Southwest measure of passenger revenue slows down

Southwest Airlines traffic rises as measure of passenger revenue grows more slowly

Associated Press

DALLAS (AP) -- Southwest Airlines Co. is still packing 'em in, as traffic last month grew compared with a year ago, but a key statistic suggests that airlines are finding it harder to charge higher prices to offset rising fuel costs.

It's called passenger revenue per available seat mile, and it measures how much the airline makes to fly one seat a single mile.

Last month, that measure rose 4 percent from February 2011, Southwest said. That's the smallest increase since last July, when it inched higher by just 1 percent.

The report from Southwest, which included figures from its AirTran subsidiary, came a day after US Airways Group Inc. announced a similar trend. The same statistic rose 7 percent in February at US Airways, the weakest gain since June.

Robert Mann, an aviation consultant in Port Washington, N.Y., said that because planes are flying so full, airlines can no longer make more money per mile just by selling a few more seats. Mild weather might have reduced the revenue statistic too, he said. With fewer canceled flights, passengers were spread among more planes.

Mann said if the Southwest and US Airways figures represent a trend, it's about domestic travel. He noted that Delta Air Lines Inc. reported last week that its revenue per available seat mile jumped 13 percent. Delta credited full planes going across the Atlantic and higher fares on its trans-Pacific flights.

Airlines pushed through nearly a dozen broad U.S. fare increases last year and also boosted fuel surcharges on many international routes. They've raised prices twice already this year.

At the same time, the airlines continue to sell many seats at sale prices. Southwest and AirTran both launched new sales on Tuesday.

Such discounting, which is routinely matched by competing airlines, undercuts the revenue that the carriers would otherwise get from raising base fares.

UBS analyst Kevin Crissey said pricing began to weaken in late January, and he believes corporate travel drove much of the discounting.

Frequent sales helped Southwest generate 3.9 percent more traffic last month. Passengers flew 7.24 billion miles, up from 6.96 billion miles in February 2011.

Traffic growth failed to keep up with a 6.2 percent increase in capacity on Southwest and AirTran. Airlines usually raise capacity by operating more flights.

With more flights, there were a few more empty seats. The average Southwest and AirTran flight during February was 75.2 percent full, down from 76.9 percent a year earlier.

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