every airline on every flight. Fares will be rising one way or another due to inflation, increased demand and reduced supply per crew shortages.[/quote]

ULCC is being bandied about so much now that I wonder if some of you know what it actually is. What, in your opinion, is a 'ULCC seat'? Considering it designates a type of airline how are such seats offered by every airline on every flight?[/quote]

While the term could be better-defined, it's pretty clear that the poster is referencing the majors basic economy fares, which literally entitle the purchaser to a seat, and everything else has been unbundled in line with ULCC. The one thing an unbundled fare on a major would provide that an ULCC wouldn't is free entertainment.[/quote][/quote][/quote]

RyanairGuru wrote:

VS11 wrote:

usflyer msp wrote:

I'm still confused as to why you think basic economy = ULCC seats. It is not the same thing. The other carriers only offer this in reaction to ULCC presence so I'd the ULCC presence is greatly diminished, why would the other carriers continue to have this offering?

It is the same thing. ULCC carriers simply have entire aircraft with basic fare seats, while the others have a limited number of such seats. As to the other question: because it appears there is demand for it. All of the airlines are now setup to offer it so why would they discontinue it if there is demand for it?

Basic economics and profit maximisation.

If there is not a lower cost competitor why lower your price? If you could sell 180 tickets for $250 or more without a low fare competitor, nobody will offer 30 of those tickets for $110 just because they’re feeling generous.

PA727 wrote:

Somebody help me understand how NK merging with B6 is bad for the marketplace? Every time something comes up, people on both sides scream "THE END IS NIGH", when in the long run - at least in the U.S. aviation industry - the gloom and doom never comes to pass.

Now understand, my argument here is from the POV of the consumer, not employees, since assuming contracts are worked out, the consumer is the focus of the DOJ.

Should NK and B6 merge, we will have MORE competition between the majors, with AA, DL, UA and WN all facing a new challenger. Of course, that will also have the dual effect of speeding up the race to the bottom while on the other side, allowing for more innovation and better fares. Seems like the usual trade-off, and price-wise a win for the consumer. Long run, more competition and incremental change while fares are kept somewhat in check.

Now, let's move to the ULCC space, where there will be a giant void. Sure, it might be tough for the short-term as the existing ULCC's scramble to fill the markets abandoned and increase their footprints. But they surely won't sit static, the smart ones will seize the opportunity and grow. The great thing about the free market (since we routinely focus on the bad) is if there's money to be made, someone will fill the void. Whether it's an established player or investment groups just looking to burn cash on a startup.

I'm a pragmatic person by nature, but in my estimation, travel options for Americans have improved drastically over the years in terms of price, destinations, options and if you want to pay for them, luxurious amenities. Aside from the dips in the economy that happen everywhere, all the time, there has never been a better time to be an American traveler. This is mainly because of the free market, expansion and contraction.

I know our system isn't perfect and it's driven by greed, but in the end, it does work better than anything else. I see either merger having a positive effect in the long-term, I just happen to believe the NK/B6 merger offers more green space and disruption to the system, therefore I like it more. I don't claim to have all the answers, but that's my take based on history and logic.

tphuang wrote:

I'm surprised that no one has posted this, but at least some NK shareholders are not happy. We will see how the June 10th vote goes. If this vote does not go through, I don't see how NK board can stick around.
https://www.paddleyourownkanoo.com/2022 ... -frontier/

VS11 wrote:

luckyone wrote:

Vicenza wrote:

[quote="VS11] "those ULCC seats are offered by every airline on every flight. Fares will be rising one way or another due to inflation, increased demand and reduced supply per crew shortages.[/quote]

ULCC is being bandied about so much now that I wonder if some of you know what it actually is. What, in your opinion, is a 'ULCC seat'? Considering it designates a type of airline how are such seats offered by every airline on every flight?[/quote]

While the term could be better-defined, it's pretty clear that the poster is referencing the majors basic economy fares, which literally entitle the purchaser to a seat, and everything else has been unbundled in line with ULCC. The one thing an unbundled fare on a major would provide that an ULCC wouldn't is free entertainment.[/quote][/quote][/quote][/quote][/quote]

That's exactly right. The essence of the ULCC model is that everything is unbundled and you pay for what you need, even though you have different packages that provide savings, which are typically offered if you are member of a club for which you pay a fee. If you travel often, a club membership is beneficial.

