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United Airlines’ December Traffic Outpaced Its Capacity Growth

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Jan. 10 2019, Updated 2:40 p.m. ET

December traffic growth

On January 9, United Continental’s (UAL) wholly-owned subsidiary, United Airlines, reported its operating performance for December 2018. Its traffic (revenue passenger miles) growth rate for the month exceeded its capacity (available seat miles) growth rate.

During the last month of 2018, the company’s traffic grew 6.9% YoY (year-over-year)—50 basis points higher than its capacity growth of 6.4% YoY during the same period in 2017.

United Airlines’ traffic growth has exceeded its capacity growth for eight consecutive months. In 2018, the company reported a higher traffic growth rate compared to its capacity growth in every month except January and April.

Lower airfares have remained a key growth driver of United Airlines’ traffic in the past few years. Falling oil prices are expected to lead to lower input costs for the company, which will make lower airfares sustainable in the near term.

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Robust traffic growth across international markets mainly drove the company’s consolidated traffic last month. United Airlines’ international traffic grew 8.9% YoY in December—higher than its capacity growth rate of 6.2% during the same period. The Atlantic region’s traffic grew 12.9% YoY, the Latin American region’s traffic grew 5% YoY, and the Pacific region’s traffic grew 5% YoY.

In the domestic market, United Airlines’ traffic growth rate in December was lower than its capacity growth. Last month, its traffic grew 5.5% in the domestic market, while its capacity grew 6.6%.

Operating performance

In 2018, United Airlines’ traffic increased 6.4% YoY compared to its capacity growth of 4.9% YoY. Its 2018 traffic growth rate was significantly higher than its 2017 growth rate of 2.8%. The international market’s traffic grew 5.7% YoY, higher than its capacity growth rate of 2.6%. The Atlantic region’s traffic grew 12.1% YoY, the Pacific region’s traffic grew 1.5% YoY, and the Latin American region’s traffic grew 1.3% YoY.

The domestic region witnessed 7% YoY traffic growth in 2018, while its capacity growth was 6.7% in the same period.

Delta Air Lines (DAL) and Southwest Airlines (LUV) have provided their 2018 traffic growth data. The data show that both companies’ traffic growth rates have lagged their capacity growth rates. Other players in the space (IYT), including American Airlines (AAL) and Alaska Air Group (ALK), haven’t yet reported their numbers for the year.

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