US airlines should be buying aircraft, at Farnborough or anywhere else for that matter. But they won’t be major purchasers of widebody equipment for the time being, even though they need them to become competitive. The implications for the balance of world aviation are potentially striking, as Asian, Middle East and European airlines grow.

In recent months, US exports have become much more competitive in international markets. The point has not escaped the country’s beleaguered airline industry either. Dollar yields in international long haul markets have long since challenged shorter haul (and more costly to operate) domestic yields. As that transition has occurred, US airlines have redirected considerable additional capacity onto the North Atlantic and other international routes.

US airline yields: domestic vs Atlantic service: Apr-98 to Apr-08



Source: Centre for Asia Pacific Aviation & ATA


But in most cases, US carriers operate fleets which have focussed on domestic rather than international operations. And, given their financial constraints, they have been either reluctant or unable to acquire newer widebody equipment suitable for long haul service. Over the past three and a half years, the combined US airline industry has ordered only 270 widebody passenger aircraft (B767, B777, B747, B787-8), suitable for long haul routes in the next, critical, couple of years.

US airline widebody aircraft orders from Jan-05 to Jun-08

	On order
	Model	Total
American Airlines	767-300ER	17
	777-200ER	54
Continental Airlines	767-200ER	10
	767-400ER	16
	777-200ER	21
	787-8	8
Delta Air Lines	767-300ER	34
	767-400ER	21
	777-200ER	8
	777-200LR	8
Northwest Airlines	787-8	18
United Airlines	767-300ER	14
	777-200	6
	777-200ER	20
US Airways	A330-200	15
Total

Source: Centre for Asia Pacific Aviation, Boeing and Airbus

Notes: Excludes B787-9 and A350 orders; some differences in “order” definitions exist. In some cases, orders have already been received


Moreover, the existing widebody fleet of US airlines suitable for international operation is well aged, even vintage. Of the airlines which fly international long haul, some long haul fleet ages are unavoidably geriatric – and uneconomic to operate.


US airline current widebody fleets and their average aircraft age

	In service
	Model	Total	Avg age
American Airlines	B767	73	15.7
	B777	47	7.5
Continental Airlines	B767	26	7
	B777	20	8.1
Delta Air Lines	B767	101	12.4
	B777	10	6.9
Northwest Airlines	B747	29	19.7
	A330	32	3
US Airways	B767	10	19
	A330	9	7.9
United Airlines	B747	30	12.9
	B767	35	13
	B777	52	9.9
Total		474	11.5
Source: Centre for Asia Pacific Aviation & Airfleets.com

Note: includes many B767s which do not fly internationally

By stark contrast for example, Singapore Airlines’ (all international) fleet has an average age of 6.5 years and the carrier has 48 widebodies ordered over the same period. Or Emirates, with 5.9 years and 71 orders respectively.

There is no need to illustrate US airline share price declines over the past year; these have been precarious, making future short term capital investment difficult. The equity markets at present are rewarding US carriers for cutting back on capacity, not for ordering more.

In these conditions, while the US industry is struggling for survival and asking Washington for various forms of support, the global shift in the airline business’ centre of gravity is fast evolving. Codeshares with foreign partners have offered one avenue for maintaining a foothold in international markets, but this is hardly a satisfactory long term strategy.

The airlines have not actively sought changes to foreign ownership rules, knowing that their requests would fall on deaf ears. But more formal financial relationships with foreign carriers may offer the only avenue to preserving a viable international future for America’s airlines, so long as they are unable to upgrade and remain competitive.