US Airways Increases Flight Capacity Too Quickly Despite Passenger Growth

Skift Take

Airlines must manage a delicate balance between flight capacity, aircraft size, routes, and fares. US Airways’ current situation shows what happens when positive customer growth is met with overly optimistic capacity growth.

— Samantha Shankman

Traffic is growing faster than a key revenue number at US Airways Group Inc., and there are a few more empty seats than a year ago.

The airline said Tuesday that passengers flew 5.1 percent more in October than a year ago — 5.54 billion miles, including trips on US Airways Express regional carriers.

But a key measure of revenue for each seat flown one mile increased just 1 percent. That’s a closely watched measure of pricing power in the airline business.

US Airways, the nation’s fifth-biggest carrier by traffic, said passenger-carrying capacity increased 8.5 percent from October 2012. Airlines boost capacity by adding flights, using bigger planes, flying longer distances — or sometimes, all three.

Because the airline and its regional affiliates added more flying than the increase in traffic, average occupancy on October flights fell to 83.1 percent from 85.8 percent a year earlier.

So far for 2013, traffic on US Airways and Express flights has increased 5.1 percent, capacity has grown 3.8 percent, and the average flight has been 84.7 percent full, up from 83.7 percent in the same period last year.

The Tempe-based airline is trying to complete a proposed merger with American Airlines to create the world’s biggest carrier, but the deal has been held up by an antitrust lawsuit filed by the U.S. Justice Department. On Monday, Attorney General Eric Holder said the two sides were in settlement talks but that he wanted the airlines to make concessions at airports around the country. If there is no settlement, a trial is set to begin Nov. 25.

Shares of US Airways fell 22 cents to $22.49 in morning trading. They began the day up 68 percent for the year.

Copyright (2013) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Tags: us airways

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