2012 FAA Aerospace Forecast

FAA Aerospace Forecast

HQ-121545

Fiscal Years 2012-2032

U.S. Department of Transportation Federal Aviation Administration Aviation Policy and Plans

FAA Aerospace Forecast Fiscal Years 2012-2032

Message from the Administrator The aviation industry continued to show resilience last year despite tough economic times. The activity of U.S. carriers at home and abroad increased by 3.5 percent in 2011. Despite a slight pause in growth projected for 2012, we expect that over the long run, aviation will continue to experience steady, moderate growth. U.S. airlines have returned to profitability in the last two years and we expect that trend will continue in 2012 as well. This forecast looks at how many planes and how many people will fly on U.S. carriers in the future – from 2012 to 2032. We want to see a picture of air travel in the next 20 years, and we want to know what we at the FAA should strive to meet and accommodate. The FAA sees a competitive and profitable industry continuing to grow over the long term despite the fact that we are operating in a climate of economic uncertainty and rising oil prices. As the economy continues to recover, the total number of takeoffs and landings and the number of passengers who board U.S. airlines will continue to climb. This year, we expect that international markets for U.S. carriers will continue to grow faster than domestic markets, as they did last year. The forecast calls for a slight decrease –less than one percent—in domestic capacity in 2012, as measured by available seat miles. This is after a 2 percent increase in 2011. Despite this pause in growth, the FAA projects continued growth between 2 percent and 3 percent per year over the next 20 years. This year’s forecast predicts that the industry will grow from 731 million passengers in 2011 to 1.2 billion in 2032. Cumulatively, air traffic growth for U.S. carriers–measured by revenue passenger miles–is expected to rise by more than 90 percent in the next 20 years. It grew by 3.5 percent in 2011. Airport tower operations are expected to increase by 23 percent. Also, the number of aircraft handled at FAA en-route centers, which separate high altitude traffic, is expected to increase by 50 percent. Over the next 20 years, large airports will continue to grow faster than their smaller counterparts in the United States. We are forecasting that the number of larger regional jets will increase, while most of the smaller regional jets will be retired from the fleet. On the general aviation front, the demand for products and services will continue to grow, particularly in new business jets and light sport aircraft. As our aviation system advances into the next century of flight, the solution for handling the demand for service is the Next Generation Air Transportation System, or NextGen. We are in

FAA Aerospace Forecast Fiscal Years 2012-2032

the process of transforming our national air space system from the ground-based radar of today, to the satellite-based system of tomorrow. This is a fundamental change in the way the United States and the world will navigate and control air traffic. Precise, satellite-based navigation is already revolutionizing the way we do business today. Technology is helping us to become safer, quieter, cleaner and more efficient with our assets. We are creating a new template for the way we manage air traffic, yet the FAA’s core mission remains the same. We will continue to work every day to deliver the safest and most efficient aerospace system in the world.

