The overall theme at the 31st FAA Aviation Forecast Conference in D.C. in March was a positive outlook … down the road somewhere.
According to FAA Administrator Marion Blakey, even with 9/11, Internet pricing, SARS and the price of oil, “Aviation is in a period of robust growth with a temporary pause here in 2006. The growth is different than what we predicted five years ago, but the growth is there.” Don’t get your sunglasses out quite yet though.
A forecast made by the Tropical Meteorology Project in 2004 predicted, “a slightly above-average 2005 hurricane season … we do not expect the 2005 hurricane season to be as active as the 2004 season has been.” Based on this particular forecast, it becomes quite clear that, “forecasts are to be taken with grains of salt,” as John Meenan, executive vice president and chief operating officer, Air Transport Association, states at the end of his presentation titled “The Current State of the Industry.”
Much of the information disseminated at the conference was a recap of what we have known for the past several years. In 1999, a peak year, the industry made over $5 billion … last year, we lost over $10 billion. Yes, the industry has changed. Low-cost and regional carriers continue to define the market, passenger totals are expected to continue to grow more than 3 percent per year; international growing 2 percent beyond that, leading to one billion passengers by 2015. Revenue passenger miles is up 7 percent for regionals and almost 8 percent for low-cost carriers. There is an increase in connecting traffic … a trend toward more point-to-point, though the hub and spoke of course is not going away. Cargo’s growth is solid both domestically and internationally; however, due to fuel costs, the industry is seeing a shift to trucking for shorter hauls. And as the plane size continues to shrink and passenger numbers rise, there will be more flights creating more workload, not only for the FAA but the entire industry.
But what is the bottom line? Bill Ris, senior vice president, government affairs of American Airlines, points out that Boeing had 1,000 orders last year but less than 100 of those orders went to the United States, so he says, “this is largely a US phenomenon and what is it about our industry that’s driving this? As an industry, we sell our product below cost.”
“We have an enemy and the enemy is us,” says Robert C. Land, vice president for government affairs and associate general counsel, JetBlue Airways, in a panel discussion on achieving financial stability in a troubled industry. “Load factors are going up, more customers are coming through, there is a much bigger demand on the system, and customers still want to get where they want to get with low fares.” Russell G. Chew, chief operating officer, Federal Aviation Administration, sums it up when he says it’s extremely important to modernize the system, both technologically and operationally … and we need to do it now.
Thank you for reading.
