This article in ATW caught my eye...
Austrian Airlines will begin
replacing regional jets and small turboprops with larger aircraft on its European routes from Sunday in order to bolster its competitiveness with higher volume and more attractive fares.
The move, expected to generate an additional 1 million passengers over the next 12 months, is a key part of the "rebirth of Austrian Airlines," CCO Andreas Bierwirth said Friday in Vienna, and an important step in its restructuring since its acquisition by Lufthansa last year. "OS is waking up from its beauty sleep. For too long, it was built on a standard from the '90s," he said.
Austrian lost €324.9 million last year
(ATWOnline, March 16), and a change in culture is required, Bierwirth admitted. "One big mistake in the last three years has been focusing too much on business travelers during a time when LCCs started to increase their presence at our hub," he said, which cost OS market share. The growth at Vienna bypassed the flag carrier.
"LCCs began to cannibalize the network carriers, and we have become a niche player."
OS now is charged with offering a network product with lower fares, which are as low as €59 one way. Frequencies on many routes will increase and many night stops outside Austria will be eliminated. The last of the 10 CRJ200s operated by its Tyrolean Airways subsidiary will leave the fleet in mid-April and will be dismantled and sold for parts.
"On 50 routes we will save 25% in seat-mile costs by using bigger aircraft," Bierwirth said. COO Peter Malanik said adjustments for the 2010-11 winter schedule will feature a larger number of connections between Eastern and Western Europe.
So the moral of this story is smaller doesn't neccesarily mean better or more profitable.