Michael P. Huerta FAA Acting Administrator

FAA Aerospace Forecast Fiscal Years 2012-2032

Table of Contents FORECAST HIGHLIGHTS .........................................................................................................................................1 REVIEW OF 2011.......................................................................................................................................................3 U.S. ECONOMIC ACTIVITY ...................................................................................................................................5 WORLD ECONOMIC ACTIVITY .............................................................................................................................8 COMMERCIAL AVIATION ......................................................................................................................................9 World Travel Demand .........................................................................................................................................9 U.S. Travel Demand ......................................................................................................................................... 13 Commercial Air Carriers – Passenger .......................................................................................................... 14 Domestic Passenger Markets ....................................................................................................................... 16 International Passenger Markets .................................................................................................................. 19 Commercial Air Carriers – Cargo.................................................................................................................. 21 International Air Cargo Revenue Ton Miles by Region ................................................................................ 23 U.S. Commercial Air Carriers 2011 Financial Results ..................................................................................... 23 U.S. Commercial Air Carriers 2011 Aircraft Fleets ........................................................................................... 25 GENERAL AVIATION .......................................................................................................................................... 27 FAA WORKLOAD ................................................................................................................................................ 29 FAA AEROSPACE FORECASTS .......................................................................................................................... 32 ECONOMIC FORECASTS .................................................................................................................................. 34 World Economy ................................................................................................................................................ 36 AVIATION TRAFFIC AND ACTIVITY FORECASTS ............................................................................................ 38 Commercial Aviation Forecasts........................................................................................................................ 38 Domestic Markets ......................................................................................................................................... 39 International Markets .................................................................................................................................... 44 Commercial Aircraft Fleet ................................................................................................................................. 49 General Aviation ............................................................................................................................................... 51 FAA Workload Forecasts ................................................................................................................................. 54 FAA and Contract Towers ............................................................................................................................ 54 En-route Centers .......................................................................................................................................... 55 UNMANNED AIRCRAFT SYSTEMS ...................................................................................................................... 57 COMMERCIAL SPACE TRANSPORTATION ........................................................................................................ 58 OVERVIEW ............................................................................................................................................................. 58 REVIEW OF 2011 .................................................................................................................................................... 59 GLOBAL FORECAST ................................................................................................................................................ 59 RISKS TO THE FORECASTS ................................................................................................................................ 61 APPENDIX A: ALTERNATIVE FORECAST SCENARIOS ................................................................................... 64 SCENARIO ASSUMPTIONS ....................................................................................................................................... 64 ALTERNATIVE FORECASTS ...................................................................................................................................... 68 Passengers....................................................................................................................................................... 68 Revenue Passenger Miles ............................................................................................................................... 68 Available Seat Miles ......................................................................................................................................... 69 Load Factor ...................................................................................................................................................... 70 Yield .................................................................................................................................................................. 70 Passenger Trip Length ..................................................................................................................................... 71 APPENDIX B: FAA FORECAST ACCURACY ..................................................................................................... 76 APPENDIX C: ACKNOWLEDGEMENTS .............................................................................................................. 79 APPENDIX D: FORECAST TABLES .................................................................................................................... 81

FAA Aerospace Forecast Fiscal Years 2012-2032

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FAA Aerospace Forecast Fiscal Years 2012-2032

FORECAST HIGHLIGHTS 2012-2032 Since the beginning of the century, the commercial air carrier industry has suffered several major shocks that have led to reduced demand for air travel. These shocks include the terror attacks of September 11, skyrocketing prices for fuel, debt restructuring in Europe and the United States (U.S.), and a global recession. To manage this period of extreme volatility, air carriers have fine-tuned their business models with the aim of minimizing financial losses by lowering operating costs, eliminating unprofitable routes and grounding older, less fuel efficient aircraft. To increase operating revenues, carriers have initiated new services that customers are willing to purchase. Carriers have also started charging separately for services that were historically bundled in the price of a ticket. The capacity discipline exhibited by carriers and their focus on additional revenue streams bolstered the industry to profitability in 2011 for the second consecutive year. Going into the next decade, there is cautious optimism that the industry has been transformed from that of a boom-to-bust cycle to one of sustainable profits. As the economy recovers from the most serious economic downturn and slow recovery in recent history, aviation will continue to grow over the long run. The 2012 FAA forecast now calls for one billion passengers in 2024, three years later than projected last year. Growth over the next five years will be moderate, with a return to historic levels of growth only attainable in the long term. This delayed trajectory represents the downward adjustments of the overall economy, here in the U.S. and abroad, and the aviation sector’s responses. One of the many factors influencing the delayed recovery is the uncertainty that surrounds the U.S. and European economies. The latter, primarily those belonging to the Euro area, have been hit hard by the pressure from bond markets for fiscal austerity. Combined with the slow pace of these economies, debt restructuring pulled the European economy into recession in early 2012. This has not helped the pace of U.S. economic growth given the importance of its trade with Europe. Despite this and the ambiguity surrounding its own fiscal imbalances, the U.S. economy has managed to avoid a double dip recession and trudges along the path of slow recovery. System capacity in available seat miles (ASMs) – the overall yardstick for how busy aviation is both domestically and internationally – will remain flat this year after posting a 3.4 percent increase in 2011; it will then grow at an average annual rate of 3.1 percent through 2032. In the domestic market, capacity overall shrinks by 0.8 percent in 2012 after having registered an increase of 2.0 percent in 2011. Domestic capacity is projected to grow at an average annual rate of 2.5 percent for the remainder of the forecast period. Domestic mainline carrier capacity will decrease by 0.8 percent in 2012 after registering a one-year increase in 2011 of 2.3 percent following three years of decline. For the regional carriers, domestic capacity will shrink by 0.5 percent from 2011 levels thus registering another decline after shrinking in 2009 – the only two periods when the industry has shrunk since deregulation. Commercial air carrier domestic revenue passenger miles (RPMs) are forecast to shrink 0.2 percent in 2012, and then grow at an average of 2.8 percent per year through 2032; domestic enplanements in 2012 will decrease 0.1 percent, and then grow at an average annual rate of 2.4 percent for the remainder of the forecast. 1