ULCC carriers offer unbundled (basic economy) fares for the entire aircraft, the rest have a limited number of those.[/quote][/quote][/quote][/quote]

usflyer msp wrote:

VS11 wrote:

luckyone wrote:

The essence of the ULCC model is low costs, which the major carriers do not have. They are not going to offer money losing fares for no reason.

VS11 wrote:

usflyer msp wrote:

VS11 wrote:

The essence of the ULCC model is low costs, which the major carriers do not have. They are not going to offer money losing fares for no reason.

Well, the motto of Spirit is "Home of the Bare Fare". Bare Fare = Basic Economy Fare.

And nobody is offering money-losing fares. It is very naive if you really believe that. If a market is consistently unprofitable it won't be served.

TYWoolman wrote:

PA727 wrote:

Somebody help me understand how NK merging with B6 is bad for the marketplace? Every time something comes up, people on both sides scream "THE END IS NIGH", when in the long run - at least in the U.S. aviation industry - the gloom and doom never comes to pass.

Now understand, my argument here is from the POV of the consumer, not employees, since assuming contracts are worked out, the consumer is the focus of the DOJ.

Should NK and B6 merge, we will have MORE competition between the majors, with AA, DL, UA and WN all facing a new challenger. Of course, that will also have the dual effect of speeding up the race to the bottom while on the other side, allowing for more innovation and better fares. Seems like the usual trade-off, and price-wise a win for the consumer. Long run, more competition and incremental change while fares are kept somewhat in check.

Now, let's move to the ULCC space, where there will be a giant void. Sure, it might be tough for the short-term as the existing ULCC's scramble to fill the markets abandoned and increase their footprints. But they surely won't sit static, the smart ones will seize the opportunity and grow. The great thing about the free market (since we routinely focus on the bad) is if there's money to be made, someone will fill the void. Whether it's an established player or investment groups just looking to burn cash on a startup.

I'm a pragmatic person by nature, but in my estimation, travel options for Americans have improved drastically over the years in terms of price, destinations, options and if you want to pay for them, luxurious amenities. Aside from the dips in the economy that happen everywhere, all the time, there has never been a better time to be an American traveler. This is mainly because of the free market, expansion and contraction.

I know our system isn't perfect and it's driven by greed, but in the end, it does work better than anything else. I see either merger having a positive effect in the long-term, I just happen to believe the NK/B6 merger offers more green space and disruption to the system, therefore I like it more. I don't claim to have all the answers, but that's my take based on history and logic.

A great perspective on the entire system and brilliant analysis for sure and not to debunk that logic entirely but (imo):
1) a larger merged B6 will forever more resemble a ULCC in its lack of international breadth and scope and therefore could not achieve the most meaningful disruption to the legacies while still then forever denying 50% of a ULCC disruptor (NK) the organic opportunity to compete in the market across ALL spectrums. Competing for legacy frequent flyers (what legacy consumers have become) will need true incentives to jump ship to make any meaningful dent to the depth you hope a merged B6 would achieve, yet B6 will be lacking.
2) In order for B6 to achieve such depth it would have to succeed in forming an alliance with a legacy that has international reach (or a foreign partner alternative), yet I do not see how DOJ can approve that prerequisite step only to then justify a further merger on the premise of creating more competition for the legacies (unless it was a foreign partner, perhaps) because approving and almost condoning the alignment of two U.S. entities (one of which is already a legacy) in order to achieve more domestic competition (via subsequent NK merger approval) SHOULD BE DOJ's ULTIMATE CONUNDRUM (let alone wiping out a tried and true ULCC in the process.)
Therefore in this current environment:
3) A larger ULCC will truly be the game-changing disruptor because that model does not require any anti-competitive alliance approval to achieve meaningful legacy scale as it does not closely resemble the legacy model nor pretend to, and therefore will not be tempted to be too many things to too many customers that would make cost creep and higher fares inevitable.
4) Two large ULCC companies merging to form a larger ULCC network for more communities has not been done before and should be given that opportunity, further allowing and ensuring legacies will compete with a basic economy fare in more places, something not guaranteed with an enlarged B6 "intermediate" model.

