US mainline air carriers are set to cede significant amounts of market share to their international rivals as they slash capacity amid the economic downturn. US carrier yields are also projected to fall in international and domestic markets over the near and long term, according to the latest 2009-2025 forecasts from the Federal Aviation Administration (FAA).
The FAA forecasts US mainline carrier international passenger enplanements to decrease 2.4% in 2009, but recover with 2.4% growth in 2010 and 4.4% average annual growth thereafter, reaching 142.2 million in 2025.
US carrier traffic is set to tumble 6.3% on Asia Pacific routes this year and contract 0.3% in 2010, before becoming the fastest growing region at +4.9% (between 2010 and 2025).
Latin American traffic by US carriers is expected to fall 1.2% this year, before rising 1.8% next year and expanding at an annual pace of 4.7% between 2010-2025.
US carrier traffic on the Atlantic market is expected to decline by 2% this year before a healthy recovery of 4.5% in 2010 and an annual expansion of 3.8% thereafter to 2025.
Domestic enplanements are forecast to decrease 8.8% in 2009 and rise 1.9% in 2010 before expanding at an average annual pace of 2.4% between 2010-2025, reaching 690.2 million in 2025.
Systemwide enplanements are set to fall by 8% this year, before rising 1.9% in 2010 and expanding by 2.7% between 2010 and 2015. Total system enplanements are expected to reach one billion in 2021 - five years later that the FAA's prediction of 2016 made just 12 months ago.
US Mainline Air Carriers Enplanements by World Region (Average Annual Percent Growth)
Foreign carriers to take market share
Reviewing the FAA's predictions of total passengers to/from the US (US and foreign flag carriers), the overall declines are more muted, indicating foreign carriers will maintain higher capacity levels than their US counterparts, and gain market share as a result.
Total Asia Pacific traffic is expected to contract by 0.2% this year (US carriers: -6.3%) and rise by 5.7% next year (US: -0.3%), expanding by 5.5% on average between 2010-2025 (US: +4.9%).
European carriers are also expected to take market share away from their US rivals as the total market declines 1.1% this year (US: -2.0%), although US carriers will fight back next year growing Atlantic traffic by 4.5% against the total Atlantic market increase of 3.5%. Over the long-run (2010-2025) however, US carriers will grow their Atlantic passengers by 3.8% against a total market increase of 4.4% p/a on average, signalling greater dominance ahead for the Europeans.
US Mainline & Foreign Flag Air Carriers: Passengers by World Region (Average Annual Percent Growth)
International yields - nowhere to hide
Adding to the loss of market share, US carriers can look forward to a steady decline in yields over the short and long-term - reversing the gains made in recent years.
The FAA forecasts international mainline real yield (adjusted for inflation) to decline from USD 13.37 cents in 2008 to 13.25 cents in 2009. Thereafter, international real yield declines at a rate of 1.0 percent annually, falling to 11.34 cents by 2025. A breakdown by region was not provided, though recent yield data from the Air Transport Association shows Pacific yields have recently caught up to the Atlantic.
US Mainline Air Carriers: Real Yield (Average Annual Percent Growth)
Domestic mainline passenger real yield is forecast to decrease from 13.09 cents in 2008 to 12.91 cents in 2009 (down 1.4%). Thereafter, domestic mainline carrier real yield declines at an average rate of 1.2% dropping to 10.61 cents in 2025.
US fleet to shrink by 10% this year
US mainline air carrier passenger jet fleet increases from 3,743 aircraft in 2008 to 5,223 aircraft in 2025, an average annual increase of 2.0%. The fleet is projected to shrink by 10.1% in 2009 (378 aircraft), with most of the decrease attributed to the grounding of less fuel-efficient aircraft during a period of reduced demand.
Regional carrier enplanements are forecast to decrease 4.5% to 153.5 million in 2009, and grow 3.6% between 2010-2025 thereafter, reaching 267.6 million in 2025.
US Regional Air Carrier Enplanements (Average Annual Percent Growth)
The regional carrier passenger aircraft fleet increases from 2,582 aircraft in 2008 to 3,033 aircraft in 2025, an average annual increase of 1.0%. The fleet is projected to shrink by 9.8% in 2009 (253 aircraft). Regional jets increase from 1,655 aircraft in 2008 to 2,249 aircraft in 2025, an annual increase of 1.8%. All of the increase is attributed to jet aircraft in the 70-90-seat category.
Heavy cargo falls
Total air cargo Revenue Ton Miles (RTMs) (freight/express and mail) increase from 38.9 billion in 2008 to 78.6 billion in 2025 under the FAA's forecast.
Domestic RTMs are predicted to slump 8.3% this year, but expand 2.5% next year. The recovery in international markets is stronger next year at +5.0%, after a 7.2% reduction this year. International RTMs are predicted to increase by 6.2% between 2010 to 2025.
US Commercial Air Carriers: Air Cargo Revenue Ton Miles (Average Annual Percent)
The US cargo fleet increases from 949 aircraft in 2008 to 1,584 aircraft in 2025, an average increase of 3.1% p/a.