MINNEAPOLIS – Delta Air Lines got a little carried away with fare increases and had to adjust its pricing during the first quarter. It worked, allowing the airline to eke out a narrow profit.
Delta has been aggressive about boosting ticket prices. Sometimes it rolls out broad-based fare increases. Other times, it simply offers fewer cheap seats on a given flight.
Travel demand was strong heading into 2013, so tickets were priced accordingly, said CEO Richard Anderson.
But automatic government spending cuts, higher Social Security taxes, and other factors kept some people from flying, so Delta filled seats with sales and promotions.
That move helped Delta record an operating profit in the first quarter, a slow travel period thats usually a money-loser for the airlines. Excluding special items, Delta earned $85 million, compared with a year-earlier loss of $39 million.
Delta begins planning how many seats to sell at what fare as much as eight months in advance. The pricing disclosures on Tuesday were a glimpse into adjustments that airlines often make as they try to balance their desire to charge as much as they can for each seat versus the need to fill as many seats as possible.
The worlds second-biggest airline said a slowdown seen in March is continuing. Government agencies have cut back on travel to comply with mandatory budget cuts, and vacationers demand has weakened. As a result, per-seat revenue is down 2 percent to 3 percent this month.
Defense companies account for about 3 percent of Deltas revenue from big companies, and flights by those companies have declined as much as 20 percent over the past month, Delta President Ed Bastian said.
Lower fuel prices should help to offset the decline, the airline said. Delta has also been keeping a lid on flying, aiming to charge more for the seats that it does offer to passengers. During the first quarter, it cut flying capacity by 3 percent. It said capacity will be flat to up 1 percent in the second quarter, which includes the start of summer travel season.