Long-Term Market
Growth moderating in third year of improvement
The North American commercial airline industry posted its third year of traffic and capacity growth amid sustained profitability. Capacity and traffic both grew 2 percent, year over year, with varying results for network and low-cost carriers. Network carriers reported a 1 percent rise in both capacity and traffic, contributing to an 83 percent passenger load factor. The low-cost carrier segment continues to grow at a faster rate, with capacity growing 6 percent and traffic growing 7 percent, contributing to a 1 percent boost in passenger load factor to 82 percent.
The two largest Canadian airlines are also growing faster than US network carriers. Combined available seat-miles and traffic increased at the same 5 percent rate, while passenger load factor remained flat at 81 percent.
Fleet replacement accelerates
High fuel prices are intensifying the need for new fuel-efficient airplanes, prompting several airlines in the United States to accelerate their fleet renewal programs. At least 900 new fuel-efficient single-aisle airplanes were ordered in 2011, with deliveries beginning in the middle of this decade. American, Delta, and Southwest have announced plans to replace some of their older, less efficient airplanes with Next-Generation 737s or the new 737 MAX.
Boeing 787-8 increasing market fragmentation
Several new routes have been announced since the Boeing 787-8 took to the sky. Boston and San Diego are the first cities to celebrate new routes (initially to Tokyo) enabled by the new airplane's state-of-the-art economics and capabilities. Additional routes to and from North America will be announced as 787 deliveries continue.
Fleet outlook
The long-term outlook for the North American airline industry is for modest growth through the forecast period. Network carriers will maintain strict capacity discipline. Low-cost carriers will continue to outpace network carrier growth to accommodate increased demand and fill niches abandoned by network carriers. Financial stability also will be a key indicator of future growth. Several airlines have indicated growth planning to be executed when returns are sufficient to fund their strategic goals.
In consideration of these trends, we forecast the region's demand to be 7,300 new airplanes to accommodate an average 2 percent annual traffic growth. Single-aisle airplanes account for the bulk of demand, which is forecast to exceed 5,000 new airplanes.
