Airlines have a funny way of using complex terms to convey simple things.
That showed even in Delta Air Lines' relatively straightforward announcement Tuesday of a $4.5 billion profit for 2015.
Airlines use tortuous terminology in part because the things investors want to hear are very different from what consumers want to hear. In fact, consumers’ motivations (low fares) are sometimes the exact opposite of investors’ interests (high profits) -- and airlines know it.
The conflict comes when airlines discuss their financial results on quarterly conference calls with analysts, because the public discussion is webcast and recorded for anyone to listen. What's more, airlines are limited in what they can say about future air fare moves because signaling future price changes could lead to accusations of collusion.
That leads to the use of some interesting terms to emphasize what airlines want to tell investors, which is: We will try to keep fares high to increase profits. But we certainly won’t say that in public in just so many words.
Here’s a handy guide to translate airline investor-speak into more familiar terms:
Increased unit revenue = Higher fares
Expand operating margins = Increase fares
Revenue premium = Higher fares than other airlines
Push fuel savings to the bottom line = Keep fares high and avoid overspending on expansion, even when fuel prices go down
Capacity discipline = Not adding many flights
Increased load factor = Fuller planes
Upgauging through densification = Squeezing more seats onto a plane
Yield = Average fares, on a unit basis
Curtail revenue dilution = Keep fares high
To be sure, the term “Higher fares” can mean, for example, more first class fares sold. Since first class fares cost more than coach fares, that drives up the average, even if coach fares remained the same.
In fact, Delta has been seeking to sell more of its first class and comfort plus seats for cash rather than giving them away as free upgrades.