Originally Posted by
diver858
The airline industry has changed significantly since 2008, when WN was able to use their fuel hedge lottery winnings to chase off big 3 competition, who were all headed to chapter 11.
WN now has labor costs comparable to the big 3, fuel costs for the entire industry are near all time lows. More importantly, much of the new AS intra-California service is on OO E175's, which have a MUCH lower cost structure than WN 737's, allowing AS to stand toe-to-toe in any fare war. This may explain why WN is doing things like giving away a companion pass to any new California credit card applicants, getting more aggressive, creative with its promotional efforts (recent Hawaii "announcement").
Airlines have made boat loads of money in the last few years and are in a much better financial position to compete. WN also does not have a network that is 100% focused on the West Coast. They can offer low fares in California and higher fares elsewhere and still do fine.
Airlines that are flying mainline planes also have a far greater capacity to sell lower priced fares. AS can’t fill up their small planes with people paying $49 or they will lose a ton of money. WN can sell more seats at a lower price and thus put pricing pressure on AS. This is what the AS management team just “discovered.”
AS can fill their planes but they are getting junk fares on transcons and Intra-California flights. Their position is a very weak and getting weaker every week as more competitors take advantage of their superior positions.