Profits up, departures down in third quarter

AINonline
January 23, 2007, 11:12 AM

Notwithstanding recent complaints of poor operational performance by the nation’s biggest regional airlines, passenger boardings, revenue passenger miles (RPMs), load factors and average trip distance all broke records during last year’s third quarter, according to statistics compiled by Washington, D.C.-based The Velocity Group for the Regional Airline Association. However, it appears the days of double-digit growth have ended, at least for the time being, as capacity saturation at the nation’s biggest airports hinders any attempts at large-scale expansion.

In fact, the number of departures by regional airlines actually declined by 2.6 percent during the third quarter compared with the same period in 2005, as did available seat miles, by 0.7 percent. By contrast, in the second quarter of 2005 the industry saw a 6.4-percent increase in departures, an 18.4-percent rise in ASMs, a 20-percent increase in RPMs and a 14.8-percent jump in boardings.

Last year, from the start of July to the end of September, passenger enplanements rose a modest 3.7 percent compared with the same three months in 2005. Meanwhile, as the average flight distance exceeded 450 miles for the first time ever thanks to the ever increasing prevalence of bigger and more capable regional jets, RPMs continued to outpace the rate of capacity introduction, resulting in an industry-wide load factor of 74.9 percent.

So even though traffic growth has flattened, profits remain robust, at least among the seven regional airlines included in data released in December by the Bureau of Transportation Statistics. Those airlines, namely SkyWest, American Eagle, Atlantic Southeast, ExpressJet, Comair, Mesa and Pinnacle, turned a combined profit margin of 8.9 percent during the third quarter–a 1.3-point improvement over their performance in the third quarter of 2005. Together, the industry’s top seven carriers reported a $227 million operating profit during last year’s third quarter.

In fact, SkyWest Airlines and its subsidiary, Atlantic Southeast Airlines, turned the biggest profit margins in the entire airline industry during the third quarter, 12.3 percent and 12.1 percent, respectively. Even Comair, threatened with capacity cuts by bankrupt parent company Delta, recorded a profit margin of 3.7 percent, or $11.1 million.

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