New Acronym for LCC

[mbav8r]

Are there truly any real LCC other than RyanAir? In North America, in my opinion there are no true LCC, there is simply a recycling of jobs at, what I will now refer to as SUCs. Start up Carriers will have a lower cost than any airline that has been around for 5 years or longer, for that matter 2 years or longer but for a SUC to have any real cost advantage, I would say you need your main competitor to be around probably 10 years or so.
If Air Canada successfully gets their SUC started what effect will that have on WestJets bottom line? Afterall their cost structure is so high now they had to start their own SUC to compete with a legacy regional airline, which will put pressure on Jazz to reduce cost or form their own SUC, oh wait, didn't AC start one.
I am a bit of a conspiracy theorist and I believe Sky Regional exist because Jazz manangement allowed it to happen, to put pressure on the Jazz groups to keep cost down, in fact shortly after SR was announced we had a memo from the pres about cost control and so on. Follow my logic here for abit and I think most will agree.
The lawsuit against the TPA and Porter for landing slots had Jazz(Chorus) as the plaintiff and had they continued with the lawsuit to the end, the outcome would have been, Jazz awarded the slots at YTZ and then there would have been no disscussion on who would do that flying. Instead about 2-3 months before the conclusion, Jazz suddenly hands the lawsuit over to AC and voila AC owns the slots and has the YTZ flying tendered out to Sky Regional, with ACPA's blessing of course. I've never seen or read anything about whether or not Jazz was reimbursed for the cost incurred over the years for the lawsuit, but at any rate either our mangement was completely duped or are in on it, not sure which.
To be fair, Sky Regional may exist anyhow, given how AC mangement managed to manipulate ACPA with their blind hatred for Jazz. Now that choice will come home to roost for them, but thats a whole new thread.

Back to the topic of SUCs, if you read the latest letter from SouthWest new CEO, the writing is on the wall for them as well. It won't be long now before Southwest looks at starting a SUC of their own claiming they need this to avoid filing Chapter 11.

[Panama Jack]

The term "Low-Cost Airline" has been used and abused for a number of years now. At a recent seminar which I attended, the speaker (Dr. John Wensveen) begged the question "what the heck does low cost mean?" He referred to it as the "Discombobulated Syndrome." Other euphamisms for these companies include:

- Low-Cost Carrier/No Frills (LCC/NF)
- Low-Cost Carrier (LCC)
- Low-Fare/High Value Carrier (LFHV)
- Less Frills Carrier
- Value Carrier
- Budget Carrier
- New Generation Carrier

In spite of all of this, I am still not sure I understand what "low-cost" means, or, to reword it, nobody would start a "high-cost" carrier these days, with the possible exception of the Qataris and the Emiratis. The nature of trying to start any business these days imply keeping your costs and overhead low, maximizing efficiencies and trying to get the most yield for the service you offer.

As far as Southwest goes, we also discussed that, quite possibly, Southwest with its unionized-stucture and more costly, older workforce (businesses like people start to gain weight as they age) may be more of a Legacy Carrier these days than a LCC. It is new-entry airlines who have the greatest chance of maintaining a low-cost structure which can be difficult to maintain as age brings some semblence of legacy issues. It is not unlike living at the same address for many years-- clutter starts to accumulate.

It depends on what you consider North America, but there are some truly lean carriers in Latin America. Even though it does not consider itself a no-frills, COPA Airlines has a very lean cost structure and is much more profitable than Jet Blue. There are some interesting LCC's down in Mexico and TACA reformed itself from a motley-crew of rag-tag Banana Republic national airlines to an efficient, lean and profitable airline (but not a very nice place to work).

As far as the recycling of jobs, BWIA folded itself a couple of years ago and started Caribbean Airlines, without unions, debt and other undesireable weight from a business perspective. I predict we will see more of this in the future, beit the BWIA example, US Chapter 11, or something else as inefficient businesses try the shock treatment or the reset button.

As my neighbor once said, "there is nothing quite like a fire or a move to clean out the house."

[flieger]

Low Compensation Carrier is what LCC stands for.

Stop pussyfooting around and call it what it is.

Just about every airline out there follows this 'model' or subscribes to the 'matrix' or whatever contrarian or Orwellian word your particular airline uses.

[Bede]

One of the problems with this industry is the new airline advantage. Sky Regional could have the exact same pay scale as Jazz, but would have much lower costs because all the pilots would be in their first couple years of service.

Low wages aren't the only problem, it's the revolving doors of airlines. Airline matures, wages go up, costs increase, airline goes under, pilots unemployed, pilots start at new start up at the the bottom of the list, airline matures, etc.

[TheSuit]

Nailed it, Bede. It's easier to start an airline than a McDonald's.

[Panama Jack]

Good observation Bede,

Question is, who is more responsible for this phenonemon and what to do about it?

Interestingly, at a lot of other airlines the salary scales tend to be a little more stable; new entry employees don't earn poverty-level wages with the realization that after the third year they will be OK, but the climb for years of service isn't that dramatic either. In fact, seniority seems to mean little more than "last in, first off" in redundancy cases.

The current new-airline advantage, as you call it, has a way of skewing airline economics and creating unsustainable models. Even LCC-darling Southwest Airlines is grappling with higher costs as a mature airline in the competitive environment.

[EA757]

Let's see if we can get the industry to fall in behind SKYMARK.

http://www.telegraph.co.uk/news/worldne ... -them.html