A Look at the Growth of ULCCs in Maps

Allegiant, American, Delta, Frontier, Southwest, Spirit, Sun Country, United

Some days, I like to sit around and dream up the kind of data I can pull from Cirium. I’m only slightly ashamed to admit that this past weekend I had one of those days. A reader asked the question about how some airports have evolved over time with Southwest and the ultra low cost carriers (ULCCs), and I just kept going deeper and deeper down that rabbit hole until I realized I had spent far too much time on this and should be spending my weekends doing other things.

The look at an individual airport is very interesting, but I decided to start with something more high level. So, I pulled schedules for the full year 2015 and compared them to what’s now filed for the full year 2022. For ULCCs, I looked at Allegiant, Frontier, Spirit, and Sun Country since those are by far the biggest in the US. I then looked at all routes that had at least 10 departures in a year, and I plotted them using Great Circle Mapper.

Let’s take a trip down memory lane and look at how overlap has changed between the ULCCs and the big four airlines. Keep in mind that I’m not looking at actual capacity or revenue overlap — we do look at some of that in Cranky Network Weekly — but in this case I’m just looking at the routes that overlap then vs. now. And an important caveat… I am looking at complete airport overlap and not city overlap. So if Southwest flies something from Midway and Spirit from O’Hare, that does not count.

Let’s start with United.

United vs the ULCCs

2015 and 2022 maps generated by the Great Circle Mapper – copyright © Karl L. Swartz.

I started with United, because these maps saw the least change. I’d say that’s because United’s hubs have seen some of the more significant overlap for the longest period of time, but it’s more than that. In 2015, United had 13.7 percent of its routes overlap with ULCCs. That had risen only to 16.5 percent by 2022, an increase of 2.8 points.

Most notably, of course, is Denver where Frontier has held court for years prior to 2015. Despite that, Denver did see serious inroads made by the ULCCs. There was overlap on 34 percent of United’s Denver routes in 2015 but that surged to 41 percent in 2022. The other big gainer was in Newark where there was no overlap at all in 2015, but by 2022 with Spirit, Frontier, and Allegiant all angling for space, that had risen to 13 percent of routes.

What’s most interesting, however, is that in United’s other hubs, this was offset significantly. O’Hare actually saw its overlap drop from 17 percent to 10 percent, and Dulles from 9 percent to 3 percent. At Dulles, it has likely been a result of the ULCCs failing to make it work whereas at O’Hare it’s more about United’s growing presence into new markets that don’t have that competition.

The rest of the hubs saw more minor change, and United has always been the weakest of the big three in Florida where the biggest growth has been for the ULCCs. So in that sense, United is lucky.

American vs the ULCCs

2015 and 2022 maps generated by the Great Circle Mapper – copyright © Karl L. Swartz.

This one was a surprise to me. I had expected American’s overlap to grow significantly considering the entry of ULCCs into Miami and the growth of American in Austin, but the increase in overlap between 2015 to 2022 was only 5.6 points… from 9.4 percent to 15 percent.

So what happened with American? Well, Philly happened. Philly became a big operation for Frontier, and overlap jumped from 13 percent to 28 percent. And of course, Miami happened. With everyone racing into Miami, overlap went from a mere 6 percent all the way to 26 percent, including significant flying into Latin America. LAX also saw growth from 8 percent to 37 percent, but those are smaller numbers for American anyway.

The rest of the markets didn’t change much. Chicago’s percentage actually went down as American added many new routes that it didn’t operate, most of which do not have ULCC competition. And DFW dropped a bit as well, probably because Spirit was in there early and then focused growth elsewhere during this time period. That appears ready to change as several airlines have turned their eyes toward DFW this summer.

Delta vs the ULCCs

2015 and 2022 maps generated by the Great Circle Mapper – copyright © Karl L. Swartz.

Of all the airlines, Delta held the biggest surprise. It went from having 12 percent of routes overlap all the way up to 19.3 percent, a gain of 7.2 points and the highest increase of the big three. I did not expect to see that much of a change.

