In 2018, airlines in the United States stretched their unbroken string of operating profits to eight years, but they’re now facing tough choices as costs increase and margins narrow. While persistently strong demand for air travel is pushing many carriers to add capacity, the additional routes and service are making pricing more competitive and putting pressure on yields. Airline operations also face mounting obstacles to sticking to their published schedules. For carriers, it’s coming down to a battle of growing capacity and revenue versus maintaining operational resilience. With predictions of a global economic slowdown in 2019 and 2020, remaining profitable may become more of a test. For the year ending in September 2018, the average carrier margin declined to 8.5 percent as higher operating costs began to offset rising revenue. That’s down 2.1 percentage points from the previous 12 months, and it marks the third straight year that US airline margins have contracted.

EXECUTIVE SUMMARY 

REPORT METHODOLOGY

REVENUE 

COST 

PROFIT 

BUSINESS CYCLE REVIEW 

WORLD CAPACITY TRENDS 

OPERATIONAL RESILIENCE 

APPENDIXES