THINKING BACK -- STARING AT 2025 Butter or no butter? 1. Two stories for the 1Q'2025 in my eyes are: 1) how much of #Spirit might emerge? If they do, will #Frontier be part of the story? and 2) given that the network airlines have placed a fair amount of 1q'25 capacity into Florida as have the ULCCs is it now GAME ON when the network airlines unleash #BasicEconomy on the #ULCC sector as never before? - I am going to pop some popcorn and watch. 2. #Breeze announced more nonstop service between PIT-LAX. Then #American announced a PIT-LAX nonstop too. The network airlines have too much invested in aircraft and product to stand back and watch revenue diminution at important spoke cities get service that overflies hubs. I guarantee there is more to come on this/others. - I am going to pop some popcorn and watch. 3. I have many reasons why I have been down on #Southwest. I put forth a number of them in a research piece on the airline. I will tip my hat to the execution the airline has made on its operational integrity. Better financial results do begin there. There is a first mover advantage in trying new and different competitive approaches. Whether the small jet advantage #Delta, Continental, #Alaska and America West had in deploying the small RJ as other competitors had significant scope clause constraints on deploying them - using large airplanes v. small airplanes - juniority benefits and maintenance honeymoons to name a few. Today's first movers - #Delta, #United, #Alaska. When is it too late to begin chasing first movers in a product battle? It strikes me that the battle will be AA v, WN to determine critical relevance in the domestic market space. There was never going to be room for 13 airlines to win their fair share of leisure traffic. Delta, United, and Alaska kept their powder dry and watched the other 11 add too much capacity targeted toward that customer. Now everyone wants to add something in the name of "premium" except for #Avelo, #SunCountry and #Allegiant. If there was no room for all 13 competing for a fair share of the leisure bucket, can there be enough "premium-oriented" customers for the 9 that will be searching for them? I think not. - I am going to pop some popcorn and watch. 4. Speaking of SY, I do not envy them at all. They were the first to get a pilot contract done. But it was done before the contracts with 40% raises in them. Now they are first up, and the benchmarks will be the big contract rates for narrowbodies. The continuation of pattern bargaining for equal pay rates to fly networks incapable of generating commensurate revenue. Point stupid. - I am going to pop some popcorn and watch. And do not forget that there is unfinished pilot contract business at Allegiant, and Frontier. But Frontier does not believe that cost convergence will hurt their competitive position anyway. They are pulling down before costs go up. There's more but I am out of characters, Happy 2025, #swelbar
Bill, I always enjoy your insights and this is a fun little read. I found it very informative, don’t eat too much popcorn and go lite on the butter.!
#4 👍 - while not having a big scale impact on capacity will continue down the road of having a big scale impact on marketplace and jobs so do the Unions want to keep jobs or just keep pressure on airline Execs? Couldn’t agree more with you on the AA/WN challenges. AA made a bad business decision/tactic and course corrected; WN has a complete strategy rethink to work through - higher utilization of AC by adding night flights isn’t the answer. Part of the solution, perhaps, but a small part. The question is can they find themselves before they lose themselves? History has proven that marketplace relevance is more important than brand but that brand can impact marketplace relevance (and Alaska hopes that continues…). Fortunately Alaska, Delta and United have a good mix of both of those, others seem to be evolving.
I'm going with popcorn and old bay; to add a little spice.
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Great takes, Bill! Always enjoy hearing your thoughts.
That's an awful lot of popcorn!