I was taken aback when I saw what had happened in Minneapolis/St Paul. Delta and Sun Country have co-existed for years, but in 2015 the overlap was only 28 percent. By 2022 it had climbed to 44 percent. Some of this is the relentless march of Sun Country into additional markets as it gets more airplanes, but some of this is also a Delta retreat. I was puzzled when I looked at the map and saw a decrease in overlapping Mexico flying from 2015 to 2022. That’s not because Sun Country stopped it. It’s because Delta did.

The other big change was at home base in Atlanta. Overlap rose from 9.8 percent to 17. 8 percent, a near doubling. This is happening as both Frontier and Spirit build up the airport more and establish crew bases. More overlap is coming.

Other than that, the rest of Delta’s hubs were fairly steady. Yes, Detroit increased from 13.5 percent to 17.4 percent, so that is notable, but everything else changed less than two percent.

Southwest vs the ULCCs

2015 and 2022 maps generated by the Great Circle Mapper – copyright © Karl L. Swartz.

No airline has seen a more significant change in overlap with the ULCCs than Southwest. In 2015, it had 14.4 percent of routes overlapping, but by 2022 it had spiked all the way to 35.6 percent. The maps above couldn’t look more different.

There’s a lot going on in here to explain why the overlap has increased so much. First, we have to remember that over the last couple of years, Southwest has gone into more than a dozen new airports, including some like Miami, Houston/Intercontinental, and Chicago/O’Hare that have a significant ULCC presence. So this is partially because of Southwest expanding, but Southwest also doesn’t fly into the smallest airports that the big three serve. Those small airports shield the legacies from a higher percentage of overlap since the ULCCs don’t serve those, at least not to airline hubs. Southwest doesn’t have that protection.

Let’s also not overlook the fact that Southwest has a large presence in heavy leisure markets where the ULCCs have done their best work: Florida and Las Vegas. Las Vegas is a long-time Southwest stronghold, but its overlap has gone from 45 percent of routes in 2015 to 80 percent today. In Orlando, the jump was from 22 to 86 percent and Fort Lauderdale from 33 to 71 percent. Those numbers are staggering.

At the same time, we’ve seen ULCCs move into the old abandoned midwestern hubs in spades. In 2015, Southwest flew to 13 places from Pittsburgh with no ULCC overlap. This year it’s 16 airports but 10 of them have ULCC competition.

With that backdrop, it is no surprise to see the overall ULCC overlap with Southwest jump up so much.

We know the ULCCs are growing, and they will continue to do so with all the airplanes they have on order. They started with the most obvious leisure destinations, but they have rapidly expanded. Airlines with facility constraints at their legacy hubs have succeeded at keeping them out for the most part, but even in those places, the ULCCs have continued to find a way.

We’ve already seen it in Europe where the ULCCs have connected nearly any two points you can imagine as the legacies have concentrated their efforts in their hubs. Southwest is a unique difference between Europe and the US since that type of hybrid doesn’t exist over there. But even that won’t stop the ULCCs from continuing to grow their footprints.

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23 comments on “A Look at the Growth of ULCCs in Maps

  1. You pointed out that the Big 3 serve a lot of small cities that don’t have enough demand to attract ULCCs. With that in mind, it would be interesting to see another similar set of statistics for each hub, showing the fraction of major airline *capacity* subject to ULCC competition, rather than the fraction of unique routes.

  2. Thought you might leave out WN, but they seemed to have the most exposure compared to AA/DL/UA. Would be interesting to see how AS and B6 stack up against the ULCCs as well, but a very interesting presentation nonetheless. Thanks.

  3. (Really quite exceptionally tiny) update; UA doesn’t face ULCC competition out of FAT any more, Frontier pulled FAT-DEN (again.) Frontier could never quite seem to get this route to work, even before WN.

    Allegiant flies FAT-LAS, so WN still has a little ULCC competition in the Big Raisin.

    (Much of my time as a little avgeek was spent in Fresno, I can remember flying PSA SFO-SCK-FAT and UA FAT-DEN-ORD on a DC-8 pre-deregulation (just barely, I’m only in the later stages of middle age, although my right shoulder and elbow might offer a different opinion on that.)

