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By Judson Rollins
November 14, 2023, © Leeham News: Much ink has been spilled over the bad – and increasingly worse – year for America’s low-cost carriers or LCCs. Frontier, JetBlue, Southwest, and Spirit have all reported disappointing results, with increasingly negative outlooks for the rest of this year and well into 2024.
Source: DigitalAirliners.com.
The future of the LCC model is increasingly murky, having historically depended on consistent double-digit capacity growth to spread fixed costs. Such rapid growth is imperiled in the short term by reluctant lower-income consumers, in the intermediate term by shortages of airplanes, parts, and skilled staff, and in the long term by a growing worldwide pilot shortage.
Boeing’s 737 MAX has its share of LCC exposure; LNA analysis puts it at 37% of unfilled orders. But Airbus’s A220 and A320 programs are even more intensely exposed, with 48% of combined orders coming from LCCs.
Will Airbus’s focus on selling to LCCs eventually return to haunt the OEM? We take a closer look.
Summary
- US LCCs are hampered by excess capacity; is a shakeout coming?
- Europe is brighter for now but faces near- and long-term constraints.
- Airbus has more to lose than Boeing in a global LCC retreat.
