While prospects for the U.S. airlines industry are not exactly bleak, it is fair to say that those prospects may be getting a dose of reality. Two of the country’s largest low-cost carriers both reported that revenues may be flat or worse for the current quarter.

JetBlue Airways Corp. (NASDAQ: JBLU) announced Tuesday morning that it now estimates that February revenue per available seat mile (RASM) decreased by 10.0% to 10.5%. The airline now expects year-over-year RASM to fall by 7% to 8% for the first quarter of 2016. In its announcement, JetBlue said that “load factors remain solid, [but] yields are lower.” In other words, we can fill the seats but we’re not getting paid enough for them, either through fares or added fees.

Southwest Airlines Co. (NYSE: LUV) also announced February data Tuesday morning. The company said that it flew a billion more miles than in February 2015 but that its load factor dropped from 79.9% last year to 79.0% this year. Southwest now estimates RASM for the first quarter to be in line with the same period a year ago. The airlines also noted that capacity rose by 14.7% year over year.

While JetBlue laid some of the blame for the weak February results on a tough comparison with 2015 results, the airline also admitted that capacity rose by 19.6% year over year. Flying empty seats from point A to point B is a sure-fire way to cut RASM.

The double-whammy is competition from the ultra-low-cost carriers like Spirit Airlines Inc. (NASDAQ: SAVE) and Frontier. According the latest data from the U.S. Department of Transportation, the average domestic airfare dropped 6.2% year over year to $372, the lowest it’s been since 2010.

That doesn’t mean the airlines aren’t trying to raise fares. Website FareCompare notes that so far in 2016 there have been six tries at raising fares, with the most recent occurring on March 2 when American tried to raise domestic fares on 460,000 routes. On March 3, Delta and United had matched the increases, but on March 4 United began rolling them back. By 4 p.m. all three airlines had given up the price hikes.

There’s also little doubt that adding capacity has hurt RASM and, by extension, profits. Flying empty seats from point A to point B is a proven loser for the carriers.

The danger for airlines is that the dreaded triple-whammy is coming in the form of higher fuel prices. Crude oil prices have risen sharply over the past several weeks and as the price of jet fuel gets passed along to the airlines, pricing pressure will increase even more.

JetBlue got the worst of it Tuesday morning with shares down nearly 9%, at $19.99 in a 52-week range of $16.26 to $27.36.

Southwest’s stock traded down about 2.3% to $40.59, in a 52-week range of $31.36 to $51.34.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.