We have divided airlines into two broad groups – network carriers and value carriers –  recognizing that each group includes airlines with a range of business models. Over the past several years, the ability to divide US airlines into two categories has become increasingly difficult. The lines that once divided US carriers continue to blur with structural changes to both groups

US CARRIERS INCLUDED AND METHODOLOGY 4

INTRODUCTION AND EXECUTIVE SUMMARY 6

REVENUE10

1.Airline Revenue versus Gross Domestic Product10

2.Change in Operating Revenue11

3.Revenue Driver: Capacity16

4.Revenue Driver: Load Factor18

5.Revenue Driver: Passenger Yield20

6.Revenue Driver: Cargo25

7.Revenue Driver: Ancillary Revenue26

8.Unit Revenue Comparison28

COST31

9.Decline in Airline Costs31

10.Cost Driver: Labor34

11.Cost Driver: Fuel35

12.Other Cost Drivers36

13.Unit Cost Trend and Gap36

14.Domestic Airline Cost Performance38

PROFIT43

15.Operating Profit and Margin – Sustained Profitability?43

16.Unit Results45

17.Profitability Trends50

18.Traffic Constant Analysis52

CAPACITY55

19.World Capacity55

20.Capacity – Asia/Oceania57

21.Capacity – North America59

22.Capacity – Europe61

23.Capacity – Africa/Middle East63

24.Capacity – Latin America/Caribbean65

25.Stage-length Adjusted RASK/CASK for International Carriers67