FAA Aerospace Forecast Fiscal Years 2012-2032

The average size of domestic aircraft is expected to increase by 0.2 seats in FY 2012 to 122.8 seats. Average seats per aircraft for mainline carriers are projected to stay relatively flat as network carriers 1 continue to reconfigure their domestic fleets. While demand for 70-90 seat aircraft continues to increase, we expect the number of 50 seat regional jets in service to fall, increasing the average regional aircraft size in 2012 by 0.5 seats to 56.8 seats per mile. Passenger trip length in domestic markets will decrease by 1.3 miles during the same period. Although the slow growth and expectations of a European recession has dampened the near term prospects for general aviation, the long-term outlook remains favorable. We see growth in business aviation demand over the long term driven by a growing U.S. and world economy especially in the turbo jet and turbine rotorcraft markets. As the fleet grows, the number of general aviation hours flown is projected to increase an average of 1.7 percent a year through 2032. The global economy is facing a prospect of slow growth again including a possible recession in the first part of the year in Europe which may slow the demand for air travel. Profitability for U.S. carriers will hinge on a stable environment for fuel prices, an increase in demand for corporate air travel, maintaining the ability to pass along fare increases to leisure travelers, and the continual generation of ancillary revenues. To navigate this volatile operating environment, mainline carriers will continue to drive down costs by better matching flight frequencies and/or aircraft gauge with demand, delaying deliveries of newer aircraft and/or grounding older aircraft, along with pressuring regional affiliates to accept lower fees for contract flying. Over the long term, we see a competitive and profitable industry characterized by increasing demand for air travel and airfares growing more slowly than inflation.

1

Alaska Airlines, American Airlines, United-Continental Airlines, Delta Airlines, and U.S. Airways. 2

