Is "growth" really returning to the airline industry? Based on
almost daily press releases, airlines appear to be adding new
destinations every week.
shows most airlines are not adding any significant growth, but
simply moving the chairs around the deck, as opposed to adding new
ones. In other words, most airlines are - transferring - aircraft
and resources from one route to another opposed to - adding -
Airline industry for this report includes the nine largest US
airlines: Delta (
), American (
), United (
), Continental (
), US Airways (
), Southwest (
), JetBlue (
), Alaska (
), and Air Tran (
). Except where noted, data represents mainline operations.
Mainline Operations - 1st Half 2010 Compared to 1st Half
Contrary to popular belief, available seat mile capacity (ASMs)
shows Alaska, Air Tran, and JetBlue as the only major airlines
actually adding capacity compared to last year. Collectively the
nine airlines covered in this analysis flew 5.8 billion less ASMs
in the first half of 2010 than they flew in the same time period a
United had the largest year-over-year capacity decline at 3.8%,
followed closely by Southwest at a 3.3% decline. JetBlue had the
largest increase at 5.8% (see following chart).
Full-Year 2010 Capacity Projections Compared to
Based on each airline's investor updates, Air Tran, Alaska, and
JetBlue will once again lead the industry in 2010 capacity growth
compared to 2009. Only Southwest and United are projected not to
add any capacity for 2010 (see following chart).
Regional Affiliates - YOY Change 2007 - 2010
Another current misnomer is that the legacy mainline airlines
have all increased their regional affiliate capacity while
shrinking the mainline. Reality is, United is the only airline to
have continuous increases in their regional affiliate capacity.
Regional affiliate capacity for Delta, American, Continental, US
Airways, and Alaska has been flat to declining over the last three
As a ratio of total consolidated capacity for 2010, US Airways
is projected to have the highest regional impact, closely followed
by United and Delta. American has by far the least amount of
regional capacity compared to other legacy competitors (see
Ten-Year Look Back
Capacity Change - 2nd Quarter 2010 Compared to 2nd
The last major profitable growth period for the airline industry
ended nearly ten years ago. Year 2000 was the last full year
following approximately five years of record profits and growth for
the airline industry.
Even after accounting for the 45% capacity increase from Alaska,
73% increase from Southwest, 345% increase from Air Tran, and the
8.7 billion ASM increase from upstart JetBlue, these nine airlines
plus their merged partners, cumulatively operated 6.4% less ASM's
than they did in the same time period ten years ago (see following
Note for 2nd quarter 2000 capacity: Delta includes Northwest,
American includes TWA, and US Airways includes America West.
Load Factor Change - 2nd Quarter 2010 Compared to 2nd
One of the most significant industry changes over the last
decade is the increase in every airlines' load factor. Specifically
for the 2nd quarter, Southwest's 6.7% change in load factor was the
industry's smallest increase compared to ten years ago. All other
airlines increased load factors from 10.3% to 14.6% (see following
Note: Load factor is the percentage of passenger seats
It is the opinion of AirlineFinancials.com that passenger demand
reconciled with little to no increase in capacity will continue to
provide record load factors for at least the 3rd quarter of 2010.
Further, this historically high traffic demand combined with lower
fuel costs than previously projected will lead to significant
profits for most of the airline industry.
Data sources are SEC, BTS and Corporate filings.
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