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FAA expects dip in airline travel this year before upward trend resumes

By Mike M. Ahlers, CNN
March 8, 2012 -- Updated 1901 GMT (0301 HKT)
STORY HIGHLIGHTS
  • In 20-year forecast, agency says it's upbeat about U.S. aviation in the long term
  • Airline revenue passenger miles -- a key measure in air travel -- expected to shrink 0.2% in 2012
  • FAA: Satellite navigation system is key; regional airlines will grow faster than major ones
  • Report says 9/11, recession, fuel prices, international debt crises have harmed the industry

Washington (CNN) -- U.S. airlines probably will see a small dip in the number of passengers this year, before resuming a climb that ultimately will see air travel nearly double in the next 20 years, according to an FAA forecast released Thursday.

The Federal Aviation Administration report says the slow pace of the economic recovery is dampening aviation growth.

The number of revenue passenger miles -- a key yardstick for air travel -- will shrink 0.2% this year, the agency said, noting that the number of passengers declined during the final two months of 2011. When the recovery takes hold, air travel will grow at an average 2.8% per year through 2032, the FAA said, slower than the 3.1% growth predicted last year.

As a result, the FAA says, it now believes airlines won't hit the 1 billion passenger mark until 2024, three years later than predicted just last year.

Transportation Secretary Ray LaHood nonetheless used the occasion to repeat his calls for an expansion of NextGen, the satellite-based navigation system that aims to make air travel more efficient.

"Our investment in NextGen is the key to getting passengers and cargo to their destinations more safely, faster, and with less impact on the environment," LaHood said in a statement.

Forecasts -- a difficult science in the best of times -- have been made more problematic by the turbulent domestic and international recession, the FAA forecasters said.

While passenger demand will probably be almost flat this year, the FAA predicts an approximately 2% increase in domestic passengers in 2013, and about 3% growth in future years. Regional airlines are projected to grow faster than the major airlines.

The report also notes some efficiencies that could help the FAA manage the growing workload. It says departures from U.S. airports will grow slower than passenger traffic. That is because airlines are increasing aircraft size and reducing the number of empty seats.

"Growth over the next five years will be moderate, with a return to historic levels of growth only attainable in the long term," the forecast reads.

Two major events -- the September 11 terrorist attacks and the recession -- have had a major effect on air travel in recent years, reducing the demand for air travel. But rising fuel prices and debt restructuring in Europe and the U.S. have also hurt the industry.

The report says that airlines have responded by starting new services, and by charging separately for services that historically were bundled into the ticket price. Airlines also returned to profitability in 2011 by better managing their fleets -- operating fewer flights, but with fewer empty seats.

"Going into the next decade, there is cautious optimism that the industry has been transformed from that of a boom-to-bust cycle to one of sustained profits," the forecast says.

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