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Steady Growth Projected for U.S. Aviation System

Regulators say commercial air carriers had total profits of $16.8 billion in 2014.

By University Alliance on June 09, 2015
Report: U.S. Aviation System Positioned for Growth

An improving economy means more people will fly more miles in years to come, according to the latest federal aviation forecasts.

The Federal Aviation Administration (FAA) estimates the number of U.S. passengers will grow an average of 2% per year during the next two decades, reaching 1 billion in 2029 and 1.14 billion by 2035. By comparison, U.S. airlines served an estimated 756.3 million passengers in 2014, which was a boost of 2.3% over 2013.

“The improving economy continues to bode well for the health of the U.S. air transportation system,” FAA Administrator Michael Huerta said in a March 2015 statement.

The agency’s report, FAA Aerospace Forecast Fiscal Years 2015 to 2035, projects that revenue passenger miles (RPM) for U.S. air carriers will grow an average of 2.5% annually. An RPM represents one paying passenger traveling 1 mile and is the standard for measuring air travel volume. In addition, load factors, which represent the average percentage of seats filled in commercial passenger aircraft, will grow to 84.2% by 2035, a slight increase from last year’s 83.4%.

More occupied seats translate to more profits for U.S. airlines. Last year, commercial air carriers – passenger and cargo – reported an operating profit of $16.8 billion, up significantly from $10.8 billion in 2013, thanks in part to lower fuel costs.

The industry has seen profits take off since the global recession in 2008 forced airlines to make changes to minimize losses and improve their bottom line. To make more money, many airlines started charging for amenities that used to be included in a plane ticket, such as meal service and baggage fees, and created new services, such as premium boarding. They also modified their business models to shrink losses by reducing operating costs, cutting unprofitable routes and grounding planes with lower fuel efficiency.

In 2014, commercial airlines posted profits for the fifth year in a row and there is growing optimism that the industry has been transformed from a “boom-to-bust cycle to one of sustainable profits,’’ the report said.

To prepare for the projected growth in the industry, the FAA is implementing an air traffic modernization plan called NextGen, which is designed to increase airport efficiency, reduce delays and streamline flight paths. Airports are expected to get busier, with landings and take-offs expanding from 49.6 million operations in 2014 to 59.9 million by 2035.

Over the long term, the report said, the FAA sees a competitive and profitable aviation industry characterized by increasing demand for air travel and airfares rising slower than inflation.

Category: 2015 Headlines