Things in the Sky

Alaska releases a monthly update with some traffic and financial data, and it’s always interesting to take a look. First, let’s look at revenue. PRASM was down 1.3% year-over-year and RASM was actually up 0.7%. That’s great, right? Well, not so fast. Alaska reports:

RASM and Passenger RASM were favorably impacted by first bag fee revenue, which began on July 7, 2009, of approximately $4.9 million for Alaska mainline. Given the seasonally high passenger count for July, this amount is in line with our previously disclosed estimate of $70 million in incremental annual revenue for Air Group. RASM was also favorably impacted by the revised Mileage Plan affinity card agreement described in our second quarter 10Q which we estimate will provide approximately $15 million in incremental revenue for the last six months of 2009, or approximately $2.5 million per month.

So, those pesky bag fees make comparing harder, especially when comparing the carriers. From United’s Q2 release:

There is no consistent industry practice among airlines regarding the recording and classification of ancillary and other revenues. Some ancillary revenue products, such as premium seat upsell revenues, are consistently recorded by most airlines as passenger revenue. Certain other ancillary revenue products, such as first and second bag fees and ticketing and change fees, are classified by
some other carriers in other revenue. For United, first and second bag fees and ticketing and change fees are recorded in passenger revenue.

So those RASM numbers are making the situation look a bit better than it actually is.

But, on the bright side, advanced booked load factors look good – up 1.5 points for both August and September. And that could be a good sign – Alaska had an  a 3.5 point increase for July in its last update, but  the increase was actually 4.6 points. Two things on that – first, still doesn’t say much on revenue. But it also goes with what Virgin America CEO David Cush told me – that advance loads aren’t the greatest at predicting actual traffic. It seems to me that more people are booking close-in.

Like many other airlines, Alaska is seeing an increase in CASM ex fuel and items, and the airline is predicting an 8% increase for the third quarter. Alaska also estimates its fuel cost per gallon will be down 36% year-over-year in the third quarter.

Anyway, off to NBTA festivities!