Packed planes boost airlines’ profits
07/24/2014 10:01 AM
07/25/2014 11:40 AM
Airlines are squeezing their passengers into planes that are more and more full, helping boost profits at the expense of an endangered species – the empty middle seat.
It’s a trend that’s been ongoing for several years as the airlines keep a tight lid on capacity and ruthlessly cut unprofitable routes. Airlines reported their earnings this week, and they posted eye-popping percentages of seats full. And while that’s good for business, it can leave passengers fed up with long waits to board and deplane, no overhead bins and claustrophobia in the skies.
“It’s like they’re herding cattle,” said Kelley Baird of Fort Mill, S.C. She was at Charlotte Douglas International Airport on Thursday afternoon, returning from a business trip in Las Vegas. “Every flight is 100 percent booked. It takes longer for everyone to board.”
American Airlines said Thursday that its profits jumped 70 percent in the second quarter, compared with the same quarter last year, totaling $864 million. American merged in December with US Airways, which is the main carrier at Charlotte Douglas.
American’s competitors also posted strong profits as the airline industry surged to a record second quarter.
In part, carriers in the U.S. are doing so much better because their planes are more full. Every unsold seat is lost money for an airline, which is still burning the same amount of fuel and paying its pilots and flight attendants the same amount to fly the plane no matter how full it is.
“Our goal would be to run 100 percent (full),” American president Scott Kirby said during a conference call with reporters. But he believes the airline industry averages won’t go much higher because popular routes are mostly full already.
“I think we’re probably near what is a structural peak,” Kirby said. “Busy flights are 100 percent full.”
American chief executive Doug Parker said the full planes are a sign of health for the airline industry.
“There’s a lot of demand for the product,” he said. “There’s a lot of people that want to fly, and we’re happy to meet that need.”
Airlines packed passengers in during the second quarter. For example:• American Airlines said 84 percent of its seats were full during the second quarter, down 0.5 percent from last year. But American’s domestic mainline flights were 87.3 percent full, up from 86.9 percent last year. And regional flights were 81.6 percent full, a jump of more than 3 percentage points from last year. Domestic and regional flights carry almost all American passengers at Charlotte.
• Delta Air Lines said its planes averaged 86.3 percent full, a jump from 84.8 percent last year.
• United Continental’s planes were 84.8 percent full, up from 83.2 percent last year.
• And Southwest Airlines had a record percentage of seats occupied, 83.9 percent. That was up from 81.6 percent last year.
Carriers measure how full their planes are using a statistic called “load factor,” which is a percentage of seats filled by passengers.
The average load factor in the second quarter at the big four U.S. carriers – which account for about 80 percent of domestic traffic – was 84.7 percent. That’s up from 83.5 percent last year.
Airlines are holding off on putting a lot of new capacity on the market, driving up load factors. In fact, some carriers are still cutting capacity even as the number of travelers grows.
Southwest cut 0.4 percent of its “available seat miles” (that’s an airline measure of how much capacity is on the market) while the airline sold 2.4 percent more seats. United took a similar approach, cutting its capacity by 0.1 percent while seats sold ticked up 0.6 percent.
Delta increased its capacity by 3 percent – but sold seats at an even faster rate, with sales rising 5 percent. Only American added capacity faster than it sold more seats, which is why its total load factor dipped slightly.
Margie O’Donnell was traveling on Thursday to Charlotte from Phoenix for the weekend. She said her flight was packed.
“It’s crowded. Every seat’s taken,” O’Donnell said. “It feels almost claustrophobic especially if there’s a bigger person. Yesterday, I was on the tarmac for three hours because of maintenance issues. You feel it even more.”
Michael Cassell of Lake Wylie, S.C. returned Thursday from a business trip. “Ninety percent of flights are packed,” he said.
Cassell had two pieces of advice: “You just have to be patient,” he said. And: “Just don’t get the middle seat. Especially if you’re 6-foot-5.”
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