United States of America
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Air Travel is frequently the most practical method of covering the large distances between cities in the USA. The domestic air system is extensive, with dozens of competing airlines, hundreds of airports and thousands of flights daily. The US is the world's largest aviation market. Domestic airlines have mostly rebounded since September 11. Delta (now merged with Northwest), United (merged with Continental) and US Airways (merged with American) have each entered and emerged from bankruptcy still flying, though mergers and downsizing have had an impact on the travel experience. The US has three major international airlines that function in a similar manner and size as a national carrier; American Airlines, United-Continental Airlines Holdings and Delta Air Lines. The expansion of LCCs such as Southwest Airlines, Virgin America and JetBlue has increased competition and lowered prices domestically and in some cross-border markets.
The Federal Aviation Administration (FAA) is an agency of the United States Department of Transportation with authority to regulate and oversee all aspects of civil aviation in the US. The Transportation Security Administration (TSA) is the government agency responsible for security in all modes of transportation and is solely responsible for carrying out screening of passengers and their baggage (both checked and carry-on) at 450 airports across the US.
Airports in United States of America
2,310 total articles
From early 2017 Air Canada and Virgin Australia introduce a tidy new partnership. Virgin Australia receives improved access to Canada – a market its JV partner Delta cannot sufficiently cover from their shared Los Angeles gateway. Air New Zealand's sixth freedom option, via Auckland, is the third largest transportation choice by Canadians visiting Australia. Since Virgin noisily fell out with Air NZ, the Australian airline is looking to reassert itself in Australia-North America markets that it had quietly let Air NZ dominate. Virgin has already announced plans to resume trans-Pacific services from Melbourne, which Air NZ took traffic from.
Air Canada is growing in Australia, expanding from its 2007 Sydney service with a 2016 Brisbane service, and perhaps soon Melbourne as well. Air Canada needs a partner for domestic and New Zealand connections as it expands its footprint and grows ahead of market demand. There is some conflict, since Air Canada - as it does for its expanding Asia and Europe presence – will look for USA sixth freedom traffic. Air Canada has favourable connections via Vancouver to a handful of American cities, including New York.
Mexican Airlines are starting 2017 under a cloud of uncertainty driven by the country’s slower economic growth and the increasing rhetoric by president-elect Donald Trump against US companies planning to sustain or expand their operations in that country. The US auto manufacturer Ford recently back-pedalled on plans to construct a new plant in Mexico, and GM has also drawn ire from the president-elect over its Mexican operations.
The threat of dissolving trade pacts, and Mr Trump’s general anti-immigration stance, sent the MXP plummeting after the US Presidential election, and the latest round of threats of taxation on automobiles manufactured outside the United States has put additional pressure on Mexico’s currency, which has been weaker during the last year and that has created pressure for Mexican airlines. However, for now, Mexico’s air passengers continue to grow at a steady rate. The country’s domestic airlines charted approximately 12% growth in passengers from Jan-2016 to Nov-2016, and international passengers among those airlines for the same time period strengthened by 11%.
Predicting whether those levels of growth will continue in 2017 is a challenge, given the level of uncertainty the US election has created for Mexico, along with internal strife the country is dealing with – including growing inflation and discontent over rising fuel prices.
After rapid growth in the market between North America and Australia/New Zealand, an airline has finally blinked: United Airlines will change its sole New Zealand service, San Francisco-Auckland, to only operate seasonally. United will rely on its JV partner Air New Zealand.
Auckland is less important for United than for American Airlines and its codeshare (but not JV) partner Qantas. Qantas has exited the Auckland-Los Angeles market, so American's entry to New Zealand gives it two nonstops from both Australia and New Zealand, enhancing presence across the region and making it easier to bring American visitors to both Australia and New Zealand.
United's adjustment to a seasonal service will mean that the New Zealand-North America (excluding Hawaii) market will expand by a reduced 10% instead of 17%. Even with this downward change there will be 17% more capacity than in the previous record year of 2008.
US low cost carriers and ULCCs observed many of the same trends in the country’s marketplace at the end of 2016 as their large global network rivals – namely, that weak pricing trends in the domestic market were improving. Each airline has its own nuanced view of that general operating environment, but they feel encouraged by what they hope is an inflection point in pricing that will lay the groundwork for a return to positive unit revenue.
Those lower cost and ultra-low cost airlines also face similar challenges to their larger counterparts – cost pressure from new labour contracts and rising oil prices. And like their larger rivals, most of the lower cost US airlines are plotting lower capacity growth in 2017 as a means to improve their respective revenue performances.
For now, pricing improvement that began in late 3Q2016 and a bump in demand after the US presidential election are sustaining the cautious optimism expressed by US airlines as 2017 gets under way. But no US airline is ready to declare that pricing traction in the country’s domestic market is on a sustained upswing.
This is Part 2 of two reports examining the outlook for US airlines in 2017.
Norwegian plans to add US routes to its Edinburgh base, a development considered in part 1 of this report, adding to its growing list of European long haul bases. However, its Edinburgh-US routes will use new Boeing 737MAX-8 aircraft – its first deployment of narrowbodies for long haul. It has also ordered 30 Airbus A321neoLRs for long haul use. Narrowbodies open up new possibilities for routes between the UK (or other European markets) and the US east coast.
Norwegian also plans to add non-US destinations to its UK long haul network, with details expected during the course of 2017. Norwegian's flexibility to develop its long haul operations from the UK would be improved by the grant of a US foreign carrier permit to its UK-registered subsidiary, Norwegian Air UK.
Norwegian has had to surmount many obstacles to build and grow its global network – which may also include Latin America in 2017, when it will accelerate long haul ASK growth to 60%. However its rapid expansion, currently driven mainly by long haul growth, has led to a rapid increase in debt, and is likely to weigh on unit revenue. Norwegian's undoubted strategic innovation can only be sustained if it is financially successful.
Norwegian's plans to add Edinburgh to its long haul bases are a further indication of its constantly evolving strategic development. Driven mainly by long haul, Norwegian returned to strong growth in 2016 after a respite in 2015. Norwegian's 2017 expansion plans will make the LCC Scandinavia's largest airline by passenger numbers, ahead of the legacy airline rival SAS.
The UK is Norwegian's biggest European long haul market outside Scandinavia. This has so far been based entirely on its network at London Gatwick, where its weekly seat capacity to the US now equals that of the market leader Virgin Atlantic. However, Norwegian is looking beyond Gatwick and will add trans-Atlantic routes from Edinburgh in 2017, for the first time deploying a narrowbody (Boeing 737MAX-8) on its long haul network. It has yet to announce the US destinations from the Scottish capital, and also plans to fly to the US from other UK cities.
This report considers Norwegian's Edinburgh long haul plans in the context of its existing UK operations. Part 2 looks at Norwegian's use of narrowbodies for long haul and the application by its UK subsidiary for a US permit. Part 2 also touches on the financial impact of Norwegian's rapid growth.