  4. I thought airline consolidation was supposed to eliminate competition in the industry. Being facetious …

  5. “Southwest is a unique difference between Europe and the US since that type of hybrid doesn’t exist over there.”

    Or did you just divine Southwest’s future?

    In Europe, a start-up “Southwest” doesn’t appear viable given the competitive pressures. Now, why does Southwest exist in the US? Well, because it is a legacy carrier at this point. And what do free market forces do to legacy enterprises that have no place in a changed marketplace as it exists today?

    Doesn’t look good for Southwest, long term.

    1. WN has a market niche that ULCCs have a hard time touching – they have a great many routes where they may only have one or two non-stop flights a day, but also offer multiple connection opportunities over several different cities. This combination makes them attractive to business flyers who rarely or never travel outside the US and are on a budget, and for leisure travelers who need to be at their destination on the same day and find ULCCs with their once-daily or LTD schedules too risky.

      Personal example: I need to go to Lynville, IN in late July for a wedding. The nearest airport is Evansville, IN, but it only has very infrequent service on smaller jets, and I’m not a huge fan of being reliant on connecting at ATL or CLT in the summer (thunderstorms.) And the prices were just shy of $500 r/t.

      So I looked at the next nearest airport, Louisville. SDF has three carriers offering non-stop service to Tampa – Breeze, Southwest, and Spirit. The wedding is on Saturday, but I’m flying up on Friday. Breeze offered a super-cheap flight up ($49), and it’d let me finally get to add the A220 to my list…but if something went wrong, the next flight was on Sunday. Spirit only had one flight that day, the timing was poor, and it was obscenely expensive ($600+ r/t, although I can’t help but think this was some sort of error.)

      Southwest only has one non-stop each day…but if something goes wrong they have many connecting alternatives for both Friday and Saturday morning that’d leave me time to drive the hour or so to the wedding. R/T was $198.

      So I chose Southwest. And a lot of small business travelers going to WN destinations will still find that WN works for them. They may lose some business off the low end of the fare scale, but it’s also possible that the LCCs will stimulate more traffic (call it the “Spirit Effect”, maybe?)

      1. Excellent analysis, I think you succinctly captured WN’s unique market niche. Of course they have plenty of competition from both network carriers and ULCCs but, unlike an of them, they still occupy that unique niche all by themselves.

        Regardless, I’m still trying to get over the fact that there are. THREE airlines flying nonstop from TPA to SDF! (Insert head exploding emoji here)

  6. A strategic Chapter 11 filing by American would give them a one-off opportunity to emerge as THE ULCC powerhouse. Combined with some level of amenities, they would then be the true ULCC hybrid powerhouse: ULCC fares combined with a massive existing network. They would stand alone in that space. However, the big question remains: Can AA shed its onerous debt to get their costs down low enough to be viable? Tremendous operational and fleet streamlining would also be required. With interest rates increasing, their current path is tenuous. Treading water is not a business plan.

    1. you clearly have not been through chapter 11 or intimately know anyone that has. It is a brutal process.
      AA’s debt is almost entirely aircraft related which means it is very hard to reduce. AA is not paying high leases; they just have lots of debt because they acquired far more aircraft than they could pay for as they were delivered. If they want to reduce their debt, they will lose aircraft.

      AA’s problem is COST related and that is largely due to the high number of employees AA has compared to DL and UA which generate similar amounts of revenue – and AA’s high number of employees IS adjusted for the size of its wholly owned airlines and its maintenance outsourcing.

      A big part of the reason for AA’s high labor costs is because DFW is an extraordinarily inefficient airport for a large connecting operation – spread across multiple buildings which require far more employees per enplaned passenger than other hub airports.

      But the issue here is not AA’s ability to become an ULCC but that the ULCCs are heavily targeting WN this year both because WN has very little ability to grow due to MAX7 delays and because WN’s operations are heavily in leisure destinations such as Florida and LAS.

