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Regionals lead recovery
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| 27 April 2004 |
By Ramon Lopez
Recovery of the US commercial aviation industry remains on track, with passenger levels expected to return to pre-11 September 2001 levels by 2005 and exceed one billion by 2015, according to the US Federal Aviation Administration's (FAA) latest annual forecast.
However, prospects for the industry's recovery remain in peril because of the rising costs for fuel and airport security, and the return of flight delays suffered during mid-2001.
In an address to the 29th Annual FAA Aviation Forecast Conference, James May, president and chief executive of the Air Transport Association, said: "As we enter 2004, we leave one of the most cataclysmic periods that any industry has ever faced; 11 September, SARS, the downturn in the US economy, the Iraq War are just a few of the events that have shaped our recent history. . . The forecast is that US carriers remain in a fragile, but improving, operating environment."
US commercial air carriers cut their losses in half, from about US$11 billion in 2002, to US$4 billion in 2003, leading to hopes for industry profitability in 2004. But May says "turmoil" in the world energy markets has caused many Wall Street analysts to lower their US carrier forecasts based on predictions of record-high oil prices. One analyst has widened his industry loss forecast from US$500 million to US$2.3 billion, due in large part to the high oil prices.
US Transportation Secretary Norman Mineta and FAA Administrator Marion Blakey noted that the US commercial aviation industry landscape is changing. Mineta said that the new passengers are not the business travellers on whom many airlines have depended for revenue, but rather more cost-conscious passengers who shop for fares on the Internet. Blakey said low-cost airlines are proving their capabilities and expanding profitability while legacy carriers restructure to compete.
According to the latest FAA forecast, the commercial airline industry will grow at an annual rate of 4.3% between now and 2015, with regional airline passenger traffic outpacing that of the major long-haul air carriers. The FAA expects that low-cost carriers and regional airlines could account for more than half of all domestic passengers by the end of 2015.
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