Originally Posted by
morrisunc
Just curious not sure this is the right forum - does anybody know how Charlotte is performing compared to other hubs now that the new higher wages have been put in place.
Here's what Kirby said last week in the quarterly conference call:
On the revenue front our fourth quarter PRASM was down 5.4%, domestically consolidated PRASM was down 3% and we saw the strongest year-over-year performance in Charlotte, the second strongest domestic performance was in DFW and that's in spite of all the capacity that has been added here.
http://seekingalpha.com/article/3849...pt?part=single
Hunter "Pumper" Keay asked about the Advantage Fares, and here's how Kirby answered:
Well, Hunter, look, there is a lot to low fares in the market, consumers are having a field say in this environment, particularly we’ll grow oil prices, whether it's there well fares and but I usually like to answer all the question that I get asked on in earnings call, but on this one I'm going to [indiscernible] and does not make commentary about advantage fares.
Later on in the call, management again refused to answer an analyst's question about the Advantage Fares. Management is smart to not discuss pricing in conference calls with the stock pushers and the media.
It's obvious that AA has scaled back the Advantage Fare program by which US undercut AA's nonstop fare pricing, and that's helped the CLT unit revenues. On top of that, NK has yet to attack AA in CLT the way it has at DFW, and thus it's no surprise that CLT unit revenues were the strongest in the system.
Within the last 18 months, AA management at CLT disclosed that CLT featured the lowest unit revenues (PRASM) of "any east coast hub," and thus they had nowhere to go but up once US stopped undercutting AA's nonstop DFW and MIA fares.
The end of Advantage fares will help diminish volume at CLT, as fewer travelers will be encouraged to connect at CLT without the big savings as an incentive, and thus CLT won't see quite so many connecting passengers. The endgame? CLT's impressive growth will slow down and will likely track its population and business activity trends. Slower growth is on the horizon at CLT.
As to the profitability of CLT - AA isn't talking. But with LUS pilots making almost 90% more than they did prior to the merger, and with LUS FAs making more than 50% more than they did before the merger, I would expect that the AA hub at CLT will see continued contraction by 2017.