      Airline hubs inherently provide an advantage in the amount of capacity the hub airline can use to compete against smaller competitors. In cases like PHL, AA pulled back to grow JFK and the domestic viability of the hub might fall due to the amount of ULCC growth.

      It would be helpful to see the data behind the route maps above but the number of routes from a hub doesn’t matter near as much as the change in revenue on a route that is carried by ULCCs and how fares have fallen for the dominant carrier at the hub. ULCCs have grown in part because other carriers are smaller – such as WN at ATL and FLL – while in other hubs such as MIA, they are flying new routes which no US carrier has served for years such as to Latin America and the Caribbean.

      1. Honestly, Tim. Just too much nonsense to respond to. Even for your normal anti-AA nonsense. AA’s debt problem is not aircraft-related. They have a lot of aircraft debt, but at very low interest rates. Aircraft debt that Delta and United will have to finance at higher rates than AA given the current interest rate environment or use cash and not pay off Pandemic-related debt.

        The debt problem for AA is with debt picked up during the pandemic that largely isn’t aircraft related.

        And calling DFW “Extraordinarily inefficient”… Is it Atlanta with long lines at every TSA checkpoint at the domestic airport in the name of efficiency? No. But it’s also not inefficent. Use your hyperbole more carefully. Just because your beloved Delta got kicked out of DFW by AA doesn’t make the airport “extraordinarily” inefficient. It’s highly profitable as AA has said many many times along with Charlotte.

        If AA liquidated, per your dreams, Delta would backfill AA in a heartbeat at DFW and you know that. And probably cut DTW or MSP (or both) to fund it with barely a thought to either city. Cut your nonsense.

        1. All I have to say is that I truly hope for the sake of AA employees and bond and stock holders because you, Masters and Ghost have nothing to do with developing American’s business strategies because you have all made completely inaccurate statements.
          – AAL IS paying its debt which is almost entirely backed by assets – including aircraft it acquired pre-pandemic and its loyalty program which it pledged during the pandemic. It has a relatively small amount of unsecured debt that is part of the federal aid to airlines but probably cannot be discharged in bankruptcy.
          – ULCCs are low cost because they are efficient. You can argue the reasons but American even on the mainline side has tens of thousands more employees than Delta or United to generate similar levels of revenue. DFW is a highly inefficient airport for connections and Doug Parker himself has said that DFW’s terminal design adds labor costs to AA – which anyone can clearly see why.
          – ULCCs have grown because they see market opportunities to replace capacity that has been pulled from the market – which includes PHL for whatever reason AA wants to give why it did it – and because there has been a lack of LCC/ULCC presence in markets which includes many MIA markets.
          – Bankruptcy can be used to lower labor costs via messy abrogation of labor contracts which have been proven to destroy employee morale but cannot fix structural problems including network design and how assets are used.
          Ghost does get it that bankruptcy isn’t the answer; figuring out to compete with whatever competition comes along IS the answer. If CF presented his data to show local revenue share of the big 6 airlines that use hubs/focus cities, it would show that AS and DL have done the best job of maintaining their revenue shares in their top markets including their metro areas while AA and UA are below industry average.
          ULCCs will grow but they will not grow or succeed in all markets equally nor will every other airline be impacted financially to the same degree by ULCC growth.

          1. Tim,

            Where, specifically, are my statements inaccurate? I’m guessing it’s my initial response to this statement. “AA is not paying high leases; they just have lots of debt because they acquired far more aircraft than they could pay for as they were delivered.” I’ll clarify. Normally, when people “acquire more things than they can pay for” they either sell asset(s) or file for bankruptcy. Bankruptcy is used when people or companies can’t meet their financial obligations. Stated colloquially, they can’t make the payments on the loans they’ve taken out. Isn’t that what the words “more … than they could pay for…” essentially mean? This isn’t rocket science.

            America refinanced its government-backed debt quite a while ago. And it didn’t draw most of what it had available to it. I believe the other airlines are in a similar situation.

            In response to another point you made, I must ask: When did using assets to secure financing become a crime? The classic cases are people’s houses and cars – the asset is the collateral for the loans they use to pay for it. Most lenders require collateral to finance the acquisition of an asset – and said asset is usually the collateral. Again, when did that practice become a crime?