travaz wrote:

If I was a stock holder of NK I would prefer the F9/NK merger. I think a B6 / NK merger will increase revenue for B6 incrementally gaining planes and pilots. I think NK/F9 would increase market share and revenue on a large scale. B6 will decimate NK but NK/F9 will be able to compete with all of the other airlines because their cost will remain low which wont happen at B6.

sxf24 wrote:

Think the basis of the ULCC argument is that they can profitably offer lower fares, e.g. F9 had an average fare of $53 and NK $55 in 2019, compared to $182 for B6.

william wrote:

travaz wrote:

If I was a stock holder of NK I would prefer the F9/NK merger. I think a B6 / NK merger will increase revenue for B6 incrementally gaining planes and pilots. I think NK/F9 would increase market share and revenue on a large scale. B6 will decimate NK but NK/F9 will be able to compete with all of the other airlines because their cost will remain low which wont happen at B6.

Why would you care as long as you got paid as a stockholder? Whether Frontier or JetBlue pays.

VS11 wrote:

sxf24 wrote:

Think the basis of the ULCC argument is that they can profitably offer lower fares, e.g. F9 had an average fare of $53 and NK $55 in 2019, compared to $182 for B6.

I doubt this is in the same market. If it is, then F9 and NK should fire their revenue managers as they would be able to charge more and still fill the planes. However, comparing "just" fares is misleading in this case. F9/NK fares do not include bags and other items so it is not really a true comparison. You will have to allocate all ancillary fees that F9/NK charge back to each ticket sold in order to have somewhat of a meaningful comparison. In other words, you will need to use the concept of "total cost of ownership" in order to see what it really costs a passenger to fly F9/NK.

In the end of the day, NK/F9 are trying to charge as much as they can get away with, just like the other carriers.

PA727 wrote:

TYWoolman wrote:

PA727 wrote:

Somebody help me understand how NK merging with B6 is bad for the marketplace? Every time something comes up, people on both sides scream "THE END IS NIGH", when in the long run - at least in the U.S. aviation industry - the gloom and doom never comes to pass.

Now understand, my argument here is from the POV of the consumer, not employees, since assuming contracts are worked out, the consumer is the focus of the DOJ.

Should NK and B6 merge, we will have MORE competition between the majors, with AA, DL, UA and WN all facing a new challenger. Of course, that will also have the dual effect of speeding up the race to the bottom while on the other side, allowing for more innovation and better fares. Seems like the usual trade-off, and price-wise a win for the consumer. Long run, more competition and incremental change while fares are kept somewhat in check.

Now, let's move to the ULCC space, where there will be a giant void. Sure, it might be tough for the short-term as the existing ULCC's scramble to fill the markets abandoned and increase their footprints. But they surely won't sit static, the smart ones will seize the opportunity and grow. The great thing about the free market (since we routinely focus on the bad) is if there's money to be made, someone will fill the void. Whether it's an established player or investment groups just looking to burn cash on a startup.

I'm a pragmatic person by nature, but in my estimation, travel options for Americans have improved drastically over the years in terms of price, destinations, options and if you want to pay for them, luxurious amenities. Aside from the dips in the economy that happen everywhere, all the time, there has never been a better time to be an American traveler. This is mainly because of the free market, expansion and contraction.

I know our system isn't perfect and it's driven by greed, but in the end, it does work better than anything else. I see either merger having a positive effect in the long-term, I just happen to believe the NK/B6 merger offers more green space and disruption to the system, therefore I like it more. I don't claim to have all the answers, but that's my take based on history and logic.

