US: FAA forecasts 2.4% annual passenger traffic growth through 2037

Noting the US airline industry saw its seventh consecutive year of profitability in 2016, FAA is projecting the US will see a “competitive and profitable aviation industry characterized by increasing demand for air travel [with] airfares growing more slowly than inflation” over the next 20 years, according to the agency’s annual Aerospace Forecast for fiscal years 2017-3037. “Looking ahead, there is confidence that the industry has been transformed from that of a boom-to-bust cycle to one of sustainable profits,” FAA said. Traffic growth by US mainline and regional carriers will increase at an average rate of 2.4% per year, with domestic traffic forecast to increase 2% per year and international traffic projected to increase 3.4% per year. The entire US system will see traffic increase 65% by 2037, FAA projected. Passenger growth on US carriers will increase at an average 1.9% per year over the next 20 years, down slightly from last year’s forecast. Low oil prices will continue to drive the uptick in passenger growth seen in 2016 through 2017, FAA said, but the price of oil is expected to rise from approximately $39 per barrel in 2017 to $47 in 2017. “Our forecast assumes that [oil] will rise thereafter to exceed $100 by 2026 and approach $132 by the end of the forecast period,” FAA said. However, certain economic headwinds, such as the fallout from Brexit, recessions in Brazil and Russia, and uncertainty about the impact of the Trump Administration’s policies on economic growth, may alter these trends.<br/>