Delta’s regional passenger revenue growth
The passenger segment revenue, which accounts for 87% of Delta’s total operating revenue, increased by $772 million and contributed to 84% of the total increase in revenue in 2Q14.
The domestic region was the best performer because it generated the highest passenger revenue and unit revenue growth of 15.7% and 10.2%, respectively, due to strong demand in Atlanta and New York. In 2013, Delta’s share in the domestic market was 65%. United (UAL) and American (AAL) domestic revenue share was 57%. Delta’s low-cost peers, Southwest (LUV) and JetBlue (JBLU), had domestic share of more than 90%.
The revenue growth in the international segment was given by the 24% capacity growth in Latin America. The joint venture with GOL and Aeromexico added $36 million to the revenue in the Latin American region because they provided one-fourth of the traffic on the U.S. to Brazil flight and on flights to key Mexican cities. According to the management unit, revenues in Latin American decreased due to capacity growth and weakness in business demand associated with the FIFA World Cup in Brazil.
In the transatlantic region, Delta managed to improve unit revenue by 7.2% with the help of its joint ventures. Delta launched a new service to Seoul, Hong Kong, and London in the Pacific region which is impacted by the yen depreciation.
For 3Q14, Delta expects a revenue per available seat mile (or RASM) growth of 2%–4% on a 2%–3% growth in capacity.
© 2013 Market Realist, Inc.
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