A great perspective on the entire system and brilliant analysis for sure and not to debunk that logic entirely but (imo):
1) a larger merged B6 will forever more resemble a ULCC in its lack of international breadth and scope and therefore could not achieve the most meaningful disruption to the legacies while still then forever denying 50% of a ULCC disruptor (NK) the organic opportunity to compete in the market across ALL spectrums. Competing for legacy frequent flyers (what legacy consumers have become) will need true incentives to jump ship to make any meaningful dent to the depth you hope a merged B6 would achieve, yet B6 will be lacking.
2) In order for B6 to achieve such depth it would have to succeed in forming an alliance with a legacy that has international reach (or a foreign partner alternative), yet I do not see how DOJ can approve that prerequisite step only to then justify a further merger on the premise of creating more competition for the legacies (unless it was a foreign partner, perhaps) because approving and almost condoning the alignment of two U.S. entities (one of which is already a legacy) in order to achieve more domestic competition (via subsequent NK merger approval) SHOULD BE DOJ's ULTIMATE CONUNDRUM (let alone wiping out a tried and true ULCC in the process.)
Therefore in this current environment:
3) A larger ULCC will truly be the game-changing disruptor because that model does not require any anti-competitive alliance approval to achieve meaningful legacy scale as it does not closely resemble the legacy model nor pretend to, and therefore will not be tempted to be too many things to too many customers that would make cost creep and higher fares inevitable.
4) Two large ULCC companies merging to form a larger ULCC network for more communities has not been done before and should be given that opportunity, further allowing and ensuring legacies will compete with a basic economy fare in more places, something not guaranteed with an enlarged B6 "intermediate" model.

You raise several good points I didn't consider, which I appreciate. Again, I think this highlights the resiliency of the market, which was the basis of my point. There are always eager players happy to jump into whichever void is created and, in the end, all will be well. But again, definitely see the validity of your points.

sxf24 wrote:

VS11 wrote:

sxf24 wrote:

Think the basis of the ULCC argument is that they can profitably offer lower fares, e.g. F9 had an average fare of $53 and NK $55 in 2019, compared to $182 for B6.

I doubt this is in the same market. If it is, then F9 and NK should fire their revenue managers as they would be able to charge more and still fill the planes. However, comparing "just" fares is misleading in this case. F9/NK fares do not include bags and other items so it is not really a true comparison. You will have to allocate all ancillary fees that F9/NK charge back to each ticket sold in order to have somewhat of a meaningful comparison. In other words, you will need to use the concept of "total cost of ownership" in order to see what it really costs a passenger to fly F9/NK.

In the end of the day, NK/F9 are trying to charge as much as they can get away with, just like the other carriers.

These are average system fares. The entire premise of the ULCC business model is that you stimulate markets and/or pick up spill traffic with lower fares.

I would agree that ancillary revenue narrows the gap, but the cold, hard reality is that F9 and NK (plus G4) have significantly lower costs than B6 and other airlines which allows them to be profitable at lower fares.

VS11 wrote:

sxf24 wrote:

VS11 wrote:

I doubt this is in the same market. If it is, then F9 and NK should fire their revenue managers as they would be able to charge more and still fill the planes. However, comparing "just" fares is misleading in this case. F9/NK fares do not include bags and other items so it is not really a true comparison. You will have to allocate all ancillary fees that F9/NK charge back to each ticket sold in order to have somewhat of a meaningful comparison. In other words, you will need to use the concept of "total cost of ownership" in order to see what it really costs a passenger to fly F9/NK.

In the end of the day, NK/F9 are trying to charge as much as they can get away with, just like the other carriers.

These are average system fares. The entire premise of the ULCC business model is that you stimulate markets and/or pick up spill traffic with lower fares.

I would agree that ancillary revenue narrows the gap, but the cold, hard reality is that F9 and NK (plus G4) have significantly lower costs than B6 and other airlines which allows them to be profitable at lower fares.

Their costs might be lower now but they will keep going up and up with each year. Especially, in the current labor environment, it is difficult to see how they will be able to hire and keep crews if they are not paying market rates. It is an employee market now and will be for some time. Who is going to fly all of the F9/NK 321 NEOs?

sxf24 wrote:

VS11 wrote:

sxf24 wrote:

These are average system fares. The entire premise of the ULCC business model is that you stimulate markets and/or pick up spill traffic with lower fares.

