Things in the Sky

US Airways released its June traffic results today, and the press release touts “a record June load factor,” which does sound good, but it also shows a weakness of  this statistic. To put it simply, load factor is just a measure of butts in seats. That’s it. It doesn’t tell much about revenue. If I owned an airline, I could offer $1 fares (and, in this situation, with no extra fees) all the time. My load factors would probably be fantastic, but I would be bleeding cash.

Another thing to consider about load factor is where the changes are coming from. In US Airways’ case, the airline cut capacity in terms of ASMs more than RPMs dropped. So, that load factor growth isn’t coming from additional passengers compared to a year ago.

President Scott Kirby estimated a 20% decline in PRASM for the month. Interestingly, he said RASM was down about 18%. I think that shows the importance of ancillary revenue for US, as those fees aren’t part of PRASM.

Of course, the release doesn’t say anything about the cost side. So, we’ll have to see how everything pans out when US Airways (and everyone else) puts out second quarter earnings in a couple of weeks.