Executives at US Airways believe discipline in cutting capacity practiced by carriers over the last year will continue as airlines begin to see signs of revenue improvement.
Speaking during a 25 March investor conference US Airways CFO Derek Kerr referenced the unprecedented capacity reductions in 2009 led by American Airlines and United Airlines, and explained those cuts are key to the recovery the industry is seeing so far in 2010.
Kerr doesn't expect nascent signs of a recovery to trigger a significant change in capacity management. "We haven't seen any sign of that [the adding of capacity]," he says. "Everybody is still kind of living in the world of fuel at $100 per barrel", and that is keeping capacity "where it needs to be".
Complementing the capacity discipline is continuing improvement in revenues, particularly from corporate travellers, says Kerr. While the industry has yet to reach similar levels of corporate revenues posted in 2007 and 2008, current revenue trends show a significant improvement from the drastic 35% decrease seen in corporate revenues from April through June of 2009, Kerr explains.
Booked yields are also improving year-over-year, says Kerr. But the improvement is being driven by less aggressive fare sales rather than prices increases. Referencing less "lower end junk sales", Kerr explains there's been a "cleaning up of the pricing environment, and cleaning up the lower end, which is much more important than the headline price increases it's really key to get the low sales out and get the yields driven up".
Striking a positive tone Kerr says: "Things seem to be turning up a little bit for everyone in the industry."
Source: Air Transport Intelligence news