I would agree that ancillary revenue narrows the gap, but the cold, hard reality is that F9 and NK (plus G4) have significantly lower costs than B6 and other airlines which allows them to be profitable at lower fares.

Their costs might be lower now but they will keep going up and up with each year. Especially, in the current labor environment, it is difficult to see how they will be able to hire and keep crews if they are not paying market rates. It is an employee market now and will be for some time. Who is going to fly all of the F9/NK 321 NEOs?

You keep on introducing macroeconomic considerations like they’re only applicable to F9/NK, but B6/NK would some how be immune.

Is the labor market different for ULCCs?

VS11 wrote:

sxf24 wrote:

VS11 wrote:

Their costs might be lower now but they will keep going up and up with each year. Especially, in the current labor environment, it is difficult to see how they will be able to hire and keep crews if they are not paying market rates. It is an employee market now and will be for some time. Who is going to fly all of the F9/NK 321 NEOs?

You keep on introducing macroeconomic considerations like they’re only applicable to F9/NK, but B6/NK would some how be immune.

Is the labor market different for ULCCs?

No, it is not. I was talking about the diminishing competitive advantage of the ULCC carriers in a tough labor market when they have so many new planes coming in.

VS11 wrote:

sxf24 wrote:

VS11 wrote:

Their costs might be lower now but they will keep going up and up with each year. Especially, in the current labor environment, it is difficult to see how they will be able to hire and keep crews if they are not paying market rates. It is an employee market now and will be for some time. Who is going to fly all of the F9/NK 321 NEOs?

You keep on introducing macroeconomic considerations like they’re only applicable to F9/NK, but B6/NK would some how be immune.

Is the labor market different for ULCCs?

No, it is not. I was talking about the diminishing competitive advantage of the ULCC carriers in a tough labor market when they have so many new planes coming in.

VS11 wrote:

sxf24 wrote:

VS11 wrote:

Their costs might be lower now but they will keep going up and up with each year. Especially, in the current labor environment, it is difficult to see how they will be able to hire and keep crews if they are not paying market rates. It is an employee market now and will be for some time. Who is going to fly all of the F9/NK 321 NEOs?

You keep on introducing macroeconomic considerations like they’re only applicable to F9/NK, but B6/NK would some how be immune.

Is the labor market different for ULCCs?

No, it is not. I was talking about the diminishing competitive advantage of the ULCC carriers in a tough labor market when they have so many new planes coming in.

sxf24 wrote:

william wrote:

travaz wrote:

If I was a stock holder of NK I would prefer the F9/NK merger. I think a B6 / NK merger will increase revenue for B6 incrementally gaining planes and pilots. I think NK/F9 would increase market share and revenue on a large scale. B6 will decimate NK but NK/F9 will be able to compete with all of the other airlines because their cost will remain low which wont happen at B6.

Why would you care as long as you got paid as a stockholder? Whether Frontier or JetBlue pays.

It’s an issue of HOW you are paid and WHETHER you are paid. Some stockholders may prefer the cash offer from B6, which NK claims has a lower probability of closing. Some stockholders may prefer to have the equity upside and cash that comes with the F9 merger, which NK claims has a higher probability of closing.

tphuang wrote:

sxf24 wrote:

william wrote:

Why would you care as long as you got paid as a stockholder? Whether Frontier or JetBlue pays.

It’s an issue of HOW you are paid and WHETHER you are paid. Some stockholders may prefer the cash offer from B6, which NK claims has a lower probability of closing. Some stockholders may prefer to have the equity upside and cash that comes with the F9 merger, which NK claims has a higher probability of closing.

No, that wasn't his argument.

His argument was not about probability of getting paid.

