Airline traffic’s downward spiral to continue

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New independent forecasts predict continued declines in U.S. airline traffic through 2010, as carriers trim capacity in anticipation of continuing economic pressure, said aviation analyst Michael Boyd.

The aviation consultant delivered his forecast at the 14th Annual Aviation Summit in Lexington, Ky. earlier this month.

As part of this, carriers will retire 622 regional jets by 2014,” he said, adding that U.S. enplanements would fall from 748.9 million during 2008 to 674.6 million for 2009. After that, he expects a slow rebound.

He also predicted the industry would see a measurable drop in passenger trips, changes in aircraft and greater dependence on global traffic.

“There will be 16 million fewer passenger trips during 2014 compared to 2008. The airline industry is now more rational, and won’t add back capacity very rapidly, even with an economic upturn,” he said.

In a gloomy prediction for smaller community “hub-feed routes” he said that such routes longer than 500 miles “will become increasingly problematic.” The reason: As fleets restructure due to the declining economics of 50-seat jets, more than 40 percent of the smaller planes will be retired by 2014 – with “no viable replacement airliners on the drawing board.”

On a more promising note, he pointed to the fact that the number of international passengers will grow, supporting domestic route systems.

“Foreign visitors don’t all stay at the gateway city. On average, each international passenger goes on to make at least 1.5 additional domestic enplanements,” he said. As a result, more than 25 percent of the nation’s domestic air traffic will be directly generated by international connectivity.

This will lead to another trend: the emergence of the global alliance as the de facto consumer product.

“In 10 years, the passenger may be booking on the alliance, not the airline. Air service enhancement programs, even at small communities, must now work toward alliance-connectivity, instead of just airline brand connectivity,” he warned.

Long term, as airline systems become more global, all carriers face the challenge of generating sufficient cash to renew fleets in the future.

For more local perspective about the issue, see this Friday’s Business Journal.