Digging in to Virgin America's Q4 Operational Stats

I promise that this is my last post on Virgin America’s recent performance, but I crunched some more numbers and found some interesting indicators hidden in the operational stats. It’s time to dive into the world of RASM and CASM. (Click for definitions)

For the fourth quarter, Virgin America saw RASM of 8.97 cents, up 1.8 percent from Q3. That’s a very slight gain, but the fact that average stage length dropped 1.5 percent counters that benefit. RASM and CASM are always higher for shorter stage lengths.

If we look at PRASM (using passenger revenue instead of total revenue), the trend is actually down. It dropped 1 percent to 8.22 cents from Q3 to Q4. Average fare also dropped by 4.7 percent down to $132. So it looks like they were getting slightly lower fares for the quarter, but ancillary revenue must have increased a bit. In the end, the change isn’t really very significant either way.

On the cost side, things looked very good thanks to fuel. CASM dropped 14.5 percent to 11.12 cents. That’s excellent, of course, but it’s a different story when we look at CASM excluding fuel. That number actually shows a 3.7 percent increase from 8.28 cents to 8.59 cents. Again, this is somewhat offset by that reduction in stage length.

There is another thing to consider here. Starting in Q4, the airline started reporting results from the charter operation it runs for Direct Air. That accounted for about 5 percent of departures, so that can create some noise in these numbers.

What does this tell us? Well it certainly doesn’t show the same progress being made quarter over quarter that the airline had reported in previous quarters. That should be concerning, especially since the numbers are likely to take a turn for the worse in Q1 for the entire industry thanks to higher fuel prices and lower demand.