- Passenger traffic (RPMs): +12.3% year-on-year;
- Passenger load factor: 78%, -2.1 ppts.
American Airlines pax traffic up 12.3% on Asia Pacific services
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All-premium UK-US airlines. BA cuts LCY frequency; La Compagnie quits LTN; Odyssey to launch in 2017
There have been two notable recent developments in the market for all-business class services on the North Atlantic: British Airways is to reduce its London City-JFK A318 frequencies and France's La Compagnie is to withdraw from Luton-Newark to concentrate its 74-seat Boeing 757 operations on Paris-Newark (its only other route).
BA's 32-seat London City operation has been suffering from significant load factor declines, particularly on the outbound flights. These flights make a refuelling stop in Shannon, where passengers can pre-clear US customs, but this may not be a sufficient incentive for some passengers to take an indirect flight. La Compagnie expressed concerns about uncertainties in the UK post-Brexit, but its route economics must anyway have been struggling, due to Luton's lack of suitability as a premium market and its lack of feed.
So far there has been no reaction to these developments from the new-start Odyssey Airlines, which plans to launch an all-business class London City-New York service in 2017. It will no doubt be attempting to find a balance between relief that its level of competition has reduced, and some anxiety that its launch may coincide with a softening of market demand.
United Airlines’ lofty margin goals draw scrutiny, after a tepid market guide for 1Q2017
United Airlines has now joined most of its airline peers in officially declaring it too will achieve a positive unit revenue result in 2017; but its unit revenue and margin outlook for 1Q2017 have created some uneasiness among investors who were clearly looking for a better forecast from the airline.
The company’s margin pressure and more conservative unit revenue outlook in early 2017, versus its rival Delta, are driven by rising labour costs, United’s higher exposure to the Pacific – where overcapacity has created challenges for the large global US network airlines – and, compared with the networks of its peers, the structure of its hub network in capturing traffic flows to warm weather destinations during the US winter season.
In late 2016 United ambitiously declared it would best Delta’s margin performance by 2020. Now that the airline has drawn that line in the sand, United’s margins will be closely watched as a benchmark for progress in meeting that goal.