Yesterday, the Air Transport Association released its monthly passenger yield data, which is a combination of results from Alaska, American, Continental, Delta, JetBlue, United, US Airways, and their regional carriers. Not surprisingly, year-over-year comparisons continue to improve thanks to comparisons off of weaker numbers and an improving revenue environment. Here’s a graph of year-over-year change by region:
Of course, a big factor here is more favorable comparisons. For example, Atlantic yields decreased the most in January last year, so that helped fuel last month’s 4.4% increase (the biggest increase in January). Meanwhile, Latin yields were actually up last year, so it’s not surprising the results were the worst this month, with a 5.1% decrease. Domestic yields were up 1.1%, while Pacific yields experienced a slight 1.6% slide.
And, here’s my usual graph of the 12-month moving average of yields. There’s really nothing to exciting to report here. Yes, we’re starting to see some positive numbers, but we’ve basically been bouncing around the bottom for a few months now.
But let’s put this data in perspective a bit. Here’s the 12-month moving average, but back to the beginning of 2007:
I think that shows pretty well that there’s still a long road ahead for yields to recover.
Yesterday, the monthly ATA yield data was released with data for November, and the numbers actually look half-decent. Year-over-year comparisons continue to improve, though a big reason for that is comparisons are becoming more favorable – November 2008 was the first month where we saw a decline in yields. Plus, Thanksgiving was earlier in 2009 than 2008, so more holiday travel took place in November this year (Thanksgiving was late last year so some travel took place in early December). But still, it’s improvement:
A 12-month moving average of the data still shows declines, but like November, the decline was less than that of the prior month.
As you can see from the graph – it really looks like things are bottoming out. Hopefully the trend will continue, and we can see some kind of growth in the coming months.
Anyway, my last final is this afternoon, so I will be back to a regular posting schedule tomorrow.
Last week, the Air Transport Association released yield data for October, and to be honest, the numbers look kind of encouraging.
First of all, the decrease in yields continues to lessen. Granted, the declines are still in the area of 15%, but it’s progress. There was improvement in all regions.
(Click to enlarge)
I also decided to graph a the 12-month moving average of yields in order to help remove seasonality from the data. As you can see, there’s been a steady decline throughout the year:
(Click to enlarge)
But there’s been improvement in this number as well – for every region, the decrease from September to October was less than the decrease between August and September.
November’s numbers will probably look even better, thanks to easier year-over-year comparisons (we’re getting to the point where numbers started to look bad a year ago). Plus, Thanksgiving was a bit late last year, putting more holiday travel into the beginning of December. The holiday is two days earlier on the calendar this year, so that might help a bit.
But, the basic message has been the same for the past few months – things are still bad, but there are signs of improvement.
The International Air Transport Association (IATA) released its latest “Airlines Financial Monitor” report last week, and it has some interesting stuff for sure.
So, what does IATA think of the current environment? Well, I think these comments from IATA chief Giovanni Bisignani from a couple of days before this report was released make it pretty clear:
“It is far too early to call this a recovery. The worst may be over in terms of the fall in demand, but yields continue to be a disaster and costs are rising. The airline industry remains firmly in the red with a fragile business environment.”
Anyway, here’s the data I found interesting in the report. First off is demand, measured by RPKs and FTKs:
So, growth in RTKs has finally turned positive, and that’s a good thing. But unfortunately that doesn’t tell the whole story. Take a look at fares:
We’re seeing an improvement in the decline in fares, which is good. But it appears that that improvement in demand is coming from a decrease in fares. IATA reports that “the revenue environment remains extremely challenging.”
Like many other indicators, this data shows that while progress is being made, there’s still a ways to go.
It’s been a while since I last whipped out the oil graph…so why not. The price data from the EIA goes up to Tuesday this week.
(Click to enlarge.)
So, oil has certainly recovered from its lows and has be testing the $80 level, which isn’t exactly good news for the airlines.
