Regional carriers reported a 3.6 percent operating profit in Q407, down from a 7.5 percent profit margin in the fourth quarter of 2006. The seven regional carriers reported a $93 million operating profit in the fourth quarter of 2007, according to the Bureau of Transportation Statistics. This operating profit cam as the seven network carriers reported a combined operating loss of $274 million in the fourth quarter for the group’s first loss after six consecutive quarterly profits. In the fourth quarter of 2006, the seven network carriers’ operating profit was $392 million.
A group of 20 selected network, low-cost and regional airlines reported a system operating loss margin of 0.02 percent in the fourth quarter of 2007, the first loss after six consecutive profitable quarters, according to BTS’s preliminary data. BTS, a part of the Research and Innovative Technology Administration, reported that the profit margin in the October-to-December period was the first loss since the first quarter of 2006. The industry’s larger airlines, the network carriers, reported an operating loss margin of 1.1 percent.
The 20 carriers spent 29.0 percent of their operating expenses in the fourth quarter of 2007 on fuel, compared to 13.5 percent five years earlier in the fourth quarter of 2002. The network group’s operating loss margin of 1.1 percent in the fourth quarter was a 2.8 percentage point decline from the 1.7 percent profit margin in the fourth quarter of 2006.
The top three regional airlines operating profit margins were reported by Atlantic Southeast Airlines, SkyWest Airlines and American Eagle Airlines. ExpressJet Airlines, Spirit Airlines and Frontier Airlines reported the worst operating loss margins. Alaska Airlines reported the worst margin of the network airlines. Horizon Air replaced Pinnacle Airlines as one of the top seven regional carriers because of updated revenue calculations.
The regional carriers spent the most for fuel per available seat-mile (ASM) of any carrier group while the low-cost carriers spent the least. However, the low-cost carriers spent the largest portion of their operating expenses for fuel while the network carriers spent the least.
Atlantic Southeast, American Eagle and Comair spent the most for fuel per ASM while ExpressJet and Southwest Airlines and JetBlue Airways spent the least. Allegiant, Atlantic Southeast and JetBlue spent the largest portion of their operating costs for fuel while Express Jet and Horizon and network airline US Airways spent the least.
The regional carriers reported the highest unit costs in the third quarter at 14.9 cents per ASM, slightly more than the network carriers’ unit costs of 14.5 cents per ASM. The low-cost carriers reported unit costs of 9.5 cents per ASM.
The carriers with the highest unit costs were regional airlines Horizon, Comair and American Eagle. The carriers with the lowest unit costs were JetBlue, Allegiant and Southwest. US Airways, which folded America West’s numbers into its report for the first time, reported the highest unit costs of any network airline.
The highest unit revenues were reported by regional carriers Comair, American Eagle and Horizon. The lowest unit revenues were reported by low-cost carriers Spirit, Allegiant and JetBlue. US Airways reported the highest unit revenues of any network airline.
The regional airlines passenger yield was the highest of the three groups at 20.8 cents per RPM and also showed the largest increase over the fourth quarter of 2006 at 0.8 cents per RPM. The top passenger revenue yields were reported by regional carriers Comair, American Eagle and Horizon. The lowest passenger revenue yields were reported by Allegiant, Spirit and JetBlue. Alaska reported the highest passenger yield of any network carrier.
The low-cost carriers were the only group to report lower unit revenues in the fourth quarter of 2007 compared to the fourth quarter of 2006. The low-cost airlines’ unit revenues of 9.7 cents per ASM were 0.1 cents per ASM less than the unit revenues in the fourth quarter of 2006. Regional airline unit revenue grew 0.2 cents while network unit revenues rose 0.9 cents per ASM from the fourth quarter of 2006 to the fourth quarter of 2007.