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North American LCCs and ULCCs: time to think outside the box

LCCs operating in North America are the most mature in the world and some of the veterans, including Southwest and WestJet, are facing challenges as they work to keep costs competitive and expand revenue. Those companies are tackling headwinds in different ways.

Southwest is adopting its historically more conservative approach, whereas WestJet has arguably ripped up the LCC playbook during the past six years – launching a regional and ULCC subsidiary and taking the low cost model across the Atlantic.

The hybrid LCCs Alaska and JetBlue are also evolving, embracing the product segmentation their larger FSC peers have adopted in order to bolster their revenues and remain competitive in the marketplace. Each of those companies is also working to maximise value from its respective premium offerings while also attempting to contain costs.

The largest North American ULCCs – Spirit and Frontier – have built up a combined 6.4% US domestic market share. Spirit is enjoying a revenue and margin upswing while, for now, maintaining an impressive cost performance.

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