This isn’t really so surprising: according to the latest figures from the Air Transport Association (ATA - a trade organization representing the major airlines) via a research report from Merrill Lynch, per passenger revenues overall went up by nearly 7% in October. You see, the airlines are getting really good at being on the winning end of domestic supply and demand. And do keep reading: inside I tell you how to analyze these some of this crazy terminology for yourself!

• Load Factor - Percentage of filled seats, on average, for all planes (usually broken by domestic or international) during a defined time period (usually a month)
• Available Seat Mile (ASM) - the total number seats flown during a time period (usually broken down by domestic and international), divided by the distance flown for that seat
• Revenue per Available Seat Mile (RASM or PRASM - P for Passenger) - revenue for airline tickets (usually broken down by domestic and international) divided by available seat miles (ASM) (provides a unit number for comparison)

You will see these terms if you examine the actual reports for yourself. Now back to the analysis itself:

Domestically,

“per passenger or unit revenue for the major airlines increased 5% — ahead of the 3.4% increase in September, but more modest than the 8.8% in August”.

Add in the majors’ regional affiliates, and you get an increase of 4.9% for October, and this too is an improvement over September’s increase of 3.9%, but again, below August’s 7.7% increase.

Why the upward trend, domestically? Analysts are crediting the 6-fare increases since Labor Day Weekend (by my count, it’s now up to 8-increases since this report is October focused — wonder where they got that information…); and, that the airlines are doing a better job of adjusting to the supply and demand of the marketplace.

The stats:

mainline domestic capacity for the month of October went down 1.6%, while the load factor increased 1.3 points, and yield increased 3.3%.

Internationally, the figures were also strong, despite the slowing economy. The experts say, economic concerns overall will be mitigated by a disciplined supply growth, and they expect revenue for the major airlines will continue the upward trend this month, with an estimated growth of 5 to 6%.

What does it all mean Basil?

Basically the major airlines continue to domestically restrain capacity, fill up smaller airplanes to the gills and compensate for fuel increases with price increases, a win for airlines financially, but as I predicted a few months ago and I am sure many will shortly find (as I did last night) that the passenger experience is going to continue to be less than stellar. As we noted earlier this summer, all airlines except Southwest rated lower than the IRS for customer satisfaction — you can’t open a paper or watch a news broadcast without the travails of this holiday travel season front and center — I hope we can find some happy medium between airline profitability and the joy of air travel.