According to the Federal Aviation Administration (FAA), air travelers will remain in a vice grip, stuck between shrinking capacity and the growing demand for air travel, which will keep ticket prices high.
In the FAA’s annual economic analysis study, the organization predicted that there would be more airline mergers in the future. They said the mergers would decrease the number of cities served and the number of flights available. They reported that travelers won’t see lower prices until the airlines see more competition. The FAA indicated that was years away from happening.
According to the study, over the next 20 years airline travel is expected to almost double. During 2011, US airlines carried approximately 731 million passengers. The number of passengers is expected to increase to 1.2 billion by 2032.
For international traffic, the FAA predicts Brazil will see the largest growth. In the Asia/Pacific markets, the fastest growth is expected for travel to/from India, Taiwan and China.
As would be expected when demand is rising and capacity is limited, the airlines are predicted to remain profitable.
In the report, Michael Huerta, the FAA’s acting administrator, said “U.S. airlines have returned to profitability in the last two years and we expect that trend will continue in 2012 as well.” However, he did say there are concerns, including fuel prices and security issues, which could impact the ability of airline companies to earn a profit.
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