Airlines sell more tickets, report higher October passenger yield

Yield is the average fare per passenger per mile. Passenger revenue is calculated by multiplying revenue passenger miles (or RPM) by the yield. It is a key indicator of price of air travel, and its weighted average is expressed in cents. Airlines for America (or A4A) publishes the monthly yield for US passenger and cargo market. Passenger yield data reflects the latest results for Alaska (ALK), US Airways and American (AAL), Delta (DAL), United (UAL), Southwest (LUV), JetBlue (JBLU), and their respective regional airline partners.

According to Airlines for America, in October, there was an overall year-over-year increase in passenger yield to 16.47 cents, an increase of 1.2% driven by increase in both domestic and international markets.

Domestic market yield increased by 1% to 17.23 cents, and international market yield increased by 1.1% to 14.66 cents. Plus, on a year-to-date basis, passenger yield increased by 2.3% to 16.54, driven primarily by the growth in yield in domestic markets, which increased by 2.9% to 17.24 compared to a lower increase of 0.5% in the international market.

There has been an increasing trend in the volume and value of tickets sold by US travel agencies. According to the Airlines Reporting Corporation (or ARC), the dollar value of airline tickets sold by US-based travel agencies rose 2.24% in October to $7.5 billion. Plus, ticket transactions increased by 2.46% to 126.3 million. In the first ten months of 2014, ticket transactions increased by 2.88% to 317.2 million, and the dollar value increased by 4.54% year-over-year to $78.1 billion. However, the global yield continues to remain soft due to weakness in Asia.

ETFs such as the Transportation Average ETF (IYT) and the SPDR S&P Transportation ETF (XTN) that hold airline stocks are impacted by changing trends in yield and other airline revenue drivers. Higher yields have a positive impact on airline profitability and margins.