Capacity Restraint Leads to Fewer Empty Airline Seats in October

(MoneyWatch)  You have to marvel at the airlines' collective ability to keep capacity in check. In the past, airlines were hesitant to cut capacity for fear of losing market share, but since last year, they've effectively been in lock step with each other. Nobody wants to add too many seats since the airline industry is still on shaky ground, but demand has held up in the face of low fares. That means that the number of seats filled continues to be very high.

The monthly October traffic reports are out, and I've got the summary here. But first, how about a brief refresher on how the airline industry measures capacity and demand? The basic measure of capacity is the available seat mile (ASM). To figure out your ASMs, you take the number of miles flown and multiply it by the number of seats on board.

Then to get demand, you take number of miles flown and multiply it by the number of seats filled. That will give you revenue passenger miles (RPM). Divide your RPMs by your ASMs and you get your load factor, the percent of ASMs that are carrying people instead of going empty. So here's what we had during the month of October.

Airline	ASMs	RPMs	Load Factor
AirTran	7.0%	5.2%	-1.3 pts
Alaska*	(1.6%)	3.0%	+3.4 pts
Allegiant	38.9%	36.4%	-1.6 pts
American*	(7.3%)	(2.6%)	+4.0 pts
Continental	(2.6%)	1.7%	+3.5 pts
Delta	(8.3%)	(6.5%)	+1.6 pts
JetBlue	7.1%	7.2%	+0.1 pts
Southwest	(9.4%)	1.9%	+8.8 pts
United	(4.3%)	(1.6%)	+2.3 pts
US Airways#	(1.7%)	(0.6%)	+1.0 pts

*Does not include regional operations #Only includes wholly-owned regional subsidiaries

As you can see, only a couple airlines added capacity. Both JetBlue and AirTran had growth, but it has been moderated since their speedier growth days. Allegiant had exponential growth, but they are quite small so the impact on the industry as a whole is negligible.

As we head into the cold winter months, it will be interesting to see how these load factors hold up. It might take even heavier discounting to sustain, but the capacity restraint has made it much more likely.

[Updated 12/13 @ 731p - I apologize for not more clearly labeling the table. These are year over year percent changes for RPM and ASM while the load factor change is year over year point change.]