How Fast Are The Old Legacy Airlines Losing US Domestic Capacity?

By Robert Herbst, Airlinefinancials.com
 
Last year, Delta (DAL), American (AMR), United (UAUA), and US Airways (LCC)
collectively operated 85 billion less domestic seat miles than they did 6 years ago.
This was on average, a 21% reduction in domestic capacity for each of the airlines
noted above.
 
While some of this capacity decrease was picked up by each airlines regional
affiliate partners, over that same time period, Southwest (LUV), JetBlue (JBLU),
Air Tran (AAI), and 4 other smaller carriers added over 84 billion ASM’s to their
route systems.
Note: One ASM is one passenger seat flying one mile.
 
The following chart provides capacity details for each legacy airline, their affiliates,
and several low cost carriers. Airlines are listed from largest to smallest.

 
 
 
Notes: All ASM’s for affiliates, Southwest, JetBlue, Air Tran and 4 others are considered domestic
for this analysis. United affiliates compares year 2009 with 2005.
4 other airlines includes: Frontier, Spirit, Virgin and Allegiant. Delta includes Northwest capacity.
 
The chart below shows system operating unit costs and system unit revenue.
For year 2009, American is the only airline to have an operating loss.
 
Data clearly shows a correlation between lower unit costs and increasing capacity.

 
 
 
The challenge for the old legacy airlines is to find a way to be cost competitive with these
growing domestic carriers that have never incurred some of the legacy expenses.
 
This objective needs to be accomplished before so much market share is lost that
there is no way for them to recover.
 
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Disclosure- The above opinions and comments should not be used to determine the worth of
any stock or investment. At the time of writing, the author and his family did not hold stock and/or
derivative positions in any of the airlines covered in this article.
 
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Robert Herbst has been a commercial pilot since 1969. His aviation experience and financial
background provides a unique analytical perspective into the airline industry.
He is the founder of: Airlinefinancials.com which provides airline industry analysis and
commentary for major US carriers.