US airlines will rebound after slow growth this year and next, predicts the Federal Aviation Administration. However, in its latest forecast the FAA assumes that the economic slowdown now brewing in the USA will not have a major role in slowing traffic over the coming two years.

Domestic revenue passenger traffic should grow by 3.9% this year and by 3.6% in 2002, according to John Rodgers, director of the FAA's office of aviation policy and plans. Unveiling the figures at the agency's annual forecast conference - this one covering the years 2001-2012 - Rodgers says that from 2003 traffic should grow more rapidly, with a 4.3% average growth through 2012.

Domestic yields are due to rise over the forecast period starting with 2.9% and 2.4% growth in the first two years. But they are then expected to grow by only 0.9% in the decade after that. The assumption is that low-fare carriers such as Southwest and JetBlue will continue widespread competition, thus having a nationwide affect on fares.

Internationally, Rodgers says, passenger traffic for US carriers will grow at 6.3% over the dozen years of the forecast, with the strongest growth in Latin American and Asian markets.

As well as being relatively optimistic about traffic growth, the FAA also sees positive news ahead on the financial front. In the years 2002 and 2003 oil prices may fall by as much as a quarter and then grow slower than overall inflation, says the FAA.

The agency is also optimistic that US carriers will be able to cut costs and adjust capacity more responsively over the industry cycle ahead. But the FAA's chief forecaster is not wholly convinced that the future is without risk. "We expect more downside risks than unseen upside potential," says Rodgers.

Source: Airline Business