North America

Continued traffic growth and financial stability

Passenger traffic, as measured in revenue passenger-miles, continues to rebound from the lows of the 2008/2009 downturn. Overall US passenger traffic has averaged 2 percent growth per year since 2009, ahead of capacity growth, which ranged from 1 to 2 percent per year over the same period. Capacity growth of the low-cost carriers (LCC) continues to outpace network carriers, averaging 4 percent in 2013, compared with 1 percent for network carriers. Total fleet capacity increased 2 percent in 2013, rebounding to pre-2008 levels. The average passenger load factor for 2013 was 83 percent, an all-time high for the US airline industry. Canada's two largest airlines outpaced the US airline traffic and capacity growth, posting 5 percent and 4 percent growth, respectively.

With the consolidation of the US airline industry over the past six years, a commanding 75 percent of both traffic and capacity is concentrated with the Big 3 network carriers: American, United, and Delta. Consequently, capacity growth slowed as the recently merged airlines continued to impose capacity discipline and to realign their networks to maximize profitability. LCCs accounted for a 20 percent share of traffic and capacity, a gain of half a percentage point compared with 2012.

Capacity growth rates varied by regional flow. For the Big 3 US airlines, capacity growth within North America increased 1 percent during 2013. When regional jet operations are included, network-carrier capacity growth drops to 0.5 percent per year, as available seat-miles on regional jets declined 1 percent. Regional jet operators continue to replace smaller regional jets with larger regional jets or small single-aisle commercial airplanes with better fuel economy and lower trip costs. Among individual flows, the Latin America flow grew the fastest, with capacity and traffic up 5 percent and 6 percent, respectively. Load factor remained constant at 81 percent. The transatlantic flow recorded the largest load-factor increase, rising 2 percentage points to 83 percent as traffic grew 1 percent and capacity declined 0.5 percent.

Five major airline mergers since 2008 have made the US airline industry the beacon of profitability for the global airline industry. US airlines are expected to report record net income of $5.5 billion for 2013, and IATA forecasts net income of $8 billion for 2014. Profit margins before interest and taxes are also forecast to increase 1.5 percentage points to slightly more than 6 percent.