Originally Posted by
forgot to bid
NEW YORK (MarketWatch) -- Online booking agent Priceline.com said Wednesday average airfare this summer could rise by as much as 25% from a year-ago as fliers fight over fewer seats among the nation's airlines. "Airline capacity and routes flown are still down compared to recent years," said Mark Koehler, Priceline's Senior Vice President, Air. "We haven't experienced the widespread, aggressive airfare sales seen a year ago." Airlines have reported stronger monthly traffic and revenue results year to date as business travelers return to the sky after nearly two years of withering demand. The International Air Transport Association recently halved its full-year loss for the industry to $2.8 billion..
Hot Damn.
While this is great news for us in the industry, there are a couple of points to consider.
1. Revenue during the summer of 2009 was down more than 23% compared to the summer of 2008. Revenue would have to increase 30% to return to "normal" levels. 25% is good news and is a long way back toward normal.
2. Oil prices during the summer of 2009 averaged about $67 bbl. This summer they're projected around $90 bbl. On the good side, the fuel hedges that killed us last year are no longer around.
Delta was forecasting a very small profit prior to the recent traffic recovery. If oil prices stay reasonable and there are no external events (yeah, right), then we have a good chance of making some more coin this year. Nothing to write home about, but still far better than a loss. Earnings season begins next week. I'm real interested to see how Delta's doing on CASM after SOC, and how we stack up on operating margin. I expect that we'll see some differentiation from our full service network peers.