Airline Traffic Reports Hint At Improving Trends

Three major U.S. carriers this week reported May monthly traffic numbers. While two showed continued declines, there were positive signs. Continental Airlines, for example, said May traffic measured in revenue passenger miles dropped 6 percent, year over year, but estimated revenue per available seat mile rose between 1 percent and 3 percent. Continental had not reported a monthly RASM increase since January. Due to a 9 percent drop in systemwide capacity, Continental also managed to improve by 2.4 points mainline jet load factor, to 75.9 percent. On a regional level, traffic was down steeply in most areas, including a 28 percent drop in SARS-stricken Pacific, but grew 3 percent in Latin America.

American Airlines, which does not report estimated RASM in its monthly reports, said traffic dropped 4.8 percent. Considering a systemwide load factor improvement of four points, however, the airline said results were "better than expected." Like Continental, American's traffic was down most severely to the Pacific and least to Latin America.

American's cross-town rival Southwest Airlines reported a 3 percent traffic increase, its sixth consecutive month of growth.

Other major carriers are expected to report traffic numbers in the next few days. Most have stated cautious optimism as advance bookings for the busy summer travel season pick up. Furthermore, several corporate and agency sources contacted by Business Travel News said bookings were starting to accelerate as the economy shows signs of life and jitters related to the war in Iraq subside.

On the revenue side, Continental's expected RASM increase could signal the very early stages of a strengthening pricing environment. A $10 roundtrip fare hike, implemented over the weekend largely in response to the government suspending a $2.50 per-segment security tax, also will help carriers drive revenue.