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In a weakening travel demand environment, U.S. carrier operations data for September--a traditionally heavier business travel period than summer months--showed some steep year-over-year drops in passenger traffic (measured in revenue passenger miles), total passenger counts and capacity. At the same time, most U.S. carriers now are starting to show the sizable capacity reductions they had announced earlier in the year (see table below).
September domestic U.S. traffic in particular suffered nearly across the board. Double-digit percentage drops occurred at Continental Airlines (-16.2 percent), Northwest Airlines (-14.1 percent) and American Airlines (-11.7 percent). United's was down by more than 9 percent and Delta's by 8 percent. Even those carriers that had been growing more quickly and consistently this decade posted September declines, including AirTran Airways (-2 percent), JetBlue Airways (-4.8 percent) and Southwest Airlines (-5.9 percent).
Overall, on a systemwide basis, the 10 largest U.S. carriers flew roughly 5.7 percent fewer revenue passenger miles in September of ths year than they did a year earlier.
These numbers contrast starkly with year-to-date figures as the downward trends become clear. For example, Continental's year-to-date systemwide revenue passenger miles are still in positive territory at +0.5 percent. The same goes for Delta (+1.8 percent), Southwest (+2.6 percent), JetBlue (+3.3 percent) and AirTran (+13.5 percent). But more declines are likely during the last quarter of 2008, and by year-end, most major U.S. airlines could be in negative territory.
In terms of absolute passengers carried systemwide during the month, the 10 largest U.S. carriers each reported reductions compared to a year earlier, with American and Continental down by double-digit percentages.
Regarding corporate travel demand, "in the U.S., there is much more of a slowdown than elsewhere," said BCD Travel senior vice president for global supplier relations Rose Stratford, speaking during a recent BCD Travel podcast. "Financial firms, pharmaceuticals and any firms tied to real estate are showing the largest impact."
"We continue to model for significant demand destruction between now and year-end," according to a September research note by JPMorgan Securities analysts. "Thankfully, capacity is exiting far more rapidly than we model demand to exit."
Indeed, the survival-mode capacity reductions airlines planned and publicized in the springand summer now are taking effect. The largest systemwide September cuts were reported by JetBlue, AirTran and Continental.
"You haven't really seen what is coming," said Continental Airlines senior vice president of worldwide sales Dave Hilfman, speaking last month at The Beat Live. "So far, we have seen the initial phase of the reductions in September. Wait until you see 2009 come. The real reductions are yet to come. You have seen 8 percent, maybe 9 percent. You're going to see the 12 percent, 13 percent, 14 percent cuts ratchet up, which really isn't good for business. There's going to be a lot of tight airplanes."
According to airline data provider OAG, U.S. airlines are showing "worse than expected declines" in winter capacity. The U.S. domestic market, the firm reported, "will account for 21.4 million of the cutback in [fourth quarter global] available seats, or 46 percent of the global decline, and a staggering 59 percent of the global drop in frequencies with 265,000 fewer flights."
As far as load factors, September presented no clear trend, as some carriers reported higher ones versus a year earlier and some lower.
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