So the 6 majors showed a net decline of 6.8% for the month of October. Only Southwest (surprise surprise) actually showed an increase with a scant 0.5%. When you include the reduction by the minor airlines and the loss of some airlines such as ATA and Aloha as well as the reduction by the remaining carriers and we get pretty close to the 10% number I have been banding about for some time now. Frankly the numbers show that the capacity cuts have not been enough and we need another - albeit smaller - round of cuts to bring the market to equilibrium. The fact that Southwest is flying around with 1/3rd empty seats is a telling sign.
The airlines are not necessarily being smart about the situation. Their seat sales are rather anemic and they are not doing anything to burn off the FF debt mountain. Other that is than devaluing the currency.
Traffic declines however do not take into consideration the reduction of the premium traffic mostly business that moves those nice people to the back of the bus. Further we are also seeing reductions in actual passenger numbers of a similar number as the US in the European and Asian markets.
There are some bright spots. Air Arabia continues its march as probably the world's most profitable airline by gross profit per pax metric. It saw a slight slip in yields but still its running at 87% load factor rates. This confirms that the decision by the Dubai Government to create FlyDubai is a good decision.
Freight however is a really sorry state.
Things do seem to be about where they should be but more belt tightening is needed. Our original projection of employee reductions of over 100,000 in 2008 seem to be coming true.
Cheers
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