US airline 2Q2015 unit revenues sink as capacity continues to creep up. The cycle returns?
The largest US airlines have revised 2Q2015 passenger unit revenue projections downwards, driven by the country's negative GDP growth in 1Q2015 and general pricing pressure rippling through the domestic market.
Sagging unit revenue forecasts have resulted in most of those airlines stating that they intend to re-examine their capacity growth during 4Q2015 in an attempt to steer PRASM into positive territory. Those airlines seem to realise that unit revenue growth is important to continue margin expansion over the mid to long term.
Two markets that appear to be undergoing the most severe pricing pressure are Dallas and Chicago, where American and Southwest seem locked in a pricing battle. The lowered fares in Chicago are creating some headwinds for United, which also has a hub at Chicago O'Hare.
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