            It wasn’t American’s idea to exclude PHL from being used as an international gateway during the pandemic. That was the federal government’s doing.

            So DFW’s design adds labor costs, but how much real-world difference does it make?

            Bankruptcy is not the way to solve labor issues. I don’t think I have to elaborate much more on that point.

            ULCCs have grown because they appeal to the casual cost-conscious traveler. If you look at the slides on American’s J.P. Morgan presentation, you’ll note that the ULCC market share has about doubled in the time frame shown (and the slide doesn’t include Allegiant). Apparently, most people don’t seem to care about fancy TV sets in seats or hot meals. They just want to get somewhere as cheaply as possible.

            1. let me just respond to a couple points because you have made some of them several times today.

              There is nothing wrong w/ buying aircraft – lots of them – because airplanes hold their value, lenders require that the airplanes that are used to secure debt are re-valued on a regular basis to ensure their collateral is still sufficient to cover the debt, and airplane manufacturers cannot continue to produce aircraft if the value of their products are not holding up because most aircraft by airlines – like homes by American homeowners – are financed. Commercial aircraft are solid collateral.

              The point is not against American or United or anyone else acquiring aircraft but the amount of the payments they have to make – even at low interest rates. Pre-covid, Delta was paying about $350 million per year in interest expense while American was 3X that amount. A difference in $600 million in one cost item is significant for two companies with similar amounts of revenue.

              Airlines have to continually renew their fleet; if you assume airplanes will last for 20 years, you need to replace about 5% of your fleet every year. If you assume a 25 year lifespan… you can do the math and the expected expenditures for airlines like AA, DL and UA. Pre-covid, AA was taking new aircraft far faster than that rate which is why they ran up their debt. UA is going to do the same thing w/ its massive fleet renewal.

              DL and other airlines deferred deliveries during covid and are adding back deliveries – but the big difference between Delta on one side and American and United is that Delta says it generated free cash even in the first (current) quarter while American and United are not expected to.
              Profitability and the ability to acquire new assets are closely linked. Airlines that are not near as profitable dig a bigger hole for themselves when they buy more aircraft can they afford – no different than your neighbor that has 2 German sports cars while you have two GM sedans – assuming you both make the same salary and have otherwise similar lifestyles.

              I am not condemning AA’s fleet renewal. I have said they dug a financial hole that they have to get out of and they have to become much more profitable to get out of that hole.

              I agree about PHL under covid rules but AA is still pitting two hubs less than 100 miles apart against each other.

              As for the inefficiency of DFW as a hub, given that the terminals are not physically connected, all of that luggage has to be manually taken between each the terminals from which AA operates – which is all of them. There are dozens of AA ticket counters etc. Parker said it was an issue and it could be part of AA’s inefficiency relative to DL and UA – but clearly is not everything.

              I have enjoyed the chat w/ you, as always.

            2. Tim,

              Without beating this already dead horse to its second death, American was forced to make a massive aircraft order because its former management waited far too long to replace its large fleet of MD-80s. But many want to blame the current management for that. To your credit, you aren’t one of those people. But this management has to live with the consequences of those choices.

              My rhetorical question still remains, how much real-world cost does DFW’s design add? It certainly adds some, but American is stuck with it. Yet in spite of its inefficiencies, DFW is one of American’s most profitable hubs. Airports don’t necessarily benefit from getting bigger. They just get more cumbersome for the public.

