Airline Passenger Growth Limited by Economy Until 2015, FAA Says

A sluggish economy and higher fuel prices will hold down airline growth until 2015, according to a U.S. Federal Aviation Administration forecast.

Carriers including Delta Air Lines Inc. (DAL) and Southwest Airlines Co. (LUV) are projected to have an increase of 0.2 percent to 730.7 million passengers this fiscal year compared with 2011, according to a summary of the FAA forecast released today.

The number of fliers will reach 800 million in 2015 and 1 billion in 2024, according to the FAA. The agency in 2011 had predicted the industry would reach the 1 billion level three years earlier. The FAA uses the predictions to estimate staffing and equipment needs.

“More and more Americans are relying on air travel, and the Obama administration is committed to making sure the U.S. can meet our growing aviation demands,” Transportation Secretary Ray LaHood said in a statement.

Even with scaled-back growth, the U.S. needs new air- traffic technology known as NextGen to keep flights moving, LaHood said. “Our investment in NextGen is the key to getting passengers and cargo to their destinations more safely, faster and with less impact on the environment,” he said.

Revenue passenger miles, which take into account how many people fly as well as how far, are expected to increase faster than passenger totals alone, the FAA forecasts. The agency predicts an average annual increase of 3.2 percent in RPMs over the next 20 years, to 1.57 trillion by 2032 from 815 billion in 2011.

Freight Carriers

Cargo carriers including FedEx Corp. (FDX) and United Parcel Service Inc. (UPS) are forecast to grow faster than passenger lines. Revenue ton miles for cargo is projected to increase 4.9 percent per year over the same time, according to the FAA.

The largest airports, except those constricted by lack of runway capacity, are projected to expand the fastest, according to the FAA. Atlanta’s Hartsfield-Jackson International, Chicago’s O’Hare International and Houston’s George Bush International are among those that will grow faster than average, the agency predicts.

The forecast is based on economic projections from IHS Global Insight Inc. (2172) of Englewood, Colorado.

To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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