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Budget Airlines in the US - September 2015

“The low-cost airlines – Southwest, JetBlue, Virgin America, Spirit, Allegiant, and Frontier – are growing much faster than the mature network airlines which merged when they emerged from bankruptcy. They grow faster because of their low costs, specifically low labor costs, which in turn allow for lower fares. The faster they grow, the larger the percentage of new aircraft under warranty (which translates into lower maintenance costs) and of employees who have less seniority (are lower paid); the low-cost airlines do not have the ‘baggage’ or legacy costs of pension and health care costs that the much older and mature network airlines are burdened with.”
Vaughn Cordle, founding partner and chief analyst, Ionosphere Capital, LCC
This report looks at the following areas:
• What drives demand for budget flights in the US?
• What is the size of the budget airline industry in the US?
• Is there any diversity within the budget airline industry in the US?
• Which airlines are the main budget carriers in the US and what are their market positions?
• How did the protracted recession in the US (December 2007-June 2009) affect the budget airline industry?
• How have budget airlines in the US performed post recession?
• What are the issues facing budget airlines in the US?
• What might the future of low-cost air travel in the US look like?

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Table of contents

  1. Introduction

      • Definitions
      • Data Sources

        • Overview

          • Market drivers
            • Population growth
              • Figure 1: Population of the US, 2003-19
            • A growing tourism industry
              • Figure 2: Size of the US tourism market, 2007-18
            • Economic trends
              • Figure 3: GDP of the US, 2003-19
            • Market trends
            • Overview of the Airline Industry in the US

              • Market size
                • Figure 4: Passengers transported by US carriers, 2009-15
              • Market share
                • Figure 5: Available seat miles on US carriers, 2009-15
                • Figure 6: Available seat miles on US domestic routes by airline, 2009-15
                • Figure 7: Revenue passenger miles, US carriers, 2009-15
                • Figure 8: Revenue passenger miles on US domestic routes by airline, 2009-15
              • Types of carrier
                • Budget airlines
                  • Network airlines
                    • A blurred distinction
                      • Hybrid budget airlines and ULCCs
                      • The Leading Budget Airlines in the US

                          • Low-cost carriers
                            • Southwest Airlines
                              • Ancillary revenue
                                • Differentiation
                                  • Operational statistics
                                    • Figure 9: Southwest Airlines’ operational statistics, 2010-14
                                    • Figure 10: Southwest Airlines’ operating statistics, first half of 2015
                                  • Fleet
                                    • Figure 11: Southwest Airlines’ fleet, 2015
                                  • Southwest Airlines going forward
                                    • Ultra-low-cost carriers
                                      • Allegiant Air
                                        • Operational statistics
                                          • Figure 12: Allegiant Air’s operational statistics, 2010-14
                                          • Figure 13: Allegiant Air’s operating statistics, first half of 2015
                                        • Fleet
                                          • Figure 14: Allegiant Air’s fleet, 2015-16
                                        • Allegiant Air going forward
                                          • Frontier
                                            • Operational statistics
                                              • Figure 15: Frontier Airlines’ operational statistics, 2010-14
                                            • Frontier going forward
                                              • Spirit Airlines
                                                • Operational statistics
                                                  • Figure 16: Spirit Airlines’ operational statistics, 2010-14
                                                  • Figure 17: Spirit Airlines’ operational statistics, first half 2014 & 2015
                                                • Fleet
                                                  • Figure 18: Spirit Airlines’ fleet, by aircraft type, 2014-21
                                                • Spirit Airlines going forward
                                                  • Hybrids
                                                    • Alaska Airlines
                                                      • Operational statistics
                                                        • Figure 19: Alaska Air Group’s operational statistics, 2010-14
                                                        • Figure 20: Alaska Airlines’ operational statistics, first half of 2014 & 2015
                                                      • Fleet
                                                        • Figure 21: Alaska Air Group’s fleet, 2014-17
                                                      • Alaska Airlines going forward
                                                        • JetBlue Airways
                                                          • Figure 22: JetBlue Airways’ focus cities, Q4/2014
                                                        • Operational statistics
                                                          • Figure 23: JetBlue’s operational statistics, 2010-14
                                                          • Figure 24: JetBlue’s operational statistics, first half of 2014 & 2015
                                                        • Fleet
                                                          • JetBlue going forward
                                                            • Virgin America
                                                              • Operational statistics
                                                                • Figure 25: Virgin America’s operational statistics, 2010-14
                                                                • Figure 26: Virgin America’s operational statistics, first half of 2014 & 2015
                                                              • Fleet
                                                                • Virgin America going forward
                                                                • Issues in the Market

                                                                    • Oil prices and aviation fuel costs
                                                                      • Figure 27: Jet fuel refiner price to end user, 2002-16
                                                                    • Fare increases
                                                                      • Figure 28: Airline ticket price index, 2002-16
                                                                    • Fuel efficiency
                                                                      • Figure 29: Fuel efficiency scores for US domestic airlines, 2010-13
                                                                    • Increasing ancillary revenue
                                                                      • Competition
                                                                        • Reliability
                                                                          • Figure 30: On-time performance of budget airlines in the US, Q2 of 2015
                                                                          • Figure 31: Complaints about budget airlines in the US, June 2015
                                                                        • Supply and demand
                                                                          • Airline bankruptcy and the collapse of a number of LCCs
                                                                            • Consolidation among legacy carriers
                                                                            • Industry News

                                                                              • What Next?

                                                                                • Market growth
                                                                                  • Network expansion
                                                                                    • An increasingly competitive marketplace
                                                                                      • Ancillary revenue
                                                                                        • Operating costs
                                                                                          • Lower fuel costs
                                                                                            • Figure 32: Budget airlines’ operating margins, first half of 2015
                                                                                          • Other operating costs
                                                                                            • Future challenges for budget airlines in the US
                                                                                              • External factors
                                                                                                • Consolidations
                                                                                                  • Customer expectations

                                                                                                  Companies Covered

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                                                                                                  Budget Airlines in the US - September 2015

                                                                                                  £295.00 (Excl.Tax)