Major domestic carriers in the past week reported falling traffic, flagging load factors and a harsh revenue environment for the first month of the year. While some of the largest U.S. carriers saw systemwide traffic fall by double-digit percentages, capacity cuts are helping to mitigate the magnitude of load factor deterioration.
American Airlines, Continental Airlines and United Airlines saw the biggest hits in systemwide traffic in January—all reporting declines in excess of 10 percent. Delta Air Lines, meanwhile, reported the smallest traffic decline, with only 2.2 percent fewer revenue passenger miles last month compared with January 2008.
Aviation consultancy Boyd Group International this week released an outlook for 2009, which notes that even in its best-case scenario, "there will be fewer passengers in the skies this year." Boyd research expects the United States this year to see a drop of more than 40 million air passengers.
"That's the baseline forecast," Boyd noted on its Web site. "The low forecast is much uglier. Even the best case high forecast scenario represents a material drop in business."
Still, the Boyd Group expects "the overall decline in scheduled seats will exceed the decline in demand," with capacity expected to be down 10 percent this year compared with 2008, "while baseline decline in demand is expected in the 6.6 percent to 8 percent range. The result is that at least from an industrywide load factor perspective, 2009 should be stable."
Even those airlines witnessing double-digit percentage declines in traffic, reported somewhat modest declines in load factor for January. American's systemwide traffic fell by nearly 12 percent in January—representing a domestic traffic decrease of nearly 14 percent and international traffic decrease of 8 percent, year over year. Given the carrier's systemwide capacity cut of more than 8 percent last year, its load factor fell 2.8 percentage points to 73.8 percent.
United Airlines reported systemwide traffic declined nearly 11 percent, though its 10.5 percent decrease in capacity helped to keep load factor decline to a modest 0.4 percentage points. The carrier reported a 76 percent systemwide load factor.
Continental Airlines said consolidated traffic decreased 11 percent in January, compared with the same month last year. Continental reported a 73.2 percent consolidated load factor, 3.6 percentage points behind where it was in January 2008, when the carrier had 6.5 percent more capacity.
Delta subsidiary Northwest Airlines reported figures separately from its parent, and reported systemwide traffic decreased 8.2 percent from January last year on 6.4 percent less capacity, with its load factor decreasing by 1.5 percentage points to 77.8 percent.
Delta's systemwide traffic last month fell only 2.2 percent, compared with last January, with a capacity decrease of 1.9 percent across its domestic and international networks. Delta's overall load factor remained relatively flat at 75.1 percent, thanks to an international traffic increase of nearly 7 percent, which helped offset the nearly 7 percent decrease in domestic traffic.
US Airways saw its traffic fall in January by 6.2 percent. However, its nearly 7 percent decline in capacity allowed the carrier to post a load factor increase, which inched up by one-half of a percentage point to 75.8 percent, "a record for the month of January," the carrier said.
Southwest Airlines and JetBlue Airways in recent months implemented their first broad capacity cuts in their histories
(BTNonline, Feb. 2), which helped to minimize the impact on load factors for the month of January. Though Southwest reported nearly 10 percent fewer passengers last month, a 4.4 percent reduction in available seat miles helped mitigate the impact on load factors, which were down by only 1.4 percentage points to about 63 percent.
JetBlue reported January traffic decreased 7.1 percent from January 2008, with more than 5 percent of its capacity cut in that period. The carrier's load factor fell 1.6 percentage points.