Source: ATW Daily News Author: Aaron Karp 03/11/2008
Subject Concerned: Government Opinion Airlines
US FAA projected a "near term ... definite pause in growth" for the domestic airline market in its annual aerospace forecast released on March 10 but emphasized that growth will be "vibrant down the road."
Speaking at the FAA Aviation Forecast Conference in Washington, Acting Administrator Bobby Sturgell said, "We're talking flat growth in operations and slow growth in passengers." He cited a "series of cascading events" that led to the slowdown, including "US$100 oil, an economic picture that's in flux, potential consolidations, and credit market woes."
FAA forecast that US airline capacity including regional operations will grow just 2.7% in 2008 "as mainline carrier domestic market capacity increases slowly [0.3%] while regional carrier capacity growth remains modest [2.5%]."
US airline mainline system traffic is forecast to grow 2.8% to 770.6 billion RPMs in 2008 on a 2.7% rise in capacity to 957.4 billion ASMs, producing a load factor of 80.5%, up 0.1 point. Long-term average annual RPM growth is projected to be 4% through 2025 on an average annual capacity rise of 3.8%. Mainline system traffic in 2025 is forecast to be 1.513 trillion RPMs while capacity is projected at 1.84 trillion ASMs, producing a load factor of 82.2%.
"From an operations standpoint, we predict that on average every year from now until 2025, we're going to add the equivalent of [New York] JFK, LaGuardia and Newark combined into the system," Sturgell said, stating that long-term demand can be met only "if we transform" ATC to a satellite-based system. The forecast assumes per-barrel crude oil prices averaging US$75-US$85 over the 17-year forecast period.
FAA Director-Aviation Policy and Plans Nan Shellabarger cautioned that "downside risk" -- factors that may undercut growth -- has "increased." She warned that congestion could stifle growth if not managed properly and added that "there is a real risk that [environmental policies] will slow the growth of aviation." Further, the economic downturn and current spike in fuel costs could last longer and be "worse than we expected," she said. The forecast also does not consider potential "major shocks to the system ... if there's major terror attack or a worldwide pandemic, all bets are off."