New Airline Fundamentals Point To Slow Growth, Shrinking Fleets, Fewer Flights In 2013

Evergreen, Colorado. January 7, 2013. A snapshot report of expected trends in US air travel forecasts a decline in both the number of flights and seats capacity in the coming year.

According to analyses accomplished by Boyd Group International, the nation will see virtually no airline passenger growth, with at least a 1.5% to 2.0% drop registered by the end of this year. The report notes government forecasts are now wildly optimistic, and by 2017, there will be nearly 50-million fewer enplanements than the FAA is now predicting.

“Airline passenger traffic can no longer be forecast simply with mathematical formulas using economic metrics such as GDP, inflation, buying power and the like,” stated Michael Boyd, Chairman. “There are only ten major full-schedule airline systems left, and each has its own subjective strategy in regard to where and if it adds capacity.”

In addition, the report notes that airline fleets are also shrinking as 50-seat jets get retired. But, counter-intuitively, this will actually be positive for many communities, particularly where these jets are operating nearly full at 80%+ load factors. “In more cases than not, the replacement with larger airliners will be revenue-positive for both airlines and the communities they serve,” stated Boyd, whose firm was the first to forecast the decline in demand for 50-seat jets. The firm forecasts that by 2017, nearly 1,000 50-seat and smaller jets will be retired form North American airline fleets.

Attached to this trend, the report predicts further robust demand for new-generation mainline-cabin airliners – the 737MAX, the A-320NEO and the new Bombardier C-Series platform. “The economics of these airplanes will allow a wider mission-envelope, including even some replacement of regional jet flying,” Boyd noted.

The report also briefly discusses forecast trends at key airlines that will set the pace for the rest of the industry, including the potential American – US Airways merger, Delta’s cutting-edge fleet strategies, Spirit’s unique strategy of head-on competition with majors, and outcomes of the combination of Southwest and AirTran.

The snapshot report can be viewed and downloaded