Phx,
I argued that the average fare paid on Southwest was significantly lower than Continental. You disagreed. I proved it.... you moved the goalposts.
I made the point, it was a crude measure and for a true comparison, you had to also compare revenue per passenger mile. This irons out the differences between puddle jumpers and long haul. I think you will find even on this measure LCC's are much lower than legacies. It is harder to find because airlines don't always publish RPM's in a comparible manner, but I will do a bit of research on the Continental vs Southwest figures.
The gap may have narrowed a bit, but there remain very significant differences. The legacies have structural costs associated with the hub and spoke model which cannot be driven out without fundamental changes to the model. For example, because they depend on large numbers of passengers who are connecting, if a segment is uneconomic, it is difficult to drop it, because the hub is a monster which has to be fed with high numbers of connecting passengers. Most LCC's operate point to point, so are able to drop or consolidate flights much more quickly.
It is a battle which will go on... the legacies have had to cut costs viciously to try to compete, but there are limits to their power to cut without causing damage to their basic economic model.
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