Aviation consultant busts myths on airline strategies

Michael Boyd says common wisdom on airlines is wrong


"Today, the traditional LCC model cannot handle where this growth is," Mr. Boyd said. "They cannot get into Shreveport. The Southwest fleet just doesn't make it. But can American Airlines? Yeah, with eight flights a day or whatever, and all of them full."

That touches on another of Mr. Boyd's peeves, the notion that hub-and-spoke carriers will lose out to low-cost, point-to-point carriers because hubs are inefficient.

Hubs allow airlines to collect much more revenue from flights because they can connect so many passengers from cities that otherwise wouldn't have airline service, he said.

"You make money when you fly airplanes with people sitting in them. The hub-and-spoke system allows that to be done," he said. "Another myth is that the low-cost carriers are all point-to-point. AirTran Airways isn't. Frontier isn't. They run some point-to-point stuff. Even Southwest is 30 percent connecting [passengers], without which they'd be bust."

Another myth is that network carriers are leaving routes when low-cost carriers enter them, Mr. Boyd said.

"In fact, there's not one major route in the United States where a major carrier has pulled out because a low-cost carrier has forced them out. Moline-to-Cincinnati is not a major market," he said.

"These comprehensive network carriers are not running from LCCs. They're very concerned about them, but they're not running."

Although major U.S. network carriers are expanding their international routes, that doesn't mean they're abandoning their domestic routes, Mr. Boyd said.

"Carriers like Delta and Continental are expanding international [routes] wildly, but it's to feed their domestic markets and make them stronger," he said.

Noting Northwest Airlines Inc.'s Detroit hub, he added: "All those passengers going from China to Detroit, do you think they want to go to Detroit? They're going elsewhere."

When it comes to ultra-small markets, Allegiant Air LLC is a contradiction. The Nevada-based carrier has found its niche flying from small cities such as Laredo, Texas, to leisure markets such as Las Vegas and Florida. Allegiant exclusively flies used McDonnell Douglas MD-80s on routes that no other carrier is serving.

"To be blunt, we can't find a hole in that strategy," Mr. Boyd said.

"I'd have to call it a bulletproof strategy."

Citing Allegiant's success in flying to small markets, he added: "There isn't another carrier in the world that wants to fight for that traffic. So it's a home run."

TAKING DIVERGING ROUTES

MATURE

Southwest Airlines

Headquarters: Dallas

Began flying: 1971

Strategy: Basic service, with most passengers flying nonstop rather than connecting

Growth: Now the nation's fourth-largest carrier in capacity but the largest in the world in the number of passengers carried. Traffic was up 8.6 percent in September from the same month a year ago.

UPSCALE

JetBlue Airways

Headquarters: Forest Hills, N.Y.

Began flying: 2000

Strategy: High-quality service, including onboard television, to major markets from New York's JFK Airport

Growth: It has become the nation's eighth-largest carrier in seven years.

UPWARDLY MOBILE

Frontier Airlines

Headquarters: Denver

Began flying: 1994

Strategy: Larger airplanes are replacing some smaller regional jets and include niceties such as onboard television. Its route system is centered on Denver, but it has added Mexican destinations from several airports, including D/FW.

Growth: Traffic grew 26 percent in September compared with a year earlier, despite new competition from Southwest.

EMERGING

Allegiant Air LLC

Headquarters: Las Vegas

Began flying: 1997

Strategy: Focused on Las Vegas and small markets that other carriers don't serve, such as Laredo-Las Vegas; Roanoke, Va.-Daytona Beach, Fla.; and Wichita, Kan.-Sanford, Fla.

Growth: September capacity was up 41 percent over a year earlier.

SOURCES: The airlines; Dallas Morning News research

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