US airlines wait for yields to turn a corner as load factors remain at record highs

Solid demand trends that prevailed in the US market for much of 2012, and are continuing into the beginning of 2013, have yet to produce significant yield traction for the majority of the country's airlines. But while some executive management teams at the country's major carriers believe it is just a matter of time before robust load factors translate into favourable yield increases, the reality is domestic fares adjusted for inflation continue to decrease.

As some economic uncertainty continues to linger, the country's airlines may encounter resistance if they try to bolster yield through fare increases. Network carriers also continue to feel pressure from ultra low-cost carriers that attempt to stimulate traffic by introducing measurably lower fares into their markets, which also creates a challenge in lifting yields.

The average yields for the full year 2012 recorded by seven US carriers - Alaska, American, Delta, JetBlue, Southwest, United and US Airways - was roughly 3%. Those results are somewhat skewed given the broader international networks operated by American and Delta. United also has a robust international offering, but merger integration challenges pressured the carrier's yields throughout much of 2012, which resulted in yield growth for the full year of 1.2%. Yields for airlines with more limited international networks - Alaska, JetBlue, Southwest and US Airways - averaged 2.4%.