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Domestic market boosts November US airline passenger yield

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Passenger yield

Passenger yield is the average fare per passenger per mile, and passenger revenue is calculated by multiplying revenue passenger miles (or RPM) by the yield. Passenger yield is a key indicator of the price of air travel and its weighted average is expressed in cents.

Airlines for America (or A4A) publishes the monthly yield for the US passenger and cargo market. Passenger yield data reflects the latest results for Alaska (ALK), American (AAL), Delta (DAL), United (UAL), Southwest (LUV), JetBlue (JBLU), US Airways, and their respective regional airline partners.

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According to A4A in November 2014, overall passenger yield increased to 16.4 cents, a year-over-year increase of 2.6% compared to 1.2% in October. The rise in domestic yield drove this increase. The domestic market yield increased by 4% to 17.11 cents, but the international market yield decreased by 1.4% to 14.68 cents.

On a year-to-date basis, the passenger yield increased by 2.3% to 16.53, driven primarily by the growth in yield in domestic markets. The domestic markets increased by 3% to 17.243, compared to a lower increase of 0.4% to 14.98 in the international market.

Tickets sold by travel agencies

In November, the dollar value of tickets sold and the number of transactions declined compared to those in October. According to the Airlines Reporting Corporation (or ARC), the dollar value of airline tickets sold by US-based travel agencies declined by ~20% to $6 billion in November, from $7.5 billion in October.

Ticket transactions also decreased by ~17% to 10.2 million, compared to 12.3 million in October. In the 11 reported months of 2014, the number of ticket transactions increased to 136.5 million and the dollar value increased to ~$84 billion. The global yield, however, remains weak due to weakness in Asia.

ETFs such as the iShares Dow Jones Transportation Average ETF (IYT) and the SPDR S&P Transportation ETF (XTN) that hold airline stocks are impacted by changing trends in yield. Plus, other airline revenue drivers affect these ETFs, since higher yields have a positive impact on airline profitability and margins.

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