FAA Forecasts Bumpy Ride for Airlines in the Short Term

The Federal Aviation Administration is forecasting “a definite pause in growth” in U.S. airline traffic in the short term because of factors such as U.S. economic troubles and high fuel prices.

The prediction cast somewhat of a pall on the discussions at the FAA’s annual Aerospace Forecast Conference here earlier this week. One participant described the tone of the conference’s first day as “gloom and doom.”

The FAA, however, wasn’t quite that gloomy (although the panel of economic forecasters that spoke later in the day might have been). Under its new 18-year forecast, the FAA expects U.S. airline domestic and international purchases to increase 1.5 percent in 2008 after growing an estimated 3.3 percent in 2007.

It expects domestic and international traffic, as measured by revenue passenger miles, to increase 2.9 percent in 2008, down from an estimated 3.9 percent growth in 2007.

Almost all of that traffic growth is expected to come from international traffic, as the major carriers shift more service to those routes, which have proven to be more profitable. The FAA is forecasting that domestic traffic will stagnate in 2008 after a 3percent increase in 2007, but that international traffic will increase nearly 9percent.

The FAA, however, expects domestic growth to resume in subsequent years and international growth to remain robust, expanding twice as fast as domestic markets. In 2009 it expects systemwide traffic to increase 4.7percent while acquisitions rise 3.8 percent.

The FAA also still expects the number of enplaned passengers to top 1 billion by 2016, which is just one year later than previously forecast.

With corporate aviation also growing, the FAA is forecasting that the number of operations added to the air traffic system each year from 2008 until 2025 will be equivalent to adding the operations of Kennedy, LaGuardia and Newark combined.