              As for PHL, the hotly debated airport, I think it will continue to be an important hub in American’s system. American’s stand-alone size is limited at JFK and LGA. Philadelphia isn’t as restricted. I once read a post by Commavia, who used to comment frequently on airliners.net, that summed up the situation quite well, in my opinion. JFK’s focus will be primarily on O&D, and prime business markets, while PHL will primarily be driven by connecting flows. JFK will be focused and deep, PHL will be broad and thin. Even with the NEA, connectivity at JFK is limited by its terminal layout. I see JFK focusing on oneworld and codeshare partner’s hubs and major destinations in Europe, the Middle East, India (?), and East Asia (Haneda, Hong Kong, Guanzhou, etc.), etc., and Africa via Royal Air Moroc and Qatar. PHL, on the other hand, will serve more destinations and secondary markets with one flight per day (or fewer) where the hub’s ability to drive connecting flows can be leveraged (much as with DFW and CLT). Delta and United don’t need that split hub model in New York, although Delta has a similar situation at LGA and JFK. New York is a special case because of its massive O&D. The pandemic and aircraft retirements have interrupted much of this, but I think there’s a sweet spot in the northeast for all of the carriers including ULCCs and Southwest. That’s my prediction.

              To paying down debt, cash flow is more important than profits (which include a lot of non-cash items) when it comes to delevering the balance sheet. American’s J.P Morgan presentation painted a rather different cash flow picture than your last comment presented, and American’s cash position looks strong at this point. Analysts’ predictions are only snapshots of a particular time, as are financial statements. The business world is dynamic, not static. Data are limited in their ability to recognize that.

              Why is all of this germane to ULCCs? After all, the original post was about ULCCs. Because ULCCs are growing far more quickly than their entranced counterparts. As my first rather cryptic comment observed, I thought consolidation was supposed to remove competition from the airline industry. Obviously, it hasn’t.

        2. Thank you. I have neither the energy nor inclination to argue with Mr. Dunn. Mr. Snyder and the other readers have made it clear that they don’t want mud wrestling here. When he makes a salient point, I praise Mr. Dunn. When he doesn’t, I simply ignore him. To his credit, he too has altered his communication style. He went sideways today and you and Desert Ghost gave him a reality check that didn’t bounce.

          Back to AA. I am very worried about them. I fear the NEA and the west coast relationship with Alaska will not be enough to mitigate their problems. Yes, it’s good that AA is getting revenue from these relationships and it’s good that neither of the other Big 3 are gaining AA assets. However, I fear that these measures are insufficient to address AA’s broader problems. But I genuinely hope that they can get back on their best trajectory. Their problems are financial and cultural, a potent combination. They need a strong front man to draw their diverse employees under one tent. But that person must also be financially savvy. It’s hard to find BOTH of those in one person.

          1. @Miss,

            I’ll give Tim credit when credit is due. And he often does make salient points. But to your point, I’m really not worried about American. Based on its recent J.P. Morgan investor presentation, the company seems to have plenty of cash on hand to pay off its near-term debt maturities. It’s gotten its capital spending more in line with where it should be on a steady-state basis. And it apparently has the cash flow needed to pay down its debt going forward. Otherwise, it wouldn’t have been able to secure financing for its ongoing deliveries.

            There have been a number of transportation companies throughout history that ended up being liquidated, bought out at fire-sale prices, or radically reduced in size because they didn’t invest enough in their infrastructure. American had to place its massive aircraft order because it waited too long to order replacements. This management team isn’t making that mistake.

            Regarding labor, what we usually see and hear tends to come from a few people who have an ax to grind. It took American quite a while to finally integrate its maintenance workforce under one contract, but it did. As the J.P Morgan presentation pointed out (I believe it was Derek Kerr who mentioned it), contract negotiations that involve merging cultures and work rules are far more complex than the norm. I really think most of American’s labor and culture issues will be resolved by retirements.

            The bottom line is that there’s no need for American to declare bankruptcy. As Tim correctly pointed out, most of its financial issues aren’t the kind that lend themselves to resolution via bankruptcy. Pre-pandemic, the airline was profitable, even if it was less so than its competitors. There’s no reason to think it won’t be profitable going forward.

            As Tim also correctly pointed out (I have to quit being so nice, LOL), American has more employees than its peers because it owns three regional airlines, and does much of its aircraft maintenance in-house. Those details make a difference. American, like Delta, used the downturn to streamline its fleet. United is following suit with its massive new aircraft order and the subsequent shrinking of its 50-seat regional fleet. All of those things will help profitability in the future. Let’s see what happens in the next three to five years before we push the panic button.

