The Federal Aviation Administration (FAA) has released its annual Aerospace Forecast Report for the Fiscal Years 2016 to 2036. The report looks at all facets of air travel including commercial airlines, air cargo, private general aviation, and fleet sizes. Here are some of the key findings of the report.
Notable Shift Towards Sustainability
2015 market the fifth consecutive year of profitability for the industry, a departure from the typical boom-to-bust cycles we have seen since its deregulation in 1978. This shift towards slow, sustainable growth has been attributed to a number of changes that took place in light of the Great Recession of 2007-09.
Air carriers have focused heavily on minimizing losses by lowering operating costs. This has been achieved by eliminating unprofitable routes and grounding older, less fuel efficient aircraft. In order to increase operating revenues, carriers have developed new services and started charging separately for services that were once included in the price of a ticket. The past 5 years have also marked an unprecedented period of consolidation with four major mergers taking place.
Because of this perceived shift towards lower losses and sustainable growth, the FAA is quite optimistic that the industry can continue this upward trend.
Growth in Line With Economic Recovery
The world is still in the process of recovering from the most serious economic downturn since World War II, and expansion has been slow, but steady. Growth in aviation will mirror this trend, as demand for aviation is highly driven by an economy in which people have the capital for such expenses. Thanks to stable demand and lower energy prices, U.S. airlines saw record profits this past year.
The FAA is forecasting that U.S. carrier passenger growth will average 2.1 percent per year over the next 20 years, which is a slightly faster rate than was cited in last year’s forecast. System traffic in revenue passenger miles (RPMs) is projected to increase by 2.6 percent a year during the same period. Domestic RPMs are forecast to grow 2.1 percent a year while International RPMs are forecast to grow almost twice as fast at 3.5 percent a year. Furthermore, as demand increases, the number of seats per aircraft is expected to grow to, with the number of 50 seat regional jets to fall to just a handful by 2023, replaced by 70-90 seat aircraft.
Use of Unmanned Aircraft Systems (UAS) Expected to Skyrocket
Unmanned Aircraft Systems, also known as drones, are expected to grow drastically. The FAA forecasts that small, hobbyist UAS purchases will grow from 1.9 million in 2016 to as many as 4.3 million by 2020, while commercial sales are expected to grow from 600,000 in 2016 to 2.7 million by 2020. Combined total hobbyist and commercial UAS sales are expected to rise from 2.5 million in 2016 to 7 million in 2020.
Final Thoughts
The cost of oil and potential savings brought about by fuel efficiency advancements will also play a huge role in the profitability of the industry. As the world in general begins moving more towards sustainable energy sources and practices, there is the potential to achieve savings in the billions in airline operational costs, which would only propel growth further.
Overall the report gives an incredibly positive outlook for aviation in the next 20 years. What else do you think could influence the industry that may not have been mentioned in the report?
To view the report in it’s entirely, please click here.