International Traffic Causes Steep Load Factor Drops

I'm still compiling all of the March traffic numbers for publication, but there has been a very telling trend that has shown up in most results. The international numbers are far, far worse than the domestic ones.

If we go back a little, it's easy to see why this is the case. Airlines have rushed to fly more internationally as their domestic turf continued to be invaded by low fare carriers. While the airlines have been aggressively cutting domestic seats for quite some time, they happily let international seats continue to flood the market. Now they're paying for it.

Let's look at the combined Delta/Northwest March traffic for a good example of what you'll find around the system. Year over year, Delta's domestic capacity was down 8.6 percent while international was down 6.7 percent. Within that international bucket though, it's easy to see that Northwest was far more conservative on its Asian route network (capacity down 12.3 percent) than Delta was on its Atlantic route network (down only 2.2 percent). Latin capacity was down 10.3 percent.

If we look at load factor, it tells the story we'd expect to see. Domestic load factor held up best, down only 2.3 points. Pacific saw a 3.7 point decrease and Latin saw a 6.3 point decrease. But what was the worst? Atlantic. Load factor there was down a sharp 10 percent even.

The biggest problem now is that airlines have to shrink more. Before, they could pull planes domestically and put them internationally. Problem solved. Now when they pull them internationally, they won't have any other place to put them but the desert.