No revenue rise in these United States

Given the fairly serious capacity cuts that US carriers have taken in the last few months, this is not the direction things are supposed to be going. Lowered capacity (we’re tempted to call it diminished capacity, but judges, lawyers, and forensic psychologists might quibble) is supposed to olddays.jpgproduce higher revenue, but further signs of weakening demand for air travel suggest that US airlines are headed into a serious downturn. The Air Transport Association says monthly unit revenues for November rose an overall 0.4%, but were down domestically by 13.6%, year over year. This is the first significant drop in revenues in nearly five years, with Asia/Pacific unit revenues (Revenue per Available Seat Mile or RASM) falling by 5.6%, year over year. The only bright spots were Atlantic and Latin revenues, each up by 5% in the month. JP Morgan airline securities analyst Jamie Baker, noting that some Thanksgiving travel actually took place in December, predicts that December “should look less bad.” Maybe….

 

But Baker, a long-term optimist on airlines, says that “thankfully, given oil’s precipitous decline, even a 9/11-type demand outcome is expected to result in a potential profit record for the industry.”

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3 Responses to No revenue rise in these United States

  1. Meghan @ LAX December 23, 2008 at 7:42 pm #

    It just never ends for our industry. We’re working harder than ever and trying to negotiate better wages and benefits, but the market is working against us. I see the same thing happening in the car industry and I totally understand what’s going on. I think the best we can hope for right now is not to take another step backward.

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