Airline Industry Growth Decline

Each year the FAA holds an Aviation Forecast Conference. The purpose is to analyze acquired data and provide a forecast of the aviation industries’ direction and growth. In last year’s forecast the FAA predicted for the U.S. commercial aviation industry to carry one billion passengers by 2016. This year the FAA has updated that prediction by stating they do not believe the industry will reach that benchmark until 2021.

However, the FAA forecast predicts the industry will eventually return to growth but in a longer than initially anticipated time. The report goes on to say “The 2009 forecast for commercial aviation calls for a sharp decline in activity in the near term, with a return to growth over the long term. The level of activity and demand in the long term, however, is not expected to snap back to levels published in the previous FAA forecast. The most significant factor preventing recovery to prior forecast levels is the state of the economy, both domestic and worldwide. In the U.S., the National Bureau of Economic Research reports the U.S. economy has been in recession since December 2007, with economists speculating this may be the deepest recession since the end of World War II. Indications are the global economy is not fairing any better. With 8 of the world’s top 10 economies’ in recession as of January 2009, the global economy is poised to perform worse than any other period during the past 60 years.”

Fleet Size Decline

The FAA predicts the average size of domestic aircraft to decline by 0.7 seats in 2009 to 120.1 seats. Average seats per aircraft for mainline carriers are projected to fall by 0.8 seats as network carriers continue to reconfigure their domestic fleets. In the report Acting Administrator Lynne Osmus said “In 2009, we expect sizeable declines in both domestic and international capacity as carriers respond to the impacts of the economic downturn. The size of aircraft in domestic markets will fall slightly as airlines continue to adjust their operations to better match demand.”

The FAA predicts an increase in 70-90 seat aircraft while the number of 50 seat regional aircraft is predicted to fall. This shift of regional airlines operating an increased number of larger jet aircraft brings an increase to the average regional jet size by 0.9 to 53.7 seats per mile.

The report shows “The total number of aircraft in the U.S. commercial fleet (including regional carriers) is estimated at 7,274 for 2008, a decrease of 470 aircraft from 2007. This includes 3,743 mainline air carrier passenger aircraft (over 90 seats), 949 mainline air carrier cargo aircraft, and 2,582 regional carrier aircraft (jets, turboprops, and pistons).”

While more regional airlines gain larger aircraft the mainline carriers have seen a cut of 16.6 % in fleet size (745 aircraft). While regional jets have seen their first decline since they entered the market, the size of these aircraft continues to grow. The regional carriers have seen a decline of 777 turboprop and piston aircraft while gaining 1,085 regional jets since 2000.

What this may mean to pilots

The industry will continue to experience a decline. Stagnation, and possibly negative growth, will slow down the career progression of many pilots. It will become increasingly important to work at a carrier with compensation and working conditions that allow for an adequate quality of life for pilots.

As stated in the FAA’s report the domestic mainline fleet will see some reductions in size and seating capacity. The number of small narrow body aircraft such as the DC9, B717, B737-500 and A318 may see further reduction in part due to replacement by similar aircraft operated under the “regional jet” title and outsourced. This shift will result in lower numbers of mainline (higher paying) jobs.

As the industry adapts to the current market conditions and airline fleets become more efficient the industry will recover. The traditional landscape of aircraft placement based on size may change. The dynamics of the industry may change the traditional career progression of professional pilots. Whereas the past has shown a rapid growth of the industry allows for more pilots to progress to mainline carriers the new system may shift domestic growth to a regional only model where carriers shift the “regional” bar to include all domestic flight and realign mainline fleets to provide only international flight operations.