Air fares will remain high this decade
Posted: 6:57 pm Thu, March 8, 2012
WASHINGTON — Air fares are likely to stay high throughout this decade, as passenger travel grows but airline capacity shrinks, according to a government forecast issued Thursday.
In its annual economic analysis, the Federal Aviation Administration predicted that more airline mergers and consolidation will shrink the number of cities served and the number of flights available in the nation’s air travel network. Travelers won’t get much relief until airlines start getting more competition, which is years off.
The combination of modestly increasing demand and shrinking capacity in the near term means that planes, already more than 80 percent full, will get even slightly more full and remain that way for the next 20 years, the agency said.
Last month, Southwest, JetBlue, United, Delta, American and US Airways raised prices on many medium-length and long flights by $10 per round trip, citing the high cost of jet fuel. Airlines raised fares about a dozen times in 2011, although they also have offered sales during slow periods.
Over the next two decades, U.S. airline travel is expected to nearly double, the FAA said.
The forecast is for the number of miles flown by paying passengers to rise from 815 billion in 2011 to 1.57 trillion in 2032, with an average increase of 3.2 percent a year.
“Imagine a carrier the size of Jet Blue coming into the system every 10 months,” Michael Huerta, the FAA’s acting administrator, said in a statement. “That is the demand we are forecasting.”
John Heimlich, an economist for Airlines for America, a trade group that represents large airlines, disagreed that fares are currently high, noting that inflation continues to outpace the price of air travel on U.S. airlines.
The average domestic round-trip ticket went up 6.7 percent from 2000 to 2010, he said. At the same time, inflation rose 26.6 percent, and the price of jet fuel per gallon soared more than 260 percent, he said. The price of oil is expected to remain high, increasing to $110 a barrel by 2015 and $138 a barrel by 2032, the FAA noted.
Major airports forecast to see the greatest growth in air traffic — better than 2.5 percent a year — are Midway in Chicago, John F. Kennedy International in New York, Washington Dulles International in Virginia, McCarran International in Las Vegas, Orlando International in Florida and Houston Intercontinental.
The growth in airline travel won’t be evenly distributed. The miles passengers fly on domestic flights are forecast to decrease slightly this year and then grow an average of 2.8 percent a year over the next two decades. But passenger miles on international flights are predicted to increase 2.2 percent this year and then grow an average of 4.4 percent a year.
The fastest growth will be travel between the U.S. and South America, followed by travel to and from Asia.
The report underscores the need to continue moving forward with the FAA’s transition from an air traffic system based on World War II-era radar technology to one based on GPS technology, federal officials said. The system is expected to allow planes to fly more direct routes to destinations and to take off and land closer together, saving time, money and fuel.
The total number of people flying commercially on U.S. airlines will increase by 0.2 percent to 732 million in 2012, then to 746 million in 2013. After that, air travel is expected to pick up more rapidly, reaching 1 billion passengers by 2024. That’s three years later than the FAA had previously forecast. By 2032, annual passengers are expected to total 1.2 billion.
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