US domestic market barely growing as airlines make huge profits; international capacity up almost 10% this summer

Emirates is the fastest organically-growing airline in the US international market

Emirates is the fastest organically-growing airline in the US international market. This August it will be offering 70% more seats than in August 2013, thanks to the introduction of larger aircraft on several routes and the addition of new routes to Boston (above in March 2014) and Chicago (due to start on 5 August).

According to IATA’s Airlines Financial Monitor (May-June 2014), US airlines notched up an impressive operating profit of $1.85 billion during the first quarter of 2014, up from $781 million in the same period of 2013. This compares with cumulative operating losses for airlines in Asia-Pacific and Europe during the same period. It is also worth highlighting that in the same report, a table of airline load factors by region shows that North American carriers have reported average load factors in the first five months of 2014 of 82.7%, notably higher than carriers in the Middle East (79.8%), Europe (78.4%), and Asia-Pacific (76.8%).

Passenger data from the US DoT Bureau of Transportation Statistics shows that in the first four months of 2014 scheduled domestic enplanements are up a modest 1.3%. In 2013 as a whole, domestic enplanements were up just 0.3% to 645.6 million, suggesting that capacity growth constraint has played a significant role in improving the profitability of the industry as a whole in the US. In 2005, 2006 and 2008 US airlines carried between 650 and 660 million passengers, while in 2007 there were almost 680 million domestic enplanements.

US top 13 domestic airlines - Change in weekly seats Aug 14 v Aug 13 (Weekly departing seats in Aug 14)

Source: Innovata / Diio Mi for w/c 12 August 2013 and w/c 11 August 2014.

Analysis of schedule data for August shows that scheduled seat capacity on US domestic routes will be up around 0.8%, with the number of actual flights down around 2%. However, ASKs (Available Seat Kilometres) which takes into account sector length will be up around 2.7%.

Until American Airlines and US Airways flights operate under a single code, Delta Air Lines remains technically the biggest carrier in the US domestic market with almost 3.7 million weekly seats. Among the top 10 airlines, Delta is the only one which is showing a small year-on-year reduction in seat capacity. AirTran Airways coded flights are now reducing quite rapidly as integration with Southwest Airlines nears completion. The fastest-growing airline are two ‘regional’ carriers, Alaska Airlines and Hawaiian Airlines, and three LCCs, Allegiant Air, Frontier Airlines and Spirit Airlines.

International seats to/from US up almost 9%

While the domestic market remains relatively becalmed, seat capacity on international flights from the US this August is up 8.7%. The number of flights have increased by 4.9% while ASKs are up almost 10%. Of the top 16 airlines to serve the US market, just one (Air France) has seen a year-on-year reduction in seat capacity and that was very small. United Airlines, the biggest international carrier at present, was also the fastest-growing of the top six carriers.

Chart: US top 16 international airlines - Change in weekly seats Aug 14 v Aug 13 (Weekly departing seats in Aug 14)

Source: Innovata / Diio Mi for w/c 12 August 2013 and w/c 11 August 2014.

Air Canada and British Airways are the leading non-US carriers followed by three other European carriers; Lufthansa, Air France and Virgin Atlantic Airways. Korean Air in 13th is the only Asian carrier to make the table, while South America’s leading representative is Avianca, whose rapid growth can be explained by its merger with TACA. In 16th place, MEB3 carrier Emirates has grown thanks to new routes to Boston and Chicago O’Hare, as well as the use of larger aircraft on routes to Houston, Los Angeles, New York and Seattle-Tacoma.

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  1. Parker West says:

    Whoa Nellie, the US government has refused to interfere with the round of mergers that has reduced the number of significant domestic carriers to just 5 legends and the former low-fare maverick, Southwest. Less regulation is wonderful, but the whole reason the Justice Department exists, or the reason it was created, was to break-up or prevent monopolies. We have a collusion of operators that continue to limit available seats, resulting in little competition, even on routes served by three or four of the six. There are no fare sales and price increases stick, unlike times past when a $10 fare increase, across the board, was more often left unmatched by others killing the increase. Even the less respected management groups, such as US Airways, and Delta, are reaping in record profits, quarter after quarter. We want healthy airlines, nobody wants an airline to dive into bankruptcy, but a little due diligence at merger time would have been wonderful. What I saw was a consistent parade of CEO’s claiming that “this bitty ‘ole merger ain’t going to increase fares, hell no, they may even fall a little bit”. Of course that’s idiotic, but the Justice Department either bought the line or didn’t care. (Sir, are you being ignorant or apathetic?” Senator, I don’t know and I don’t care)
    Well what about the smaller guys, surely they can undercut the fares and make a bundle. Nope, all the minor players are niched, either by region (Frontier, Alaska, Hawaiian) by specializing in leisure travelers buying packages (Spirit, Allegiant (most city pairs served just twice a week)) the exception would be JetBlue a fine airline limited to west coast-east coast or New York City/Boston-Florida/Caribbean routes. JetBlue is smart enough not to challenge the big 5, knowing that old style predatory practices by the “Bigs” would squash them like a bug under a tractor.
    We can dream; “if only we had a Ryanair”. (I’m old enough to recall Europe wishing “if only we had a Southwest”. Or a EasyJet, a Wizz, Air Berlin, German Wings, one of the large leisure carriers like Monarch, TUI Fly, Comet. How things have changed, Europe, you don’t know how lucky you are.

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