Originally Posted by
fastair
Nomalize that for AA, which I believe reduced service 2.6% vs UA which increased service (only a tiny bit .1%). It is easy to get RASM gains when you reduce service, more difficult when you add service. Simple laws of supply/demand. Reduce supply for same demand, and people pay more. Increase supply with same demand, people pay less.
Let me give a few examples from June's data:
In June UA's traffic was up .1%, yet UAL actually reduced its capacity by (.3%), so net its load factor went up by .4% PRASM was then (as I've adjusted it) up 4-5% consolidated, and 3-4% mainline.
in June DL's traffic was also up .1%, but there capacity was cut by (1.7%), so load was up by 1.8%. DL's PRASM was up by 8% (my original post was in error in saying 6%).
So there could be a number of things going on (1) DL could be have attracted a few more high value passengers, (2) DL could have kept its same fliers yet charged them a little more, or (3) swapped lower fare passengers for higher fare ones. However simply sheding capacity does not mean that your revenue stays constant, you loose some sales too, so its not constant. regardless DL blew UAL's doors off however you look at it.
United also pushed up its Load, attracted the same number of extra passangers as DL, yet it was able to sell its seats for less, i.e. have less of a yield premium. Had UAL cut capacity more they would have perhaps upped their PRASM, but that assumes they still sell everyone who actually flew them a ticket. Not going to happen either short or long term.
Nor can load factor account for the difference. In May UAL's load factor was down (.1%), i.e. they were less able to fill seats. As noted above UAL's may's PRASM was down (.4%) for mainline. So they lost
passengers and revenue in May. American in May was up +.8% in load, yet had a PRASM up 7.3%.
April 2012 (just looking at PRASM) UAL was up 4.5% consolidated, and 3.3% mainline,DL was up 11%, US was up 9%, and AA was up 11.6%
These are all big gaps, and as I have noted there is actually a smaller gap this month.
My point is that UAL is doing post 3/3 very poorly. Had they had an attractive proposition for fliers with the capacity cuts at DL and AA one would have expected UAL to pick up business. Did not happen, UAL has been flat on how many fliers they attract (down .1% in may, up .1% in june) yet are not getting the same extra revenue for the seats they sell that their competitors are.
