Research Insights Looking ahead: 4 key areas impacting the U.S. air market

Looking ahead: 4 key areas impacting the U.S. air market

April 2023
Phocuswright Research

The U.S. airline sector recorded another stellar year in 2022, exceeding 2019 passenger revenue. According to Phocuswright’s latest travel research report U.S. Airline Market Report 2022-2026, 2022 saw record-breaking leisure demand, but also capacity restraints and catapulting fares. Eager passengers acquiesced to the higher prices. The anticipation of seeing friends and family or returning to business meetings and events offset worries about inflation, labor shortages and (often) substandard service, which still plagued the airline industry in 2022.

Nevertheless, the segment now represents 42% of the U.S. travel market gross bookings, compared to 45% for hotels.

Phocuswright Chart: APAC Airline Gross Bookings By Channel Online Penetration
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Looking ahead, Phocuswright has identified 4 key areas impacting the U.S. air market:

The price-service gap widens

Airlines - and their passengers - suffered from severe operational challenges in 2022, which will have continued into 2023. The problem won't be fixed any time soon as airlines face high fuel prices and costs of capital amid continuing supply and labor shortages, limiting their ability to add network capacity.

Business travel becomes blended travel

Airlines have more than made up for the loss of business travel. They have benefitted from the increase in blended (business/leisure) travel - evidence of the new work/life balance that many people seek.

Merchandising moves the needle

NDC and like technologies are still nascent, but the promise of offering creative and personalized options to customers could not come at a better time as airlines continue to recover from the operational woes of 2022.

Shortages, inflation remain top challenges

Compared to 2022 growth, airlines anticipate a slowdown in 2023 and are tightly managing capacity. Despite the gloomy economic outlook, U.S. airlines remain optimistic about 2023 due to the resilience of leisure travel and the return of business travel, meetings/events, and international trips.

This report provides a comprehensive view of the U.S. airline segment, including detailed market sizing and projections through 2026, distribution trends, key developments and more.

This report is part of the U.S. Travel Market Report 2022-2026 series, which features an overview of the U.S. travel market, along with detailed data and analysis of five key segments: airline, hotel & lodging, car rental, cruise and packaged travel. A standalone report dedicated to online travel agencies rounds out the coverage. Collectively, the series provides comprehensive market sizing, projections and analysis for the U.S. travel industry from 2019-2026.

Other reports in the U.S. Travel Market Report 2022-2026 series (available now or publishing soon):

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