US' City of Atlanta announced (31-Aug-2010) an agreement with Delta Air Lines, AirTran, ASA and other airlines that serve Hartsfield-Jackson Atlanta International Airport. The agreement amends Delta’s Central Passenger Terminal Complex lease, which was extended in 2009. Under the terms of the agreement, the carriers will pay a supplementary terminal rental payment of USD30 million, spread over a four-year fiscal period from 2013 to 2016, to Hartsfield-Jackson over the remainder of the current lease, which expires in 2017. The supplementary payments will help to fund the international terminal and will enable the airport to retain adequate financial reserves to maintain its credit rating. The supplemental payments, paid in equal monthly installments, are as follows: USD12 million in FY2013; USD8 million in FY2014; USD5 million in FY2015; and USD5 million in FY2016. [more - City of Atlanta] [more - AirTran]
Atlanta reaches groundbreaking agreement with Delta and AirTran
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US airlines: a turnaround in unit revenue just as cost pressures rise in 2017
The four largest US airlines are moving closer to returning to positive unit revenue in 2017 after each of those companies has issued an improved unit revenue forecast for 4Q2016, driven by stronger yields and continued improvement in close in bookings. The yield improvement indicates that the US domestic environment is gaining some pricing traction after two years of weak fares, and the results on close in bookings continue a trend that emerged in the US market during late 3Q2016 and continued through the rest of the year.
Delta and Southwest have both publicly cited a bump in demand since the US presidential election in Nov-2016. Delta has expressed cautious optimism that the US revenue environment has turned a corner, and the positive momentum is driving the company’s confidence of climbing out of a negative unit revenue performance in 1Q2017.
Key to sustaining unit revenue momentum is keeping capacity in check over the course of 2017. American, Delta, United and Southwest have all declared their intentions to lower capacity growth in 2017, and show no intentions of revising those targets upwards. Rising fuel cost and non fuel cost inflation are the major headwinds for US airlines in 2017, which has resulted in Delta declaring margin compression for the year.
Southwest Airlines:domestic changes, continued international expansion, as overall 2017 growth slows
Southwest Airlines plans lower system capacity growth in 2017. The company joins other US airlines working feverishly to return to positive unit revenue as oil prices and labour costs are forecast to rise for most of the country’s airlines.
Even as Southwest’s capacity increases are projected to fall year-on-year in 2017 the airline is broadening its international reach with the debut of new flights from Fort Lauderdale, and is making moves in its domestic network.
This includes its decision to launch service from Cincinnati, a market that has attracted significant low cost service during the past two to three years as its hub status for Delta has diminished. Southwest’s service entry at Cincinnati comes at the cost of flights from Akron and Dayton, which is not surprising, given Cincinnati’s potential to garner higher revenue.
Although Southwest cited some positive trends at the end of 2016, it struck a cautious tone about the operating environment in the US, noting that while yields were improving, the revenue environment remains challenging. US airlines, including Southwest, are being closely watched after declaring they will return to positive unit revenue in 1H2017.