Originally Posted by
Dropoffcharge
Two camps on this subject, IF a LCC at SOU were to come in and take on RYN at BOH then the seat price war would commence, think I know who my money would be on to win that battle.
No seat price war would be necessary. As has been pointed out time and time again by those with any sense, SOU and BOH are completely different and target a different audience. Both can and will continue to co-exist, even if a LCC appears at SOU. FR will never be the right fit at SOU with their 737s, so they will almost certainly remain the lowest ticket even if EZY opened a base at SOU. The problem the posters on this thread have always had is that they ignore one very important word in business, which is yield. It is arguably the most important column in that table, even more than the profit one. Whilst the table shows that the comparable routes are more profitable at BOH, it also shows that the yield is more than double for each route at SOU. In simple terms this means that SOU has a market where enough people are willing to pay more than double the ticket prices that BOH offer, to the extent that each route nearly has an 80% load factor. There are not many businesses that charge more than double their local competitor and manage to still make a healthy profit. I would argue that if EZY or someone else did come along at SOU, they would not even need to engage in a price war with BOH, they could still charge double and make a profit, as BE have proved. They could even charge just 50% more than BOH, and perhaps increase that circa 80% load factor even more, taking some of BOHs passengers in the process. As I have already said though, I fully expect FR to soldier on at BOH even if a LCC carrier appeared on the scene at SOU. BOH is not centered around pax flights like SOU is, so it should not fear SOUs growth in that area.