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Why Delta Air Lines’ Traffic Fell in August 2016

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Dec. 4 2020, Updated 10:53 a.m. ET

Traffic growth

Delta Air Lines’ (DAL) total traffic fell due to a computer outage. For August 2016, Delta’s traffic fell by 2.8% as compared to the 0.5% capacity growth.

Airlines’ traffic is measured by revenue passenger miles (or RPM). RPM is the number of revenue passengers multiplied by the total distance traveled.

Other airlines have also faced computer outages. Southwest Airlines (LUV) canceled 2,300 flights in July due to a router failure. United Airlines (UAL) had a router failure earlier in the year as it completed its system integration process with Continental Airlines. American Airlines (AAL) also had an outage in 2013 when merging with US Airways.

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Domestic traffic grows

DAL’s domestic traffic fell at a slower pace than its international traffic. Throughout 2016 as well as 2015, DAL’s domestic region has seen higher traffic as compared to its international operations.

For August 2016, DAL’s domestic traffic fell by 1.5% as against the 2.6% capacity growth in the same period.

International traffic grows slightly

For August 2016, DAL’s international traffic fell by 4.7%. Traffic in the Atlantic region saw the lowest decline in this segment, declining by 3.3% in August 2016. Latin American traffic fell by 3.4% in August 2016. The Pacific region saw the highest traffic decline of 8.7%.

Outlook

DAL’s traffic grew by an average of 2% for the first eight months of the year. This is slightly lower than the 2.5% average growth capacity in the same period.

DAL has usually matched its supply and demand, and we can expect it to regain this balance in the next few months. DAL forms 3.2% of the iShares Transportation ETF (IYT). Next, we’ll discuss DAL’s utilization and yields.

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