European, North American airlines notch higher load factors

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Aircraft deliveries in global airline industry

Airlines increase capacity by adding more aircraft to their fleet. In September 2014, growth in capacity was driven by a rise in deliveries of new aircraft. There were 144 new aircraft deliveries during the month, compared to 114 in August and 127 in July. However, the rate of growth in capacity was lower compared to August and is in line with the slower growth in passenger traffic.

Part7_Nov_Airline fleet development_Capacity

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Europe, North America record highest load factor

Despite an increase in aircraft deliveries, capacity grew at a slower rate than demand. Load factor improved slightly to 80.3% in September, compared to August. Although growth in capacity, as well as traffic in Europe and North America, was lower than in other regions, the highest load factors of 83.9% and 82.4%, respectively, were recorded in these two regions. This was higher than the global utilization rate of 80.3% recorded in September. The third best load factor of 79% was recorded in Latin America, followed by 78.4% in the Middle East, 77.1% in Asia-Pacific, and 71.4% in Africa.

The load factor reflects the efficiency in utilization of capacity, and US airlines have high load factors. The domestic load factor in the US was 82.6%, higher than most of the major economies including Japan, Russia, China, India, Brazil, and Australia.

In 3Q14, load factors of six major US airlines, including Delta (DAL), American (AAL), United (UAL), Alaska (ALK), Southwest (LUV), and JetBlue (JBLU), ranged between 84.4% and 86.4%. ETFs that hold these airline stocks include the iShares Transportation Average ETF (IYT) and the SPDR S&P Transportation ETF (XTN).

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