# Presentation: 067423

## 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%
**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%

## 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

## Domestic Capacity Trends

**Source:  Official Airline Guide (OAG)**

## 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

## Domestic Yield Trends

**Source:  Air Transport Association  (ATA)**

## 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

## 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%

## System Enplanements

**2005-2006:    0.3%**
**2006-2007:    3.9%**
**2007-2017:    3.4%**

**Actual**

**Forecast**

## System Enplanements

**Actual**

**Forecast**

**2005-17 Avg. Annual Growth   **
**Mainline Domestic:        2.5%**
**Regional Domestic:       4.2%**
**International:                  5.0%**

## System Revenue Passenger Miles

**2005-2006:    1.5%   **
**2006-2007:    4.8%**
**2007-2017:    4.3%**

**Actual**

**Forecast**

## System Revenue Passenger Miles

**Actual**

**Forecast**

**2005-17 Avg. Annual Growth   **
**Mainline Domestic:        3.1%**
**Regional Domestic:       6.7%**
**International:                  5.5%**

## System Load Factor

**2005-2006:    0.5 Points**
**2006-2007:    0.2 Points**
**2007-2017:    0.1 Points**

**Actual**

**Forecast**

## Domestic Aircraft Size

**2005-2006:    -1.4 Seats**
**2006-2007:    -0.6 Seats**
**2007-2017:     0.1 Seats**

**Actual**

**Forecast**

## Domestic Real Yield

**2005-2006:     0.4%**
**2006-2007:    -1.0%**
**2007-2017:    -0.9%**

**Actual**

**Forecast**

## Cargo RTMs

**Actual**

**Forecast**

**2005-17 Avg. Annual Growth **
**Domestic:           3.2%**
**International:      6.3%**

## Total General Aviation Fleet

**2005-2006:    1.0%   **
**2006-2007:    1.8%**
**2007-2017:    1.4%**

**Actual**

**Forecast**

## Total General Aviation Flight Hours

**2005-2006:    2.5%   **
**2006-2007:    3.1%**
**2007-2017:    3.2%**

**Actual**

**Forecast**

## General Aviation Flight Hours

- Actual

- Forecast

**2005-17 Avg. Annual Growth **
**Piston:           1.8%**
**Turbine:         6.4%**

## En-Route Aircraft Handled

**2005-2006:    -0.6%   **
**2006-2007:     2.7%**
**2007-2017:     3.4%**

- Actual

- Forecast

## FAA and Contract Tower Operations

**2005-2006:    -0.4%   **
**2006-2007:     2.7%**
**2007-2017:     2.2%**

- Actual

- Forecast

## Forecast Risks

**Terror attacks/Pandemic**
**Impact of high oil prices**
**Mainline carrier financial woes**
**Growth of VLJ’s and impact on workload**
**Sufficient Capacity**

## 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**