Cunning:
Surely in that alleged 'quote' he's referring to the LCC, not the mainline? Show me an example of a successful 'core-based' LCC and I'll be very surprised. The only way they can keep overheads down with Skimpy (just as DJ do) is to 'virtualise' their airline, and make maximum use of third party providers.
Wirraway's hit the nail on the head. That said, Kap, they will have to be very, very careful with the likes of management structure etc to ensure that management overheads are kept to a bare minimum. Like that scene in "Apollo 13" in the simulator where they're turning off all non-essential electrical loads to get the total battery load down to 5A or whatever it was, the formation of a LCC is much the same. Say their business plan says that 'in order to compete with DJ, we need a unit cost of $4.99/unit, rather than DJ's unit cost of $5/unit' (imaginary numbers), they basically have to trim down all non-essential facets of their business until they achieve $4.99/unit. If they get to $5 or more, then it's simply a waste of time for all concerned (assuming they want to make a profit, otherwise $5 and no more would be just fine).
ED