Airlines See Drop in Traffic

Feb. 5 — Despite offering less capacity in January, both Southwest Airlines Co. and American Airlines Inc. last month saw their traffic decline even faster.

As a result, airplanes for Southwest and American, as well as several other large U.S. carriers, flew emptier in January than a year ago, the latest evidence of slowing demand for air travel.

Dallas-based Southwest said its load factor, or percentage of seats filled, dropped 1.4 percentage points to 62.8 percent in January compared with a year earlier. Its capacity in available seat miles flown fell 4.4 percent, but its traffic in revenue passenger miles was off 6.4 percent.

American said its traffic plummeted 11.7 percent in January compared with a year earlier, despite an 8.3 percent cut in capacity. Its load factor dropped 2.8 percentage points to 73.8 percent.

On its domestic routes, Fort Worth-based American reduced capacity 11.6 percent, but demand dropped even more — down 13.9 percent.

In all parts of its system — domestic, Pacific, Atlantic and Latin America — airplanes had more empty seats despite sharp cuts in capacity.

And airlines have told analysts to expect even more drastic drops in traffic in the next few months.

Southwest had told industry analysts Jan. 22 that January's bookings and revenue trends looked fairly strong. However, chief financial officer Laura Wright had warned that the carrier was seeing "notable softness in post-January bookings."

Other carriers have echoed the same trend — fairly good results through January, but a drop-off in bookings and revenue apparent in February and March.

Southwest launched an airfare sale Tuesday in an effort to fill some of those empty seats during a period that is traditionally slow even in good years. Other carriers largely matched its prices.

Southwest's fare sale goes through March 31, which includes the spring break for most schools. However, Easter, traditionally a strong travel period, comes on April 12 this year, hurting first-quarter results.

During the latter part of 2008, airlines slashed their flying capacity, and investors are waiting to see if the new, smaller airline industry is well-matched in size to the smaller demand from a weak economy.

While United Airlines Inc. and Continental Airlines Inc. this week reported a decline in seats filled for January, three smaller carriers said their load factors increased.

US Airways Inc. flew 6.9 percent less capacity in January than a year earlier, more than its 6.2 percent decline in traffic. As a result, it said Wednesday that it set a record for January load factors, up 0.6 points to 75.8 percent.

Alaska Airlines Inc. also reported fuller airplanes, saying that its loads jumped 2.9 points to 71.7 percent in January. It had cut its capacity 8.4 percent last month, with traffic down 4.7 percent.

On Tuesday, AirTran Airways Inc. said its loads climbed 5.8 points to 73.2 percent.