US Airways reports September traffic results

[Justme]

Oct 5 (Reuters) - US Airways Group Inc: * Reports September traffic results *

September passenger load factor 79.3 percent, down 0.8 points

September capacity 5.8 billion available seat miles (asms), down 0.6 percent

September passenger revenue per available seat mile (prasm) decreased approximately 15 percent

September total revenue per available seat mile decreased approximately 14 percent

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[BoeingBoy]

Not too bad compared to the other carriers that have reported so far - CO and FL.

Mainline traffic (RPM's) down 3.4% vs CO up 6.7% and FL up 11%

Mainline load factor up 0.1% points vs 4.8% points for CO and up 2.6% points for FL

PRASM is harder to compare since US' reported "consolidated" figure only includes mainline, PSA, and PDT while CO includes their entire express operation - the results aren't directly comparable. Just taking the announced "consolidated" figures US was down 15% while CO was down 17.2%. CO mainline PRASM was down 17.9 % but US didn't report mainline only PRASM.

Jim

 

[BoeingBoy]

AS reported today also - mainline traffic up 1.4%, mainline load factor up 2.1% points.

Jim

ADDED:

UA reported late today - mainline traffic down 3.8%, load factor up 2.4% points.

 

[freedom]

hmmmmm

 

[Art at ISP]

Load factor means next to nothing if the yields are not there. You can make a profit with a flight 70% full and lose money with one 100% full....

The problem is that fares remain artificially low, based on cost of product, and until that is fixed, long term profits for any airline will remain nearly impossible.

You can't stay in business selling a product that costs you $140 or more for $59-$69, period.

And don't let the numbers fool you--people are getting turned off by fees, big time.

It's time to stop the insanity and make fares realistic--not to sound elitist but if Ma and Pa Kettle can't afford to pay $400 for a trip, they should drive.......but that's yet another issue related to this sick economy....

My BEST to you all....

 

[Itestwell]

It's time to stop the insanity and make fares realistic--not to sound elitist but if Ma and Pa Kettle can't afford to pay $400 for a trip, they should drive.......but that's yet another issue related to this sick economy....

My BEST to you all....

How do you increase fares when there is too much capacity in the market? Obviously, improving the onboard product does not work, or we would see Continental wildly profitable. What is the answer?

 

[OTslave]

How do you increase fares when there is too much capacity in the market? Obviously, improving the onboard product does not work, or we would see Continental wildly profitable. What is the answer?

In a competitive marketplace you need to decide what kind of carrier you're going to be tell your customers you value their business and mean it, manage in-house fighting so it doesn't spill over into your business and change perceptions here's an example:
http://c3dsp.westjet.com/guest/spare2.jsp?language=en

 

[freedom]

How do you increase fares when there is too much capacity in the market? Obviously, improving the onboard product does not work, or we would see Continental wildly profitable. What is the answer?

The answer is to die the slowest and hope our competitors kick the can before we do.

 

[Itestwell]

In a competitive marketplace you need to decide what kind of carrier you're going to be tell your customers you value their business and mean it, manage in-house fighting so it doesn't spill over into your business and change perceptions here's an example:
http://c3dsp.westjet.com/guest/spare2.jsp?language=en

... which is exactly what CO and DL and AA do. They know what kind of carrier they want to be. They value their customers business. They have no in house fighting (except AA), and are perceived as full service carriers.

That, clearly, does not make them wholly profitable in these economic times. People like Art have said repeatedly that you CANNOT shrink to profitability, and I am simply asking what can be done to get these carriers to charge fares that cover the cost of transportation, other than capacity reductions across the board (which would be considered "shrinking to profitability").

The WestJet link is cute, but unfortunately, all legacy carriers are fee happy here in the good ol' US of A. In fact, I believe CO just raised some baggage fees recently (or removed the online discount), and removed free pillows and blankets on domestic flights as of October 1st. Doesn't CO have the highest customer satisfaction rating on these boards, let alone by many other well known measures?

 

[Art at ISP]

Itestwell,

You ask a valid question, and if I had the answer, I'd be CEO of an airline now wouldn't I?

The problem with shrinking to profitability is that your unit costs go up for the most part. I am not saying that capacity shouldn't be adjusted, but it should be done as a secondary measure, not primary.

What really has to change is the pricing model across the board. There is just no place for $99 transcon fares any more. That's my point. These fares used to be subsidized by those paying $1500 and up for coach, and those people just are not there any more. So if the bottom price was adjusted to let's say $299, for argument's sake, the airline becomes less dependent on the $1500 last minute fare.

The answer lies somewhere in the middle--the question is where? Yes you'd have fewer people flying, but the average fare paid by each one still flying would be higher. If I am not mistaken, WN has the highest percentage of customers flying on unrestricted fares, because they are reasonable and add value to the proposition. If I have a choice of paying $580 r/t on US or another legacy airline, with the assumption of an average to poor product in coach, but with all the restrictions and add on fees, or paying the same on WN with it's known product, and no fees or add ons, PLUS fully changeable and unrestricted, what do you think I am going to choose?

I was once told by an airline executive that if he was able to raise the bottom fares in each market by $20, he could lower the top end fare by $300. It's a little simplistic, but I believe such a theory is valid to a degree.

The business demand will come back, although not to the level it was before, and the key is going to be how to offer the most value for a REASONABLE (not lowest) fare. If a DL or UA or US decided to offer unrestricted fares in the mid range of the bucket, they'd probably see an increase in AVERAGE fare per seat.

In order for this to work, ALL the airlines have to independently decide that they can't go on like this and adjust all fares to better reflect their actual costs (not like that would ever happen).

So the answer is complex, but I do believe that done right it can work. The devil, however, is in the details.

 

[BoeingBoy]

People like Art have said repeatedly that you CANNOT shrink to profitability, and I am simply asking what can be done to get these carriers to charge fares that cover the cost of transportation, other than capacity reductions across the board (which would be considered "shrinking to profitability").

Actually, "shrinking to profitability" is generally used when a specific carrier attempts to keep reducing capacity in search of profits and it is nearly impossible - it's what PanAm did, it's what TWA did, it's what US tried to do during the course of it's two bankruptcies. We know what happened to PanAM. What was left of TWA was bought by AA before it could go out of business. The US/HP merger saved US from extinction.

Adjusting capacity to market conditions is an essential tool for the industry. If no carriers had reduced capacity after 911, some of the carriers would have almost certainly disappeared. But as traffic improved the capacity was added back. The same goes for the environment the airlines have found themselves in for about the last year. When conditions improve, capacity will be added back into the air transportation system.

Jim

 

[john john]

When conditions improve, capacity will be added back into the air transportation system.

Jim

The way management does this M.O. grown the airline with virtual airlines
No language for increase flying going to maineline. Growing the airline will go to express and contractors . The same as it is NOW

 

[Richard]

Stay on the topic -- do NOT hijack this thread to discuss pilot labor issues or it will be closed as well...

 

[BoeingBoy]

Most carriers have reported Sept traffic and the low cost carriers saw increases (F9 hasn't reported yet). CO and AS also saw increases but the rest of the legacies saw decreases.

Jim

 

[Black Magic]

Just like WN ceo Gary Kelly said "adding fees do not attract customers." I feel people are wising up to the baggage fee nonsense and are choosing southwest or jetblue when possible. I know in phx US has alot of the same nonstop routes that WN does, it makes no sense to fly on US as the price is the same but you get 2 free checked bags on WN.