WASHINGTON -- You
can expect a future of more airline passengers, more congestion but
fewer airlines.
Low-cost carriers
will continue their ascendancy, some mainline carriers will fold if
fuel prices remain high and 70- to 110-seat regional jets, if one
can still call them that, will boom in popularity.
Air-taxi service
for wealthy travelers could flourish with new microjets that carry
four to six passengers -- or the whole idea could fall
flat.
Those were among
the statistics, predictions and warnings emanating from the Federal
Aviation Administrations annual Aerospace Forecast
Conference.
In addition to
forecasting U.S. airline traffic and FAA workloads for the next 12
years, the conference also takes the temperature of the industry
and tries to diagnose its condition.
Among the
symptoms reported this year:
" Seventeen
airports regained the traffic lost after 9/11 and are exceeding
passenger-traffic levels of 2000; six more will do so by 2005; and
another two by 2006, the FAA said.
The window of
opportunity to deal with congestion and delays will close very
quickly, said Robert Bowles, the FAAs manager of statistics and
forecasts.
" High fuel costs
are obscuring U.S. airline nonfuel productivity gains, said Lehman
Brothers analyst Gary Chase, who is predicting $3.9 billion in
pretax losses for U.S. airlines this year, based on current fuel
prices.
Airports Council
International-North America President David Plavin said data from
Eclat Consulting show U.S. airlines reduced nonfuel costs by 5.8%
from first-quarter 2002 to third-quarter 2004, helped in part by
decreases of 15.1% for labor, 13.1% for food and 43.6% for
commissions.
Unfortunately for
airlines, fuel increased 82.7%, wiping out these gains and raising
overall costs by 2.8%.
" Legacy airlines
face another big challenge: debt.
As of June 30,
2001, the six largest network carriers had $31.2 billion in debt
outstanding; by Sept. 30, 2004, it had increased 55% to $48.5
billion, the FAA said.
Not only do the
carriers face higher interest payments in the future, but they will
need to divert resources to service the higher level of debt,
resources that could have been used instead for new equipment that
could have lowered unit costs, the FAA said.
" Regional jets
with 70 to 110 seats are hot; 50-seat RJs are not.
The reason is
economic.
The break-even
load factor for a 50-seater is higher than for a full-size mainline
aircraft but lower for a 70- to 110-seat RJ, said Jason Reisinger,
director of Express planning for US Airways.
" Low-cost
carriers (LCCs) are a growing force in longer haul
markets.
In the 12 months
ended in June 2004, LCCs increased their capacity in markets over
750 miles by 14.2%, compared with 9.5% for all carriers, the FAA
said. Since 1998, the LCC growth has been 180%, compared with 97%
overall.
To contact
reporter Andrew Compart, send e-mail to [email protected].