His argument for NK/F9 merger is due to his view that combined airline would be more successful. And he was rightfully called out for it.

sxf24 wrote:

fastmover wrote:

LAXintl wrote:

According to Airline Weekly, just reconfiguring the current NK 320 and 321 fleets into B6 configurations and based on B6 rates of utilization would mean a loss of over 8mil annual seats from the U.S. marketplace. Add in the hundreds of aircraft Spirit has on order, the impact of B6 takeover becomes quite significant.

I am not sure there is anyone today that can with a straight face says we have "too much" capacity domestically to warrant the dismemberment of a strong competitor as JetBlue proposes.

It’s not like JetBlue won’t use those planes to grow. Also I was told on here the F9 would be fine either way and grow into the areas that JetBlue might leave. Interesting how that works yet not.

JetBlue’s network may grow with the integration of the NK fleet, but the net number of seats in the market will shrink due to reconfiguration of airplanes and lower utilization.

VS11 wrote:

Polot wrote:

You are too focused on product and not financials. JetBlue certainly has not been “milking it for decades”. That’s not to say they have been doing horribly, but their financial performance has long been middle of the road at best.

Prior to Covid (and post ULCC transformation) F9 was routinely outperforming B6.

F9 may have publicly initiated the merger first but if you believe JetBlue they say they have been talking to Spirit about merging for years.

jetBlue has been a sustainable business for over 20 years. They have not been aggressive in their growth, which is probably why they are still around. When current Frontier will have been around for 20 years without bankruptcy we can take a look and compare financial performance. Until then it is a one trick pony riding a bull market driven by increased money supply, low interest rates and tax cuts. It ain't a unicorn, sorry.

You’re correct that B6 has a longer track record than F9. However, the more recent growth and earnings trends show very different trajectories.

It’s also intellectually dishonest to attribute F9’s growth to the macro environment. While they certainly benefitted from attractive lease rates, it was in the same market that every other airline participated. As rates and fuel go up, F9’s exposure is no different than any other airline. In fact, there’s a pretty strong case to be made that ULCCs are better positioned to navigate a recession than higher cost airlines that are more dependent on achieving leading yields.

VS11 wrote:

sxf24 wrote:

Is your rationale a reason to remove ULCC capacity from the market and enable higher fares?

I think the DOJ cares more about perceived consumer financial benefit than avoiding overcapacity.

I don't think that ULCC capacity will be substantially reduced. There is no vacuum in the marketplace - those ULCC seats are offered by every airline on every flight. Fares will be rising one way or another due to inflation, increased demand and reduced supply per crew shortages.

Sure, that is possible but ULCC will be immediately removed with a merger and that’s what regulators focus on. They don’t know if Breeze, Avelo, Allegiant or other airlines will be successful and growing.

sxf24 wrote:

VS11 wrote:

usflyer msp wrote:

The essence of the ULCC model is low costs, which the major carriers do not have. They are not going to offer money losing fares for no reason.

Well, the motto of Spirit is "Home of the Bare Fare". Bare Fare = Basic Economy Fare.

And nobody is offering money-losing fares. It is very naive if you really believe that. If a market is consistently unprofitable it won't be served.

All of the airlines have been unprofitable. Are the fares not money loosing?

Think the basis of the ULCC argument is that they can profitably offer lower fares, e.g. F9 had an average fare of $53 and NK $55 in 2019, compared to $182 for B6.

F9 and NK can offer fares like this because their costs are 2/3rd of B6’s.

sxf24 wrote:

VS11 wrote:

sxf24 wrote:

These are average system fares. The entire premise of the ULCC business model is that you stimulate markets and/or pick up spill traffic with lower fares.

I would agree that ancillary revenue narrows the gap, but the cold, hard reality is that F9 and NK (plus G4) have significantly lower costs than B6 and other airlines which allows them to be profitable at lower fares.

Their costs might be lower now but they will keep going up and up with each year. Especially, in the current labor environment, it is difficult to see how they will be able to hire and keep crews if they are not paying market rates. It is an employee market now and will be for some time. Who is going to fly all of the F9/NK 321 NEOs?

You keep on introducing macroeconomic considerations like they’re only applicable to F9/NK, but B6/NK would some how be immune.

Is the labor market different for ULCCs?