How Will The FIFA World Cup Impact American Airlines’ 2Q’18 Passenger Yield?

by Trefis Team
American Airlines Group
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The FIFA World Cup 2018 has just begun and fans all over the world are aggressively supporting their favorite teams and players. This once-in-a-four-year event not only boosts viewership of online portals and the revenues of the hospitality industry, it also provides a push to the airline industry as many fans travel to the host country to watch the games live. As the airlines experience a surge in their traffic during this large sporting event, it allows them to leverage this opportunity by maneuvering their pricing for different routes and schedules. Consequently, they witness a jump in their revenue during this period. In this note, we analyze American Airlines‘ (NASDAQ:AAL) passenger yield during previous football World Cups (2006 onward) and estimate the impact of the current game on its 2Q’18 numbers using our interactive dashboard.

Passenger revenue yield per passenger mile is the passenger revenue divided by revenue passenger mile. It represents the average amount that a passenger pays to fly one mile and is useful to assess changes in fares over time. So, we compare American Airlines’ Passenger Yield in the quarters when the last three FIFA World Cups were held. Since the event is generally held in the second quarter of the calendar year, we look at the quarterly figures to understand the impact.

In the last three games – 2006, 2010, and 2014 – we see that American Airlines’ second quarter passenger yield increased strongly compared to the previous year, due to the strong demand for air travel during the World Cup. AAL’s yield rose 7.6%, 14%, and 7.8% on a year-on-year basis in the second quarter of the respective years. Now, given that American’s yield increases in the quarters in which the FIFA World Cup is conducted, we estimate its yield to improve strongly in 2Q’18 as a result of the current ongoing event. We anticipate an increase of 9.8% in AAL’s yield based on the past trend as well as the growing popularity of the game.

Feel free to create your own forecast by changing the inputs (blue dots) in our dashboard and visualize its impact on American Airlines’ passenger yield numbers. Also view our core reference data in other related dashboards: US Available Seat Miles, International Available Seat Miles, Revenue Passenger Miles, Load Factor, Fuel Expenses, Operating Income (EBITDA), and  Capital Expenditure.

Do not agree with our forecast? Create your own price forecast for American Airlines by changing the base inputs (blue dots) on our interactive platform.


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