U.S. air travel is set to grow an average of 1.9 percent per year over the next 20 years, a slight decline from last year’s forecast, according to the Federal Aviation Administration’s (FAA) new Aerospace Forecast Report Fiscal Years 2017 to 2037.
According to the FAA, a growing U.S. and global economy will continue to drive steady growth in air travel. A sharp drop in the price of oil in 2015 and 2016 led to an uptick in passenger growth in 2016 that is expected to continue this year, and the FAA’s growth forecast assumed that oil prices will begin to rise again throughout the forecast period.
At the same time, the FAA warned that a number of economic “headwinds” could work against air travel growth. These include the UK’s move to leave the European Union, recessions in Russia and Brazil and inconsistency in other emerging economies, a “hard landing” in China and a lack of stimulus in advanced economies.
“Although the U.S. economy has managed to avoid a recession, there is uncertainty regarding the impact of the new U.S. administration’s policies on economic growth,” the FAA said in a summary of the report.
U.S. carrier capacity is expected to grow in line with demand, as the number of seats per aircraft rises, especially in the regional market, the FAA said.
“Although the U.S and global economy continued to post disappointing growth in 2016, a combination of robust demand and continued low energy prices resulted in record profits for U.S. airlines,” the FAA said. “Over the long term, we see a competitive and profitable aviation industry characterized by increasing demand for air travel and airfares growing more slowly than inflation, reflecting over the long term a growing U.S. and global economy.”
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