Buoyed by airfare
growth and what executives characterized as unflagging business demand, Delta
Air Lines, United Airlines and US Airways during quarterly earnings calls this
week reported year-over-year double-digit percentage increases in corporate
revenues for the last three months of 2011. Those carriers expect business
traffic and corporate spending this year to steadily grow.
Delta's fourth-quarter corporate
revenues grew by 15 percent year over year, while United
reported a 13 percent increase, with corporate yields—a representation of
average fare per mile—up 9 percent. US
Airways, meanwhile, reported an 11 percent increase in overall
passenger revenue per available seat mile.
So far, demand this year appears to be building on
that base. Calling the second week in January "typically the largest
booking week of the year"—as business travelers return to work and leisure
travelers set spring and summer vacations—US Airways president Scott Kirby said
the carrier's "booked revenue was up 35 percent year-over-year in that
week." Booked corporate revenue, he added, "is up almost 30 percent
year-to-date in 2012."
"If anything, the new year has seen a step up
in business demand from the already-strong levels that we saw in the second
half of 2011," Kirby continued. "As a result of the strong demand
environment, the pricing environment also remains strong and the industry is
successfully recovering high fuel prices."
At United, "the majority of our global corporate
accounts expect 2012 travel volumes to be flat to up and travel spend to
moderately increase versus 2011, with first-quarter trends expected to mimic
the full year," according to chief revenue officer Jim Compton.
Delta president Ed Bastian noted that financial services clients last quarter
spent 18 percent more year over year, while revenue from technology clients
grew 15 percent and manufacturing clients spent 10 percent more. While airlines
last fall cited softness in the banking sector, Delta reported 5 percent
fourth-quarter revenue growth from that segment.
Meanwhile, airline
executives said that economic troubles in the eurozone have yet to significantly
impact demand or revenue. "The corporate base really hasn’t shown much
weakness in the European side," Bastian said. Kirby
claimed US Airways "simply did not see any evidence of macroeconomic
weakness in our business. That was true even across the Atlantic."
Though less reliant than its
network carrier competitors on corporate travel revenues, Southwest Airlines
similarly pointed to strength in business travel demand for the last quarter of
2011 and into 2012.
American Airlines likely
won't publicly report corporate revenue performance as its parent company, AMR,
restructures under bankruptcy court protection. J.P. Morgan analysts in a
recent research note wrote, "We believe AMR is sacrificing share to others
(GDS/OTA issues, weakening corporate share, etc.)."