A new report said that only four of the 19 global U.S. airline hubs have been producing positive domestic yield growth. Nevertheless, American (AAL) , Delta (DAL - Get Report) and United (UAL - Get Report) all produced record profit in 2015.

The report by Wolfe Research analyst Hunter Keay said American's Charlotte hub produced 3.4% domestic yield growth in the 12 months ended Oct. 30. Second best was United's San Francisco hub, with 1.7% domestic yield growth, followed by both the Delta and United hubs at New York Kennedy International Airport, both with 1% domestic yield growth.

All other hubs had negative domestic yield growth, during a year when fuel prices were falling and ultra-low-cost carrier pricing was impacting thousands of routes. Yield is a metric, reported in cents, that measures ticket pricing; it is determined by dividing an airline's passenger revenue by the number of revenue passenger miles.

The worst hub domestic yields were negative 9.2% for American and United hubs at Chicago O'Hare, negative 8.5% at United's hub in Houston, which has been impacted by the decline of the energy economy and negative 7.3% at American's Dallas hub, impacted by the growth of Spirit Airlines (SAVE - Get Report) , the leading ultra-low-cost carrier or ULCC.

Fourth worst was a 7.1% yield decline at Delta's Atlanta hub. It is worth noting, however, that at Delta investor day in December CEO Richard Anderson declared, "We have the most profitable hub in the world in Atlanta, with huge scale," an indication that the dramatic decline in fuel pricing means that an airline can be profitable even if ticket prices fall.

As for Charlotte, on the two most recent American earnings calls, President Scott Kirby has singled it out as a top performing hub in terms of passenger revenue per available seat mile.

On the fourth-quarter call in January, Kirby said, "We saw the strongest year-over-year performance in Charlotte," adding that "the second strongest domestic performance was in (Dallas-Fort Worth) and that's in spite of all the capacity that has been added here," again a sign that yield is not the only indicator of profitability.

Domestic yield in the 19 cities in Keay's survey declined an average of 3.2%.

Keay said he could find no single obvious factor that accounted for yield variation.

"Other than Charlotte, where American has a staggering 93% domestic market share, market share really didn't matter all that much," he wrote. "Factors that seemed to matter more than market share included ULCC penetration, geographic location and mix of local traffic."

Keay said being a coastal hub helped to keep yields up. Average yield declines in coastal hubs were 1%, while average yields in inland hubs declined 5%. "Coastal hubs are less impacted by connecting traffic and tend to be less penetrated by ULCCs because of the lack of multi-directional growth options," he wrote.

 

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.