Discounted tickets and a strong economy will help the nation's airlines to report record first-quarter travel when they release their figures later this week.
Several major carriers and industry analysts predicted the profit picture will be much fuzzier, however, because discounting holds down revenue while boosting ticket sales.
"March was extremely strong. It might even come in as the strongest month in our history, and it certainly will be double-digit in growth," American Airlines spokesman Al Becker said. "That means we have had an entire quarter of double-digit growth." For January and February combined, American's traffic increased 12.9 percent. Nonetheless, Becker said, "I would have to characterize yields as not as good as we would like them to be."
March was the first full month for traffic to reflect the results of a new round of fare wars set off Jan. 18 by American. Under American's Ultimate Super Saver, travelers pay only $129 one way to the West Coast if they buy a round-trip ticket 30 days in advance. The other carriers immediately matched American, and all carriers contacted reported strong discount sales and first-quarter traffic.
George James, president of Airline Economics Inc. and a long-time industry analyst, said, "I think you're going to find that the yields are going to be down on a year-over-year basis, probably something on the order of 4 percent to 5 percent less than a year ago."
James said that the percentage of passengers traveling on discount was reaching the mid-80s on an industry basis, up from about 74 percent last fall.
"We are seeing good traffic growth," James said. "It looks like a record compared with any other first quarter, but it probably does not exceed the best third quarter in history," which occurred last year.
The potential that discounts have to affect the bottom line never was clearer than in 1983, James recalled. In the first quarter that year, the airline fare battles were fierce and resulted in a 10 percent increase in traffic. However, that was accompanied by a 10 percent decrease in growth and a $650 million industrywide loss, making those three months the worst quarter in the industry's history.
Nobody expects this first quarter to be a loser, but the airlines are cautious. Joe Hopkins, spokesman for United Air Lines, the nation's largest, said that "traffic shot up dramatically in March for us, and I think you'll see some fairly strong traffic in the industry . . . As far as translating that into dollars, however, there is great concern that these low fares, while they may stimulate all that traffic, are not that great for the bottom line."
At Delta Airlines, however, Joseph A. Cooper, senior vice president for marketing, said that "yields are looking very, very good" despite all the discounting. Cooper said that Delta had a 21 1/2 percent increase in revenue passenger miles through the first 30 days of March over the same period last year, "And Sunday [March 31] couldn't have done us any harm."
Eastern spokesman Paula Musto said February marked the seventh consecutive month in which the financially troubled airline set a traffic record, "And I fully expect March to be a record. . . . We're going to have some good results" on the bottom line.
At Washington-based USAir, traffic records were set in both January and February, and spokesman Dave Shipley said "I would have to say we expect a good first quarter."