North America Leads Global Profitability

Both Boeing and Airbus have released their long term forecasts of passenger and cargo traffic, as well as regional aircraft manufacturers, Bombardier and Embraer. Routesonline are taking a look at the long term forecasts to assess the potential outlook for each region over the next 20 years.

Both Boeing and Airbus have released their long term forecasts of passenger and cargo traffic, as well as regional-jet manufacturers, Bombardier and Embraer. Routesonline are taking a look at the long term forecasts to assess the potential outlook for each region over the next 20 years.

North America leads global profitability, with IATA calculating the 2014 net income of North American airlines at more than $12 billion – two thirds of the projected net income for the entire global airlines industry. The region’s profitability is expected to increase an additional $1 billion in 2015, as lower fuel expenses provide a further boost in earnings.

According to Airbus, North Americans are the most willing to fly, averaging at 1.63 trips per capita in 2014, ahead of Europe and the People’s Republic of China. By 2034, Airbus has predicted that North America will increase the number of trips, with an estimated 2.16 trips per capita.

Boeing has predicted a total of 7,890 of new aircraft deliveries to the North American market over the next twenty years, with 64 percent of new deliveries predicted to be single-aisle aircraft. Less than 1 percent of aircraft deliveries are expected to be large widebody aircraft, while 21 percent are predicted to be regional jet deliveries. The remaining 15 percent will be spread between small and medium widebody aircraft.

Embraer has predicted that the largest number of deliveries of its regional jets will be to North America, who dominated a 32 percent share in the forecast – a total of 2,060 70 to 130-seat jet aircraft. 1,260 of its smaller 70 to 90-seat jets are also forecasted delivery to North America – a 55 percent share overall. In the 130 to 210-seat jet segment, Embraer has forecast a total of 4,540 jets will be delivered to North America – 21 percent of the world total.

Bombardier on the other hand has predicted a total of 3,900 deliveries within North America over the next ten years, worth $96 billion in revenue, and also predicts North America as the largest market for business aircraft. Light and medium aircraft are expected to account for over 80 percent of deliveries according to Bombardier, with large aircraft only expected to make up for 18 percent over deliveries overall.

Low-cost carriers are the fastest-growing business segment of the US domestic market – they take advantage of the flight reductions of rationalised network carriers and backfill on those routes, according to Boeing.

The revised domestic forecast from Boeing has traffic growth in the range of 2.5 to 3.0 percent over the next five years. With a load factor of 83 percent for 2014, network carriers may be prompted to further ease their capacity discipline in the face of competitive pressures and continued economic recovery.

Since 2008, four major airline mergers have occurred in the US, resulting in the market dominance of those carriers which now hold at least 85 percent of all available seat miles.

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