WASHINGTON — The FAA is predicting that domestic airline capacity, as measured by available seat miles, will dip again this fiscal year and begin to rebound in 2011 as airline traffic growth resumes.
After reporting a 9.5% capacity cut for major domestic airlines for 2009 and a 5.1% drop for regional carriers for the year, the FAA predicted a 1.6% further capacity cut for airlines across the board for 2010, according to projections released this week at the annual FAA Forecast Conference.
After that, the FAA predicted, airline capacity will increase 2.5% in fiscal 2011 and then grow by an average of about 3.4% per year for better part of coming two decades.
The FAA predicts passenger traffic will inch up by 0.3% in 2010 – remaining flat for large carriers and growing by about 4% for regional airlines. Starting next year, though, the agency says traffic should start picking up, with an annual growth for 2011 of about 2.6%.
After that, the FAA projects total system traffic will increase about 3.5% a year – 3.4% annually for large carriers and 4.2% for regional airlines.
Over the entire forecast period, ending in 2030, traffic should grow by an average of about 3.1% per year. But departures at FAA air-traffic facilities is likely to grow by an average of only about 1.9% over that period, the FAA predicted.
Although the annual FAA forecast is usually given due deference in the industry, airline executives speaking the conference say the FAA may be off base with its capacity forecast for this fiscal year.
Bryan Bedford, president and CEO of Republic Airways, said he foresees no capacity decline in 2010. US Airways President Scott Kirby was more to the point: "We don’t plan any cuts in 2010."
That’s not to say airlines say they plan to grow capacity for the year. The lingering effects of the recession – coupled with revenue losses caused by February flight cancellations caused by large snowfalls – has frozen any expansion plans airlines said they harbored for the first half of the year, if not all of 2010.
"I see no indications that we should be adding capacity," American CEO Gerard Arpey said during a break at the FAA conference. He said the industry is "nowhere near recovering its cost."
FAA officials concede that the anticipated economic recovery is not materializing as the agency thought it would. The nation’s flat GDP and high unemployment continue to cause angst among those in the industry, causing the agency to dial back some of its previously rosier forecasts.
For example, the FAA a year ago had predicted a 2.6% capacity growth for the industry for this fiscal year. At the time, the FAA had expected a relatively quick rebound for the economy.
While the economy has stopped sliding, it has yet to start climb, agency forecasters said.
"There is no rapid recovery in demand," said Roger Schaufele Jr, FAA manager of statistics and forecast. "No snapback."