FAA Aerospace Forecast Fiscal Years 2012-2032

REVIEW OF 2011 Although the year 2011 began with a lot of hope for an economic recovery, it was primarily characterized as a year of full scale uncertainty. The grim operating environment faced by the carriers at the start of the global recession that revolutionized how they operate today also helped the industry cope with this uncertainty. Consequently, U.S. airlines made a profit for the second consecutive year. A view held by some industry professionals is that recent carrier initiatives will provide traction towards profitability, even during future periods of uncertainty, and this appears to have borne fruit in 2011. One recent initiative by the passenger carriers is a shift in focus from increasing market share to one of boosting shareholder return on investment. The U.S. airline industry has become more nimble; that is, adjusting capacity to seize opportunities or contracting in times of economic distress. As a result, it expanded its capacity by 2.0 percent in 2011 while positioning itself for a reduction of 0.8 percent this year in anticipation of the uncertain economic environment. Even during times of economic instability and distress, the industry has found ways to increase revenue. For example, air carriers are charging fees for services that used to be included in airfare (e.g. meal service), as well as for services that were not previously available (e.g. premium boarding and fare lock fees). The impact from these recent initiatives gives reason for optimism. After posting net losses for eight consecutive quarters, the industry (passenger and cargo carriers combined) posted profits in both 2010 and 2011. Demand for air travel in 2011 grew slowly following a dismal 2010 that was marked by fading consumer confidence, tightening credit, surging unemployment, eroding corporate travel budgets, and the pressure of debt restructuring in Europe and the U.S. In 2011 2 system revenue passenger miles increased 3.5 percent as enplanements increased 2.5 percent. Commercial air carrier domestic enplanements were up 2.3 percent while international enplanements were up 4.4 percent. The system-wide load factor continued to rise to 82.0 percent (up 0.1 points from 2010). Domestic enplanement market share continued to rise for low-cost carriers in 2011 while network and “other” carrier and regional carrier share decreased. Domestic low cost carrier enplanement share increased by 1.1 points to 28.4 percent while the share of network and “other” carriers fell by 0.4 points to 46.8 percent and regional carrier share dropped by 0.6 points to 24.8 percent. Capacity restraint by the carriers as passenger demand returned helped the system wide real yield to increase by 6.4 percent in 2011. Data for FY 2011 show that the reporting passenger carriers had a combined operating profit of $5.8 billion (compared to a $7.3 billion operating profit for FY 2010). The network carriers reported combined operating profits of $4.23 billion while the low cost carriers reported combined operating profits of $1.1 billion, with four out of the five network carriers and five of the nine low cost carriers posting profits. The general aviation market continued its decline in calendar year (CY) 2011, although at a slower rate. U.S. manufacturer shipments declined for the fourth year in a row, down an 2

All stated years and quarters for U.S. economic and U.S. air carrier traffic and financial data and forecasts are on a fiscal year (FY) basis (October 1 through September 30). All stated years and quarters for international economic and world traffic and financial data are on a calendar year (CY) basis, unless otherwise stated. 3

FAA Aerospace Forecast Fiscal Years 2012-2032

estimated 8.9 percent, even though U.S. billings are estimated to have increased 6.7 percent than their CY 2010 levels. Piston aircraft shipments by U.S. manufacturers fell an estimated 10.5 percent, and turbine aircraft shipments (turboprop and business jets) by U.S. manufacturers declined by 7.0 percent in CY 2011 compared to CY 2010. While continuing decreases in U.S. shipments reflected the fragile nature of the economic recovery, the pace of the decline has slowed. The 7.0 percent decrease for the turbines compared favorably to the 24.9 percent decline recorded in 2010 and 39.2 percent decline posted in 2009 in turbine aircraft shipments by U.S. manufacturers. The business jet segment showed even more reason for optimism as shipments fell by only 2.7 percent in CY 2011 versus decreases of 29.2 percent and 46.2 percent, respectively in CY 2010 and CY 2009. Along with the fall in shipments, general aviation activity at FAA and contract tower airports fell 2.3 percent in 2011. Total operations at FAA and contract towers decreased for the 4th consecutive year, falling 1.0 percent, as activity declines in the air taxi and general aviation categories offset increases in air carrier and military activity. Although the overall number of flights fell, FAA’s workload did not. As the fleet mix changes with increasing numbers of regional and business jets in the nation’s skies, along with carriers consolidating operations in their large hubs, the complexity of activity in the airspace continues to grow, increasing controllers’ workload.

4

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. ECONOMIC ACTIVITY Following an unprecedented fiscal stimulus (i.e., American Recovery and Reinvestment Act or ARRA) of over $800 billion that took place in 2009, with over half of it being spent during 2010, the U.S. economy was left to its own fundamentals in the latter part of 2010 and 2011. The economy grew at an average annual rate of 2.1 percent in fiscal year (FY) 2010 and 2.1 percent in FY 2011. Given the uncertainty that characterized 2011, the economic growth that occurred without a contraction or double-dip recession was reassuring. Towards the end of the fiscal year and beginning with FY 2012, there were signs of pent-up demand coming back as consumer spending continued to grow, the housing market appeared to be finally turning around and the labor market gained traction. Overall, business spending continues growing, perhaps partly influenced by tax incentives and a cautious environment that has kept inventories to a minimum. U.S. Gross Domestic Product Seasonally Adjusted Annual Growth 4.0 3.5 3.5

