New York - Delta Air Lines president Ed Bastian said the
economic backdrop remains "choppy," while US Airways president Scott
Kirby cited a macroeconomic environment that continues "to muddle
along." Despite such characterizations of stagnation, which dotted
executive presentations at two aviation conferences here on Wednesday and
Thursday, corporate demand for air travel remained "steady,"
according to Kirby, and "solid," according to Bastian. Not all
airlines presenting this week shared such optimism, as United Airlines gave
minimal detail on corporate demand and even alluded to worse-than-anticipated corporate
marketshare performance.
Among the airlines that presented this week, Delta delivered
perhaps the most sanguine outlook and shared the most specific corporate
booking data, disclosing that corporate revenue for the quarter ending this
month is trending upward by 9 percent year over year, a rate similar to those
the carrier witnessed in the first two quarters of the year.
"Corporate revenue strength is broad-based, led by the
automotive sector, financial services and a significant gain that we're picking
up in the banking sector, including many banks here in the New York area,"
Bastian said Thursday during the Deutsche Bank 2012 Aviation and Transportation
Conference, noting Delta's emboldened presence at LaGuardia Airport. "The
only sector that we have that's showing any real weakness is transportation,
and that's been driven by cutbacks at Federal Express in some of their current
spending."
Bastian also cited "corporate-contracting gains"
Delta realized from its competitors, helping it stay on pace "to produce
solid September-quarter results."
United executives struck a different tone about the
corporate market, and acknowledged a potentially negative impact from service
disruptions related to the integration of Continental Airlines. "When you're
in the middle of a lot of construction, people will sometimes take a detour
around the construction until the construction is finished, then they come back
and take the route they prefer," United CEO Jeff Smisek said during a
presentation at the Deutsche Bank conference. "From our perspective, we
have a very good corporate share. The growth of our corporate share has been
less than we anticipated because of the integration issues. But those
integration issues are transient; they will go away."
United CFO John Rainey Wednesday during the Dahlman Rose
& Co. Global Transportation Conference here said little about the carrier's
corporate demand outlook but acknowledged "modest slowness in the economic
outlook" in announcing the United's plan to further reduce capacity for
the remainder of the year. Meanwhile, Smisek said he expects 2013 capacity to
be down 1 percent from this year. "We see a slowing economy, and we'd like
to get out ahead of that to make sure that we can always get compensatory fares,"
he said.
While US Airways president Scott Kirby did not highlight
specific corporate travel metrics Wednesday during the Dahlman Rose & Co.
conference, he pointed to growth for the remainder of the year.
Even though some meeting, convention and "discretionary"
business travel slowed around the "end of May, beginning of June" as
uncertain economic news prevailed, Kirby said, "I think businesses are
still doing their core business travel."
Indeed, ARC data showed that total U.S. travel agency air
transactions declined 5.4 percent year over year in June, the largest decline
in any month since April 2011. Total June air sales including fares, taxes and
fees decreased by 1.8 percent from June 2011, the largest drop since October
2009. Yet that improved in ARC's most recent data, showing U.S. travel agencies
in July processing 2 percent more transactions than they did a year earlier.
Kirby expected the business demand environment to improve
further "as we get into the fourth quarter and we get more certainty
around the election, more certainty around the fiscal cliff and perhaps some
certainty around Europe."
He envisioned business demand "returning to levels in
the March-April period, even if it's a little below those levels today."
Kirby, meanwhile, pointed to "strong transatlantic business demand,"
claiming marketshare gains from competitors at the European point of sale.
Meanwhile, JetBlue Airways CFO Mark Powers during the
Dahlman Rose & Co. conference said "early signs are encouraging"
with regards to business travel demand during the post-Labor Day shoulder
season, though he cautioned, "It's still too early to tell given nature of
our close-in booking curve." While Southwest Airlines senior vice
president of planning Tammy Romo did not detail business-specific trends, she
expected third-quarter unit revenue to increase by low-single-digit
percentages. The carrier in August experienced some "softness on the yield
side" but strength in load factors, she said during the Deutsche Bank
conference.