The need for air transport is set to continue and to grow

Longer term economists believe that among the "industrialised" nations, future regional economic patterns will remain similar to those seen in the last 20 years, with North America remaining a growth leader. This is thanks to positive factors such as favourable demographics, abundant natural resources, efficient financial institutions, the sheer size of this huge market and its tremendous capacity for innovation and entrepreneurship. For the 2007 to 2026 period covered by this forecast, the US economy is anticipated to grow at an average of 2.5% per year, which is the same as for North America as a whole.

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US traffic has continued to grow steadily, setting a monthly record of 72 million scheduled domestic and international passengers in last summer, which is 2% more than the previous record set in July 2005. Traffic growth continues to outpace capacity, with airlines managing to improve load factors by 0.4 percentage points in 2007. Based on the US Bureau of Transportation Statistics, it would also appear that international load factors might have peaked at around 85%, as there has been no overall  improvement in the year to end July. Therefore, domestic load factors were responsible for all improvements in load factor, with up to 81% recorded over the period.

One result of this increased demand, is the increase in the number of delays that passengers have experienced in the region in 2007. This demonstrates the need to find ways to accommodate growth other than by increasing frequency, which at certain times and at certain airports is not easy, or by improving productivity in terms of load factor.

In fact, the sheer number of delays has meant that on time arrivals are at the lowest point since 2000, causing passengers and politicians at the highest level to call for action. Possible solutions suggested centre on various market-based incentive schemes, including congestion charging and schedule reduction at New York’s JFK airport, where airlines increased their operations by 41%, between March 2006 and August 2007. This would not be the first time that a major US airport has been subject to scrutiny in this way. A similar process was undertaken at Chicago’s O’Hare International airport in 2004 due to congestion issues. However, longer term, possible ways to reduce pressures on scarce airport and infrastructure resources would appear to be based around enhanced Air Traffic Control (ATC), the use of restricted airspace or simply increasing the size of aircraft on the routes most affected. Some airports in the region have already begun adopting the latter solution across all aircraft types with more than 50 seats. Average seating for the larger network airlines has been increasing rapidly in the last six years, growing from 148 in the second quarter 2001, to 158 seats in the first quarter 2007, while growth in the average stage length, which had been witnessed in recent years, now appears to be moderating. This trend is likely to continue. Indeed, one airline has already announced that its plans to help address congestion at JFK include ending all of its turbo-prop flights at the airport and increasing its two-class flights, with between 70 and 270 seats, from 43% to 65% of operations at peak times, from lower capacity operations.

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Liberalisation is one of the drivers for continued international passenger traffic growth, particularly between large population centres across continents. The subsequent benefits to passengers and economic growth are clear, therefore, efforts to further liberalise markets to and from North America have continued. A new Air Transport Agreement signed between the US and Europe on April 30, 2007 will be provisionally applied on March 30, 2008, for all 27 European Union Member States. Airlines are already positioning themselves in the market, in terms of operations and commercial relationships, to take advantage of this agreement. An expanded bilateral has also been signed between the US and Japan. This allows an increase in both scheduled and charter flights, an element of "beyond Japan" flying by some US airlines and greater fare setting flexibility. Negotiations are expected to continue to further liberalise this market by the middle of next year. Canada signed a similar agreement with Japan earlier in 2007, which is expected to be further developed and improved in 2008.
While such agreements have resulted in new opportunities, largely for the network airlines, the Low-Cost Carriers (LCCs) have continued to expand their presence in the US domestic market. By the third quarter of 2007, US LCCs provided 50% of the seats on the top five US interstate markets, including flights within California and Texas, and between New York and Florida.

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North America is the largest and most mature of the regional markets. This is reflected in the fact that 20 year average annual growth is forecast to be below the world average, at 3.7%. However, the US domestic market will remain the largest in size throughout the next 20 years. The international market is expected to grow twice as fast  as domestic or intra-regional traffic at 5.3% for the next ten years and 5.0% for the complete 20-year forecast period. This is caused by the need to connect North America with regions that are developing rapidly, both economically and in terms of air transportation. These include flows to Asia-Pacific with 5.8% growth, the Commonwealth of Independent States (CIS) with 7.8% and the Middle East with 8.7%. Growth will be driven internationally by the major US carriers continuing to seek new opportunities outside of the US domestic market.

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The structure of the North American fleet will remain fairly stable, in terms of operator segmentation. The majors, eight operators who on the whole can be considered as global network airlines, will continue to operate most of the aircraft in the region, nearly 4,500 aircraft in 2026. The regionals and their affiliates will operate 31% of the fleet, mainly aircraft with less than 100 seats (jets and turbo-props). The current LCCs are expected to increase their share of North America’s 2026 fleet to more than 2,600 aircraft.

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