Third Quarter 2004 Airline Financial Data: Regional Passenger Airlines Report Highest Rate of Domestic Profit
Here is the reason that the United wanted to renegotiate the AWAC contract. AWAC was on the way to making 80 million dollars for the year while United was losing billions. If the major airlines are being squeezed so will the regionals. It is all economics. Note the statement that the companies with the highest costs were Eagel and AWAC. What is also interesting is the significantly lower seat cost per mile that MESA has (15 cents per mile) than the other "major" regionals. You have to click on the tables to view the results.
BTS 35-04
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202-366-5568 Thursday, December 16, 2004 - The seven largest regional airlines had the highest domestic operating margins ― an industry measure of profitability ― of any selected carrier groups during the third quarter of 2004, the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation reported today in a release of preliminary data.
This group of regional carriers reported a domestic operating profit margin of 10.8 percent for the third quarter, above the profit margin of 3.6 percent reported by the seven largest low-cost air carriers and the 7.6 percent loss margin reported by the seven network carriers (
Table 1). Domestic operating margin measures operating profit or loss as a percentage of the airline’s total domestic operating revenue.
The industry operating margin declined from the second quarter to the third quarter. Quarter-to-quarter changes may be affected by seasonal factors.
The selected low-cost carriers reported a 68 percent decline in profit margin over the third quarter of 2003 while the selected network carriers increased their operating loss margin by 181 percent from a year earlier.
The largest percentage operating loss margins were reported by network carriers Delta Air Lines and US Airways (
Table 2) and low-cost carrier ATA Airlines (
Table 3).
The top operating profit margins were all reported by regional airlines---SkyWest Airlines, American Eagle Airlines and Express Jet (
Table 4).
Network carriers operate a significant portion of their flights using at least one hub where connections are made for flights on a spoke system. Low-cost carriers are those that the industry generally recognizes as operating under a low-cost business model. Regional carriers provide service from small cities, using primarily regional jets to support the network carriers’ hub and spoke systems. The selected groups consist of the seven carriers with the highest annual reportedrevenue in each group.
The regional carriers had the highest unit revenues with 14.2 cents per available seat mile (
Table 5). These higher unit revenues generally reflect the shorter flights and smaller aircraft flown by these carriers. They average flights of 300 to 450 miles, compared to the 1,000-mile average stage length for the network carriers. Domestic unit revenue measures revenues against capacity by dividing domestic operating revenues by domestic available seat miles.
Overall, the highest unit revenues were reported by the regional carriers Sky West, Air Wisconsin and American Eagle (
Table 8).
The lowest unit revenues were reported by low-cost carriers ATA, JetBlue Airways and Spirit Airlines (
Table 7).
Northwest Airlines reported the highest unit revenues among the selected network carriers (
Table 6).
The regional carriers also reported the highest domestic unit costs – 12.7cents per available seat mile (
Table 9).
The low-cost carriers reported the lowest unit costs – 7.8 cents per available seat mile. All of the selected low-cost carriers had lower unit costs than any of the regional or network carriers (
Table 10 ,
Table 11 and
Table 12 ). Domestic unit cost measures expenses against capacity by dividing domestic operating expenses by domestic available seat miles.
The carriers with the highest unit costs were the regional carriers American Eagle and Air Wisconsin (
Table 12) along with network carrier US Airways (
Table 10), which had the highest unit costs (16.1 cents) of the 21 selected carriers.
The carriers with the lowest unit costs were low-cost carriers JetBlue, ATA and Southwest Airlines (
Table 11).
The regional carriers also reported the highest domestic passenger revenue yields ― at 19.2 cents per revenue passenger mile (
Table 13).
Domestic passenger revenue yield measures passenger revenues against total travel by dividing domestic passenger revenues by domestic revenue passenger miles.
The top passenger revenue yields were reported by regional carriers Express Jet, American Eagle and SkyWest (
Table 16).
The lowest passenger revenue yields were reported by low-cost carriers JetBlue, ATA and America West Airlines (
Table 15).
Northwest Airlines reported the highest revenue yield of any network carrier (
Table 14).
Additional airline financial data can be found on the BTS website at TranStats, the Intermodal Transportation Database, at
http://transtats.bts.gov. Click on “aviation”, then on “Air Carrier Financial Reports (Form 41 Financial Data)”, then click on “Schedule P-12.”
Data are compiled from quarterly financial and monthly traffic reports filed with BTS by commercial air carriers. Financial and traffic data are preliminary and include data received by BTS as of Dec. 12. Data are subject to revision. Data from second-quarter 2004 and previous quarters are posted on the BTS website at
http://transtats.bts.gov. BTS has scheduled May 16 for release of fourth-quarter 2004 data.