U.S. Airlines' Revenue Declined in Nov.
CHICAGO – A key measure of U.S. airline industry revenue declined slightly in November, reflecting weakness in airline ticket pricing even as traffic was strong, analysts said Tuesday.
Systemwide unit revenue, also known as revenue per available seat mile (search) or RASM, declined 1.2 percent in November from a year earlier, according to Wall Street analysts who receive the data from the Air Transport Association (search), an industry trade group.
The unit revenue slip occurred as capacity, or available seat miles, rose 5.1 percent during the month.
"Although these latest statistics were not unexpected, they demonstrate the continued weakness in airline pricing despite strong traffic," wrote Ray Neidl, airlines analyst at Calyon Securities, in a research note.
"This dynamic, plus the industry's entering the slow winter season and the continued uncertain oil price environment, continues to make us cautious on the airline sector, and thus we remain neutral on the airline industry," he added.
Earlier this month, Continental Airlines Inc. (CAL) estimated that its mainline unit revenue was flat to up 1.0 percent in November. Analysts use unit revenue figures from Continental, normally the only carrier that releases estimates at the start of the month, to predict unit revenue performance across the industry.
In recent months, however, Continental's unit revenue figures have come in stronger than industry RASM.
Domestic mainline revenue declined 1.2 percent in November, while international mainline revenue posted a small decline of 0.3 percent, analysts said.
"We think the airlines remain washed out due to mixed signals about the economy and stubbornly high fuel prices," wrote Susan Donofrio, an analyst for investment firm Fulcrum Global Partners, in a research note.
Many airlines have blamed high oil prices as a leading contributor to weakness in the industry this year. Airlines also have been hit by competition from low-cost carriers.