Among the trends that will impact the U.S. airline industry in 2018: Ultralow-cost carriers (ULCCs) will continue to grow aggressively; Southwest will finally add Hawaii to its route network; and a growing pilot shortage could increasingly bedevil regional airlines and small markets.

In 2017, ULCCs aggressively added capacity as they sought to win market share from legacy carriers Delta, American and United, as well as from Southwest.

For the first nine months of the year, Spirit grew its available seat miles by 15.6% and Allegiant grew its by 9.5%. Frontier, meanwhile, expected to be up 20% year-over-year in the fourth quarter.

By comparison, Delta and American grew capacity by less than 1% from January through September, while United and Southwest grew by 4.4% and 4.1%, respectively.

Despite the rapid ULCC growth, Frontier’s announcement in July that it would put a renewed emphasis on connecting traffic out of its Denver base with 21 new routes led United’s president, Scott Kirby, to declare a victory of sorts. The move, Kirby said, was a sign that the ULCCs were running out of profitable point-to-point routes to move into, an ominous sign for their business model.

But heading into 2018, there are signs that Kirby spoke too soon.

“They’re all still pretty bullish on their options and think there is a ton of opportunities for them,” Brett Snyder, who writes the aviation blog Cranky Flier, said of the ULCCs.

Spirit plans to grow capacity by 22% to 25% in 2018, according to Securities and Exchange Commission filings, while Allegiant says it expects to grow by 9% to 10%.

Scheduling data from the data analytics company Diio reveals that Frontier will offer 27% more seat miles in first-quarter 2018 than it did a year earlier, according to Seth Kaplan, managing partner of the newsletter Airline Weekly.

Perhaps more telling is that in November Frontier’s parent, Indigo Partners, ordered 134 Airbus A320neo narrowbody airliners to be delivered over the next 10 years, which will triple the size of the airline.
The ULCC model will also gain a new entrant in 2018 when Minneapolis-based Sun Country transforms its business model by offering unbundled fares, adding more seats to aircraft and diversifying its network away from its Minneapolis base.

Flying the Aloha skies

As the ULCCs continue their network expansion in 2018, the world’s original low-cost carrier, Southwest, will finally begin serving Hawaii.

Southwest hasn’t said when, precisely, those flights will begin. That depends on how soon it obtains Extended Operations Service (Etops) authorizations from the FAA for each of the aircraft it intends to fly between the mainland and Hawaii. Even so, analysts have begun speculating on the markets that Southwest, the largest U.S. domestic carrier, will enter first.

“Southwest doesn’t like to go into a market in a small way,” said Snyder, who expects the carrier to service several Hawaiian islands from California and other places on the West Coast.

Kaplan was more specific, predicting that Southwest will fly to Honolulu from Oakland, San Diego, Phoenix, Seattle, Portland and possibly Orange County.

“Anywhere out West where they are big and they have a big frequent-flyer base,” he said, noting that Southwest’s narrowbody fleet of Boeing 737s doesn’t have the range to reach Hawaii from the eastern U.S.

Kaplan predicted that Southwest would do fine in Hawaii but it won’t become one of the carrier’s top markets. Southwest’s business model, he said, including its narrowbody fleet and the fact that it doesn’t assign seats, is optimized for short-haul flying.

A major open question about Southwest’s foray into Hawaii is whether it will fly interisland routes, a domain that is now almost the exclusive provenance of Hawaiian Airlines. In October, Southwest CEO Gary Kelly hinted that such service could be in the offing.

“They clearly have an interest there,” Snyder said.

In any case, the beginning of Southwest service in Hawaii is just one piece of good news for Aloha State travelers. In addition, United plans to increase frequencies on eight routes to the islands this winter while Hawaiian and Delta are rolling out more lie-flat seats on U.S. mainland-to-Hawaii routes.

“It’s a great time to be flying to Hawaii,” said Gary Leff, an analyst who writes the View from the Wing blog.

Pilot shortage grows

But while Hawaii service flourishes, less glamorous regional airline markets throughout the U.S. are likely to continue suffering in 2018 as a nationwide pilot shortage gets worse.

The shortage has been a key factor in 20 U.S. airports losing commercial air service since 2013. Another 26 airports have lost at least 75% of departures, according to the Regional Airlines Association.

The shortage, which transportation economist Dan Akins said numbered 500 pilots in 2017, has also led to closures, bankruptcies and operational problems for regional airlines. In the most recent prominent example, Alaska Airlines’ regional subsidiary, Horizon, was forced to reduce its flight schedule from September through at least January. In September, Horizon canceled a whopping 6.5% of its flights.

With retirements at major U.S. airlines ramping up, Akins projects that the U.S. commercial airline industry will require 2,000 more pilots than will be available in 2018.

“Ramifications will be further reduction of regional operations, reduction or elimination in service to an increasing number of smaller communities, more carrier failures/bankruptcies, pressure on military to retain existing pilots for national defense and perhaps the start of airline funding of pilot training,” Akins said.

The shortage has led to various proposals in recent months to increase the legal avenues for aspiring pilots to obtain a commercial license with less than the required 1,500 hours of flight time.

Akins said that even if such changes are made, the shortage is sure to persist. “The lag time to train pilots is years,” he said. 

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