Traffic up, revenue metric down at Southwest - Businessweek

DALLAS (AP) — Southwest Airlines Co. said Tuesday that it flew more passengers in June but customers continued to pay less per mile — a key revenue measure for the industry.

The company, which also operates AirTran Airways, said passenger revenue for every seat flown one mile fell about 1 percent last month, compared with June 2012. That follows a 2 percent decline in May and a 4 percent to 5 percent drop in April.

Passenger revenue per seat mile is watched closely in the airline industry as a sign of pricing power. The figure usually rises or falls with the average price of a ticket. Airlines can sell out seats yet still see their revenue per seat mile fall if they must discount prices to fill the plane.

That may have been what happened at Southwest last month. The company reported lower revenue per seat mile despite a 2.3 percent increase in traffic. Passengers flew 9.85 billion miles last month on Southwest and AirTran, up from 9.62 billion miles in June 2012.

The Dallas-based company increased passenger-carrying capacity 1.7 percent, partly by operating longer flights on average.

With traffic rising faster than capacity, the average flight was more full last month — 85 percent compared with 84.4 percent full a year earlier.

Dallas-based Southwest is the nation's fourth-biggest airline by passenger miles.

Southwest shares rose 19 cents, or 1.5 percent, to close at $13.10. In the past year, they have risen from $8.45 to peak at $14.56 in May.

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