2012-02-02-奥纬咨询-Airline_Economic_Analysis_2012_41页_648kb

US Airline Economic Analysis Summary (February 2012)

Core Content Overview

This report provides an in-depth economic analysis of US airlines, focusing on cost and revenue trends for network and value carriers from Q2 2010 to Q2 2011. It highlights changes in cost per available seat mile (CASM), revenue per available seat mile (RASM), and the impact of fuel prices, fleet efficiency, and ancillary revenue on airline profitability.

Key Cost Trends

1. System CASM Increase

• Both network and value carriers experienced CASM increases, with value carriers seeing a larger rise (16.8%) compared to network carriers (11.4%).
• The CASM gap between network and value carriers declined from 15.0% in Q2 2010 to 9.6% in Q2 2011, marking the smallest gap ever.
• Fuel prices were the primary driver of these increases, with network carriers still slightly disadvantaged in terms of CASM.

2. Domestic CASM Increase

• The domestic CASM gap between network and value carriers declined from 19.2% to 12.3%.
• Value carriers had higher increases in all cost categories (labor, fuel, other), while network carriers saw increases only in fuel.
• Southwest Airlines significantly influenced the value carrier results, contributing 54% of domestic ASMs and 56% of domestic revenue.

3. Long-Term Domestic CASM Trends

• The domestic CASM gap has been declining for four consecutive years.
• The fuel cost gap between network and value carriers has narrowed due to network carriers adopting more efficient aircraft.
• Ex-Fuel CASM for value carriers has been trending upward, while network carriers have remained relatively flat since 2008.

4. Fuel Prices

• Fuel prices reached the second-highest level since 2001 in Q2 2011.
• Fuel costs accounted for 38.5% of average value carrier domestic CASM, up from 32.7% in Q2 2010.
• Hedging played a crucial role in managing fuel costs, with carriers benefiting when system fuel prices were lower than spot prices.

5. Value vs. Network Carrier Domestic CASM (With and Without Fuel)

• Network carriers have closed the fuel cost gap with value carriers.
• Value carriers had a slightly higher CASM in Q2 2011, but the difference was minimal.
• Fuel cost was the dominant factor in CASM increases for both groups.

6. Use of More Efficient Aircraft

• Network carriers are replacing older aircraft with new-generation models (e.g., 737-700/800/900, A318/319/320/321), improving fuel efficiency.
• Fuel burn per seat hour is significantly lower for aircraft over 5 years old compared to those under 5 years.
• Maintenance costs increase sharply with aircraft age, doubling between the 5-10 year and 10-15 year groups.

7. Regional Aircraft Efficiency

• Large regional aircraft (e.g., ERJ-175) are more fuel-efficient than smaller regional aircraft (e.g., ERJ-135), which burn 84% more fuel per hour.
• The growth in large regional aircraft is attributed to high fuel prices, as they are more cost-effective than smaller ones.

8. Individual Value Carrier Domestic CASMs

• All value carriers saw CASM increases, with Allegiant experiencing the highest (30.6%) and Spirit the lowest (7.9%).
• Fuel costs were the main driver, with Southwest having the highest labor CASM and Allegiant the highest fuel CASM.
• Frontier had the largest increase due to restructuring, while AirTran saw a rise after its acquisition by Southwest.

9. Individual Network Carrier Domestic CASMs

• Network carriers had CASM increases ranging from 7.0% to 44.1%, with Hawaiian having the largest increase due to a one-time fleet transition.
• Alaska had the lowest CASM among network carriers, slightly below Virgin America and Frontier.
• Delta and United/Continental had higher CASMs than American.

10. Stage-Length-Adjusted Individual Carrier CASMs

• Adjusting for stage length, Spirit remains the lowest-cost value carrier, followed by Southwest and Allegiant.
• Alaska and US Airways are the lowest-cost network carriers.
• Hawaiian and Allegiant showed significant changes due to their fleet compositions and operational adjustments.

Key Revenue Trends

11. RASM Increase

• RASM for both network and value carriers increased, but at a slower rate compared to the previous year.
• Value carriers had a higher average RASM increase (11.4%) than network carriers (7.3%).

12. Network/Value Carrier Domestic RASM Gap

• The domestic RASM gap declined to a 6% premium for network carriers in Q2 2011.
• The gap has been declining every year since 2007, showing a narrowing trend in revenue performance.

13. Changes in US Airline Revenue Over Time

• Peak revenue for US airlines occurred in YEQ3 2008.
• Revenue has nearly reached that peak in current dollars, despite a sharp decline in the following year.
• Ancillary revenue (fees, services) remains a small portion of total airline revenue, typically between 5% and 11%.

14. RASM Adjusted for Stage Length

• Stage-length-adjusted RASM showed Continental had the highest unit revenue performance (38% higher than Allegiant).
• The RASM gap between network and value carriers is smaller than last year, with value carriers performing better in terms of unit revenue.

15. Baggage and Cancellation Fees

• Baggage and reservation change fees have stabilized, while miscellaneous fees (e.g., food, entertainment, Wi-Fi) continue to grow.
• These fees represent a significant portion of airline revenue, with value carriers generally having lower RASM than network carriers.

Margin and Profitability

• Despite strong cost control, network carriers did not profit on domestic operations when comparing RASM/CASM.
• Value carriers did show a profit on domestic operations.
• Network carriers remained slightly profitable due to international operations, which contributed to a higher proportion of revenue in Q2 2011.
• Break-even load factors have increased, with network carriers at mid-80s and value carriers at low 80s.
• Future profitability will depend on yield increases or cost reductions, as load factor growth is limited.

International Carriers

• Value carriers are gaining global market share, with Oceania having the highest percentage of ASMs.
• South America and the Middle East have the lowest.
• International RASM/CASM trends mirror those in the US, with value carriers generally having lower unit costs than network carriers.
• Ryanair and Air Asia have even lower CASKs than value carriers in their respective regions.

Conclusion

• The domestic CASM gap between network and value carriers has narrowed significantly over the past few years.
• Fuel prices remain a major cost driver, but network carriers have improved efficiency and reduced the gap.
• Ancillary revenue is growing, but ticket revenue remains the primary source.
• International operations are becoming a larger revenue share for US network carriers.
• Profitability for network carriers is still constrained by domestic operations, while value carriers show better performance in the domestic market.