            1. you indeed are too kind- and you are mostly right.

              The AA vs. DL and UA comparison IS for mainline only and there are multiple data sources that dice the data even further. I would suggest you and others that want to understand relative labor efficiency in the airline industry should look up the MIT Airline Data Project and compare labor efficiency by workgroup including revenue generation per employee. The same data can be calculated from SEC-filed annual reports. Delta simply is a more efficient airline including by revenue generation per employee while American is at the opposite end.

              It is remarkable that an article about ULCCs devolved into a discourse on AA’s future with one person even considering the liquidation of AA and another stating that they are “really worried” about AA. The immediate fear IS misplaced but the fact that AA has not been able to extract itself from the position as the financial bottom of the industry 10 years after its emergence from bankruptcy is and should be very concerning. And that isn’t expected to change this quarter.

              There is a poll on the AA subsite of another airline-related site which has been running for over a year; 70% of the poll respondents (of which I am NOT one) believe AA will file for bankruptcy again. From the responses here, and whether accurate or not, there is significant uncertainty about the future of AA among at least some people.

              Perhaps the biggest impact of the ULCC is in the psyche of some airline employees and fans who are not certain if their “preferred” airline has what it takes to face the growth of ULCCs even after surviving covid, although heavily due to government aid.

      2. Tim,

        You wrote: “AA is not paying high leases; they just have lots of debt because they acquired far more aircraft than they could pay for as they were delivered.”

        If that was the case, American would have already filed for Chapter 11. American ordered most of the aircraft you criticize in November of 2011. Those orders (A321neos, and 737-8maxs) are still being delivered 11 years later. But contrary to your apparent wishes, the airline is apparently making its payments. It wouldn’t have been unable to secure the debt financing it has taken on during the pandemic if lenders thought it would default. American recently ordered an additional 30 737-8maxs. And according to the airline’s annual report, it has secured financing for most of its 2022 deliveries. That wouldn’t be possible if American was acquiring “far more aircraft than they (sic) could pay for.”

        I agree with your view that American shouldn’t become a ULCC, although some critics claim it already is. I saw someone criticize Delta’s uncomfortable seats on Gary Leff’s blog, so I guess American’s onboard offering isn’t quite as inferior to Delta’s (the “perfect airline”) as you allege.

        The main advantage of hubs is the vast number of routing possibilities they can easily and conveniently open up. Part of the reason Philadelphia was pulled back was that it wasn’t a designated international gateway during the pandemic. Philadelphia will come back in my opinion because it and Newark offer travelers something Delta can’t in duplicate the New York area – a true connecting hub. That’s not as critical as in many other cities because O&D is such a huge factor there. A major disadvantage and risk of ULCC travel is when flights are canceled. The next available flight may not operate for a couple of days. But many budget-conscious travelers are willing to take that risk to avoid connecting or to allegedly save money. One beauty of the free market is choice.

        The ULCCs are the fastest-growing segment of the airline industry. Who knows, maybe Indigo Partners will acquire Delta someday. Wouldn’t that be a hoot?

        1. I enjoyed the leading article and following comments. But one thing no one has talked about is the bite the airlines are feeling from the price of fuel. Jet went over $4.06/gallon Thursday and folks like AA with a lot of debt are going to be struggling with their cash through the summer. Yes, bookings are strong and airlines are touting their revenues now, but fuel is going to suck that extra cash and then some. Fuel costs will hurt all airlines, but the legacies don’t have the efficiencies of the ULCC.

    2. Trying to be a ULCC is never going to work when they still fly long-haul international routes and are in alliances and joint ventures with other airlines. A Chapter 11 filing would reduce labor costs somewhat (as long as they pay their pilots enough to stay) but that’s about it.

  7. Great post Cranky, but what this type of analysis misses is new ULCC capacity that overflies Big 3 hubs, especially ATL and CLT. I’m not as surprised DL is seeing a lot more direct ULCC competition given the fares they charge out of their hubs, but it’s a double whammy when you look at all the new ULCC capacity to Florida overflying Atlanta.

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