U.S. Air Travel Grows Slowly; Airlines Stay Profitable

 - March 18, 2014, 1:41 PM
The FAA predicts U.S. passenger growth will average 2.2 percent annually over the next 20 years. (Photo: Bill Carey)

The demand for air travel in the U.S. grew slowly in 2013, a year that started “with a good deal of uncertainty that never really let up,” the Federal Aviation Administration states in its latest 20-year aerospace forecast. Nevertheless, the U.S. airline industry posted a fourth straight year of profits, thanks to changes it implemented after the 2008 global recession. The biggest change is that airlines have shifted from efforts to increase their market share to improving shareholder returns, the FAA said.

U.S. passenger and cargo carriers reported an operating profit of $10.8 billion last year, compared with $7.6 billion in 2012. Operating revenues increased 0.8 percent; operating expenses decreased 0.9 percent, according the 2014 edition of the forecast, which the FAA released on March 13.

Air carriers’ domestic and international capacity expressed in available seat miles (ASMs), a measure of industry output, inched forward 0.8 percent in 2013, to 1.003 trillion. System-wide revenue passenger miles (RPMs) increased 1.4 percent, to 834 billion. The FAA predicts the mainline carrier component of ASMs will grow 0.8 percent this year, which is slower growth than last year. Meanwhile, the capacity of regional carriers will grow by 2.2 percent, its first increase since 2011. Overall, RPMs will grow at the same rate as last year.

The number of passengers airlines transported system-wide increased 0.4 percent, to 739.3 million, last year. Domestic enplanements on mainline and regional air carriers increased by 0.1 percent, to 654.3 million; international enplanements increased 2.6 percent, to 85.1 million. Despite the modest growth in the number of overall passengers, airplanes were more crowded. System average load factor, the number of RPMs expressed as a percentage of ASMs, reached 83.5 percent, a record, the FAA said. The agency predicts load factors will grow moderately during the early years of the forecast period before tapering off in the midterm.

The FAA predicts U.S. passenger growth will average 2.2 percent annually over the next 20 years, a number that remained unchanged from last year’s forecast. By the outer edge of the forecast period in 2034, it projects U.S. air carriers will transport 1.15 billion total enplaned passengers.

In the air cargo market, total revenue ton miles (RTMs) declined by 4.8 percent last year but are forecast to grow slightly, by 0.8 percent, this year. RTMs will increase at an average annual rate of 4.2 percent for the balance of the forecast period, the FAA said.