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FAA Aerospace Forecast Fiscal Years 2009–2025

The FAA continues to forecast long term aviation growth, despite global economic conditions. Since 2000, U.S. airlines have dealt with the impacts of 9/11, heightened concerns about pandemics, the bankruptcy of four network carriers, record high fuel prices, and the most serious economic downturn since the Great Depression. In spite of these challenges, the number of passengers traveling continues to grow over the long term, demonstrating the value of air transportation to the public. In last year’s forecast the FAA predicted for the U.S. commercial aviation industry to carry one billion passengers by 2016. We now believe the industry will reach this mark in 2021. The 2009 forecast for commercial aviation calls for a sharp decline in activity in the near term, with a return to growth over the long term. The level of activity and demand in the long term, however, is not expected to snap back to levels published in the previous FAA forecast. The most significant factor preventing recovery to prior forecast levels is the state of the economy, both domestic and worldwide. In the U.S., the National Bureau of Economic Research reports the U.S. economy has been in recession since December 2007, with economists speculating this may be the deepest recession since the end of World War II. Indications are the global economy is not fairing any better. System capacity in available seat miles (ASMs) – the overall yardstick for how busy aviation is both domestically and internationally – will drop 6.7 percent this year, after posting a 1.2 percent increase during 2008, and then grow at an average of 3.8 percent per year through 2025. Air traffic will not rise to prior forecast levels even when the economy recovers because of the absence of significant price cuts as measured by real yield in the near term. Following previous downturns (e.g. the recessions in 1991 and 2001) carriers stimulated passenger demand by reducing fares sharply. The industry’s response to the current economic downturn is to better match supply (seats) and demand (passengers) by modestly cutting fares and dramatically reducing capacity. The average size of domestic aircraft is expected to decline by 0.7 seats in FY 2009 to 120.1 seats. The downturn in the economy has also dampened the near-term prospects for the general aviation industry. Longer-term, we see growth in business aviation demand driven by a growing U.S. and world economy. The shaky global economy that took hold in the latter part of 2008 is expected to put a squeeze on air travel demand through 2009, although falling oil prices will offset some of the decline in demand, allowing U.S. carriers to be profitable in 2009. To navigate the volatile operating environment, carriers are attempting to increase revenues per customer (through increased fares and/or additional fees) while driving down their costs by implementing capacity cutbacks (by reducing flights and/or gauge of aircraft, delaying deliveries of newer aircraft, and/or grounding older aircraft). Over the long term, we see a competitive and profitable industry characterized by increasing demand for air travel and air fares growing more slowly than inflation.

Language

  • English

Media Info

  • Media Type: Web
  • Features: Appendices; Tables;
  • Pagination: 94p

Subject/Index Terms

Filing Info

  • Accession Number: 01127498
  • Record Type: Publication
  • Files: TRIS, USDOT
  • Created Date: Apr 30 2009 8:08AM