But what I always find more interesting is the price of oil in euros. Oil is priced in dollars, so it’s assumed that as the dollar depreciates against other currencies oil would go up in dollars. And that seems to be the case. Note how the two prices came very close at the end of last year when investors were seeking safety in the U.S., boosting the dollar, but now the dollar is losing value again. As a result, the gap between the two prices is now increasing.
I’ve been meaning to talk about IATA’s recent release of premium traffic data for August, which came out last week, but I kept forgetting. Anyway, the decline in premium travel has been hurting airlines a lot during this recession. Sure, there are a small number of premium seats on most aircraft, but they represent a large portion of revenue on a flight due to high fares.
According to IATA, the situation is beginning to improve. The number of passengers in premium cabins was down 23.5% in May, but was down 12% in August. Revenue, however, is another key metric that’s improving – revenues in August were down about 30%, while decreases in past months were over 40%. Granted, comparisons will begin to look rosier soon, as comparisons will begin to be made off of those horrible months when revenues were down over 40%. Hopefully, we will see some kind of positive number when that happens.
Here’s a graph of the latest data from IATA – the purple bars represent volumes, and the blue line represents revenues.
Last week the ATA released its monthly yield data, and the results show more of the same: we’re around the bottom, but we’re not moving much:
Of course, comparisons are hard, and that will continue. In, September 2008 airlines posted large gains in yield as airlines rose fares, and as the months progress, comparisons will be based on this year’s big declines.
Nevertheless, in terms of year-over-year change, the decreases in yields have been in the same range for a few months now. Declines of over 20% aren’t good, but at least we are now seeing some kind of stability.
Southwest kicked off earnings season for the airlines last week, but a bunch of airlines are reporting this week:
Tuesday, October 20
Allegiant
Hawaiian
United
Wednesday, October 21
AirTran
American
Continental
Thursday, October 22
Alaska
Delta
JetBlue
US Airways
The ATA has released its latest yield data, and year over year change has reamanted fairly steady. We’re still seeing big declines, but at least things appeared to have stabilized a bit. On the bright side, yields in August improved from July for all areas except the Atlantic, and all areas are improved from June levels.
Click to enlarge.
Over the past month, I have been on the hunt for more and more data to look at, as it seems that I have been developing a somewhat unnatural obsession with Microsoft Excel. 
The Air Transport Association (ATA) releases the monthly yields of seven carriers and their regional affiliates, and the July numbers were just released. It looks like, just maybe, we’re starting to see a bottoming out. The year-over-year decline in passenger yield was less in July than June for Domestic, Latin, and Atlantic markets, though the decline worsened in the pacific.
There was also an improvement in some yield numbers in April, but this can probably be traced to the “Easter mismatch.” Easter was in April this year and March last year, improving April’s results but worsening March’s results.
ATA President James C. May said in a news release, however:
While the modest improvement in demand from June to July would normally be cause for cautious optimism, the fact is that the number of air travelers continues to fall despite double-digit declines in fares. Clearly, with the difficult economic environment, demand for air travel remains weak.
May makes a good point, but things are slowly looking a bit better on the traffic side. According to July 2009 traffic numbers, Alaska, Allegiant, JetBlue, and Southwest all posted gains in RPMs.
Is it safe to call a bottom here? Maybe, but I’m interested in seeing what the autumn has to bring.
For the heck of it I wanted to compare GDP to airline industry performance, but I wasn’t really sure how. Then I found this handy chart from the ATA that has operating revenues for passenger airlines, which made it pretty easy. So a graph of the data looks like this:
Click on the graph for a larger version.
They seem to move pretty well together, as I got an r-squared value of about 0.90. Then, I decided to take out 2002, because I think it’s fair to say that the airline industry was hit harder than other areas of the economy – then r-squared jumped up to 0.935. Not bad! After playing around with the numbers a bit, I can estimate that a one billion change in GDP will go with a change in airline revenues of about $8.5-8.7 million.
Now, we’ll have to see what happens this year when both GDP and revenues have been hammered.
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