Porter’s December:

Does Fewer Flights Mean Business Has Peaked?

Porter today crows that it has increased its load factor, implying increasing business success.

But when the numbers are more closely analyzed the picture does not look so rosy.  Here is why...

There are two ways to increase load factors:

• Attract more passengers by reducing ticket prices.

That strategy hasn’t  worked very well for Porter, as even with increasingly frequent advertised 20 and 30% discounts, the trend over the last six months is in the opposite direction. See chart below.

  December revenue passenger miles (the total number of paying passengers, times the miles each flew) of 57.9 million are a marked decline from the peak months of July and August - 61.4 and 63.7 million respectively. A drop in passenger loads of -9.1% since August.

 September, October and November were slightly worse than December, but all were significantly lower than last summer’s peak.

 In 2009, the situation was very different. Porter’s revenue passenger miles grew consistently from July to December, from 29.9 to 40.5 million. However, that increase just about matched 2009’s growth in the number of available seat miles (the standard measure of capacity), as Porter’s planes continued to fly half-empty.

• Decrease the number of seats available, by reducing the number of miles its planes fly.

The December numbers confirm that Porter’s made significant reductions – from 98.3 million available seat miles in November to 92.8 in December – a drop of 5.4% in one month.

Porter peaked in terms of capacity in August, at 99.7 million available seat miles. Porter’s planes are sitting on the ground more often.

The significant fact that the numbers reveal is that the growth of Porter's business has stalled.

 Because its passenger growth has stalled, Porter has reduced the number of flights (available seat miles). 

 It is that reduction that has led to the increase in load factor announced today.

 What Porter’s not revealing is how all this affects its bottom line. It can’t be good.

 As of March 31, 2010, date of the last available financial information, Porter had accumulated losses of $44,505,000.

 The load factor data released today, when considered against the previous five months’, suggest that that bottom line can only get worse.

 Here are the load factor data for the past six months, with comparison to 2009, as released by Porter: