Key revenue measure falls at Southwest Airlines

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Associated Press

Posted on May 7, 2013 at 10:30 AM

DALLAS (AP) — Traffic is up but a key revenue measure is down at Southwest Airlines Co., indicating that carriers are finding it harder to sell high-priced tickets.

Southwest said Tuesday that passenger revenue per seat for every mile fell by between 4 percent and 5 percent in April.

That's a closely watched measure of pricing power in the airline industry, and Southwest's report echoed last week's news from US Airways, which said that the revenue ratio fell 4 percent in April. US Airways said travel by government employees dropped after automatic federal spending cuts took effect.

The revenue ratio was flat at Southwest in March compared with the year before. It rose when carriers imposed frequent fare increases over the previous couple of years.

Southwest, which owns AirTran Airways, said that traffic on the two carriers rose 1.5 percent last month compared with April 2012. Passengers flew 8.74 billion miles. The average trip was 16 miles longer, at 942 miles.

However, the increase in traffic wasn't enough to keep up with expansion at Southwest and AirTran. The airlines added 4.1 percent passenger-carrying capacity — that figure rises when carriers add flights, use bigger planes or fly longer trips.

The expansion left a few more empty seats. Average occupancy on April flights was 77.8 percent, down from 79.8 percent in April 2012.

Dallas-based Southwest carries more passengers within the United States than any airline, although it is the nation's fourth-largest airline by passenger miles behind United, Delta and American, which all offer long international flights.

In morning trading, shares of Southwest rose 5 cents to $14.30. They are up 40 percent for the year. Airline stocks have been soaring on steady travel demand, stable fuel prices and the expectation that mergers will make the surviving carriers more profitable.

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