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FAA 2006-2017 Forecast

FAA 2006-2017 Forecast. Agenda. 2005 Review Assumptions Forecast Overview. Review of 2005. Traffic growth strong RPMs up 8.0% Domestic +6.9%, International + 11.6% Passengers up 7.1% Domestic +6.6%, International + 12.1% Real yield decline Domestic down 4.8% International up 1.1%

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FAA 2006-2017 Forecast

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  1. FAA 2006-2017 Forecast

  2. Agenda • 2005 Review • Assumptions • Forecast Overview

  3. Review of 2005 • Traffic growth strong • RPMs up 8.0% • Domestic +6.9%, International + 11.6% • Passengers up 7.1% • Domestic +6.6%, International + 12.1% • Real yield decline • Domestic down 4.8% • International up 1.1% • Workload Growth • En-Route Traffic up 2.8% • Commercial + 3.7%, Non Commercial + 0.3% • Tower Ops down 0.1% • Commercial +3.7%, Non Commercial - 2.6% • OEP 35 Commercial + 3.9%

  4. Assumptions 2006-17 • External Environment • Economic growth about 3% per year • Higher Oil Prices in near term • Industry • Domestic capacity shrinks in FY 2006 • DL and NW in bankruptcy – shrink 10% to 20% • AA, US announced reductions • RJ fleet growth slows in near term • Production of 50 seat RJs stopped • At least 107 aircraft to be grounded in FY 2006 • Significant 70/90 seat aircraft demand

  5. Domestic Capacity Trends Source: Official Airline Guide (OAG)

  6. Assumptions 2006-17 cont. • Industry • Domestic Yield • Increases in 2006, then resumes long run decline • Y/Y turned positive in May 2005 and is increasing • Tight capacity with current demand => prices up • Competition and productivity increases drive long term decline • Load factor increasing • Domestic above 78% by 2017 • International approaching 80% by 2017

  7. Domestic Yield Trends Source: Air Transport Association (ATA)

  8. Forecast Overview FY 2006-17 • Slow growth in 2006, rebound in 2007, return to historical trends after that • Demand continues to grow • Passengers: +3.1% per year • Domestic +2.9%, International + 5.0% • RPMs: +4.1% per year • Domestic +3.6%, International + 5.5% • Load Factor Higher • Domestic: 78.1% in 2017 • International: 79.4% in 2017 • Aircraft size continues to shrink • Domestic seats/mile falls until 2011

  9. Forecast Overview FY 2006-17 • Real Yield continues long term decline • Domestic: - 0.8% per year • International: -0.8% per year • Cargo continues to grow • System 5.2% per year; Domestic 3.2%, International 6.3% • General Aviation fleet and activity rising • New products stimulate growth • Workload continues to increase • En-Route Aircraft Handled + 3.0% per year • Commercial + 3.2%, Non-Commercial + 2.4% • Tower Ops: + 2.0% per year • Commercial +2.4%, Non-Commercial + 1.8%

  10. System Enplanements Actual Forecast 2005-2006: 0.3% 2006-2007: 3.9% 2007-2017: 3.4%

  11. System Enplanements Actual Forecast 2005-17 Avg. Annual Growth Mainline Domestic: 2.5% Regional Domestic: 4.2% International: 5.0%

  12. System Revenue Passenger Miles Forecast Actual 2005-2006: 1.5% 2006-2007: 4.8% 2007-2017: 4.3%

  13. System Revenue Passenger Miles Actual Forecast 2005-17 Avg. Annual Growth Mainline Domestic: 3.1% Regional Domestic: 6.7% International: 5.5%

  14. System Load Factor Actual Forecast 2005-2006: 0.5 Points 2006-2007: 0.2 Points 2007-2017: 0.1 Points

  15. Domestic Aircraft Size Actual Forecast 2005-2006: -1.4 Seats 2006-2007: -0.6 Seats 2007-2017: 0.1 Seats

  16. Domestic Real Yield Actual Forecast 2005-2006: 0.4% 2006-2007: -1.0% 2007-2017: -0.9%

  17. Cargo RTMs Actual Forecast 2005-17 Avg. Annual Growth Domestic: 3.2% International: 6.3%

  18. Total General Aviation Fleet Actual Forecast 2005-2006: 1.0% 2006-2007: 1.8% 2007-2017: 1.4%

  19. Total General Aviation Flight Hours Actual Forecast 2005-2006: 2.5% 2006-2007: 3.1% 2007-2017: 3.2%

  20. General Aviation Flight Hours Actual Forecast 2005-17 Avg. Annual Growth Piston: 1.8% Turbine: 6.4%

  21. En-Route Aircraft Handled Actual Forecast 2005-2006: -0.6% 2006-2007: 2.7% 2007-2017: 3.4%

  22. FAA and Contract Tower Operations Actual Forecast 2005-2006: -0.4% 2006-2007: 2.7% 2007-2017: 2.2%

  23. Forecast Risks • Terror attacks/Pandemic • Impact of high oil prices • Mainline carrier financial woes • Growth of VLJ’s and impact on workload • Sufficient Capacity

  24. Forecast Summary • Slow growth in 2006, rebound in 2007, return to historical rates afterwards • Demand continues to grow in line with economy • Real yield continues to fall • Aircraft continue to get smaller • Workload gets higher

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