But Hopes Of High Ticket Prices Haven't Come True... Yet

When the US domestic airlines announced last summer that they were planning capacity cuts, some industry observers worried the cuts would be too deep. Most of those carriers have now posted their stats for December, and it looks as if they planned about right.

Among the statistics, load factor expresses the number of passengers flying onboard a commercial airliner as a percentage of seats available. While individual flights can vary widely from the average, load factor is a good general measure of how well capacity is matched to demand.

Delta Air Lines proudly boasted this week it achieved a load factor for December of 80.1, an increase of 0.7 over December 2007. The airline reported domestic travel on both Delta and Northwest "were higher than any previous December on record."

Farther down the page in the same news release, Delta said year-over-year capacity on its branded flights  decreased 2.4 percent. Together with the load factor, it shows that the capacity cuts were slightly greater than the drop in demand due to the recession, allowing the small increase in load factor.

Over on the Northwest side, system traffic in December dropped 3.6 percent, but capacity was down 4.5 percent, allowing a slight increase in load factor, reported at 81.9 in December.

American and United also guessed about right, with capacity cuts which ended up closely matching drops in passenger counts. Both airlines posted slight improvements in load factor.

Southwest and AirTran bucked the industry trend, posting both actual increases in passenger volume and declines in available seats. Southwest's load factor jumped to 69.7 percent, up from 68.2 percent for the same period in 2007... but its overall load factor for the year declined.

While slightly improved load factors and dramatically cheaper fuel since last summer are good news for the carriers, the numbers suggest the airlines didn't achieve their real goal -- tilting supply/demand enough to allow significantly higher ticket prices.

If the recession eases during 2009 and demand rebounds, they may achieve that goal, and renew the fears of price-conscious consumers.

FMI: www.bts.gov