Relaxation of advance-purchase rules in corporate travel
policies is pushing down airlines' yields, Virgin America CEO David Cush said
during the carrier's first-quarter earnings call.
While BTN research last year showed that
most travel programs were maintaining advance-purchase policies that require airfares
to be bought during certain windows of time before departure, Cush cited the
"breakdown" of those rules as a primary reason why fares within both
one week and two weeks of travel are falling. Legacy carriers are matching
fares with low-cost carriers, and industrywide yield in those purchase ranges
are down by mid-teen percentages, he said.
"While demand is OK but not robust, the key thing is
they're able to buy into lower fares with lower advance purchase," Cush said.
"It's less a capacity issue and more a competitive [issue]."
Virgin America's average fare during the first quarter
declined 3.9 percent year over year to $182.70. Yield was down 3.7 percent.
Demand among Virgin America's top corporate clients, however,
was strong during the quarter, according to senior vice president of planning
and sales John Macleod. Business from the carrier's top 10 corporate accounts
grew 27 percent year over year during the quarter, boosted by tech companies in
Silicon Valley and the financial services sector, he said.
Passenger revenue increased 11.5 percent year over year to
$332.6 million, and total revenue was up 11.5 percent to $364 million. Traffic
increased 15.9 percent during the quarter while capacity increased 15.8 percent,
keeping the carrier's load factor flat at 80.1 percent.
Virgin America's first-quarter net income increased 36.5
percent year over year to $17.5 million.
While executives avoided specifics regarding the timing of the
carrier's planned
acquisition by Alaska Airlines, Cush noted Thursday's earnings call likely was
Virgin America's last earnings call. Virgin America last week filed its
preliminary proxy statement outlining the merger and expects a shareholder vote
in the "near future," he said, and the carrier also has filed
antitrust approval with the U.S. Department of Justice.