3.3

3.1

Percent Change

3.0 2.5

2.2

2.2 2.0

1.8 1.6

1.5 1.0 0.5 0.5 0.0 2009 Q4

2010 Q1

2010 Q2

2010 Q3

2010 Q4

2011 Q1

2011 Q2

2011 Q3

Fiscal Year 2011

Fiscal Year 2010

The nation’s unemployment rate has been greatly affected by the recession. When the recession began in December 2007 the unemployment rate was 5.0 percent. Unemployment climbed throughout 2008, intensified during 2009, and reached its pinnacle during the first quarter of FY 2010 (10.0 percent). The unemployment rate is gradually falling, from an average of 9.7 percent in FY 2010 to 9.2 percent in FY 2011; this rate of decline is relatively slow compared to past recessions.

5

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Unemployment Rate 12.0

10.0

9.7

10.0

9.7

9.6

9.3

9.6

9.6 9.2

9.1

8.9

8.2

Percent Unemployed

8.0 6.9 6.0 6.0

4.0

2.0

0.0 2008 Q3

2009 Q3

2009 Q1

2010 Q1 Date

2010 Q3

2011 Q1

2011 Q3

The price of oil, as measured by the U.S. Refiners’ Acquisition Cost (for West Texas Intermediate, or WTI), was $96.05 in FY 2011, an increase of 29 percent from FY 2010. This is on top of the last year’s increase of 36 percent. The fuel price volatility that characterized 2008-2009 has diminished considerably but a rising trend appears to be settling in throughout the last two years. U.S. Refiners' Acquisition Cost 140 123 120

115

115

114

117 110

113

110

104 97

$ Per Barrel of (WTI) Oil

100

91 83

85

80

60

40

20

0 Oct-10

Dec-10

Source: IHS Global Insight

Feb-11

Apr-11 Date

6

Jun-11

Aug-11

Oct-11

111

FAA Aerospace Forecast Fiscal Years 2012-2032

Finally, consumer prices continued to increase in 2011. Core inflation (excluding gas and food) was moderate (2.2 percent); while headline inflation was up a modest 2.6 percent due to an increase in oil and gasoline prices.

7

FAA Aerospace Forecast Fiscal Years 2012-2032

WORLD ECONOMIC ACTIVITY Based on preliminary figures, according to IHS Global Insight, the U.S. and rest of the world economies grew 1.7 and 3.1 percent, respectively, in 2011. The advanced economies (U.S., Western Europe, Japan, Australia, New Zealand, and Canada) expanded 1.3 percent overall. All world regions saw their economies grow, except Japan which was impacted by the devastation wrought by the March earthquake and tsunami. Data coming out at the year’s end suggest that the recovery in Europe is continuing to lag that of other world regions. U.S. and World Gross Domestic Product 6.0 4.8

4.7

5.0

4.4

4.2 4.0

3.7

3.5 3.1

Annual Percent Change

3.0

3.1

3.0 2.7 2.0

1.9

2.0

1.7

1.0 (0.3) (1.0) (2.0)

(1.9)

(3.0) (3.5)

(4.0) 2004

2005

2006

2007 2008 Calendar Year US World

2009

2010

2011

Source: Global Insight website, GDP Components Tables (Interim Forecast, Monthly), Release date 14 OCT 2011

On a calendar year basis, gross domestic product (GDP) in Canada expanded at a faster pace (up 2.2 percent) than the U.S. in 2011 (up 1.7 percent). The combined economies of the Asian and Far East nations grew 4.2 percent in 2011, down from 6.8 percent a year earlier. This region includes the world’s second largest economy, Japan (down 0.6 percent), and the world’s most vibrant economy, China (up 9.3 percent). The combined economies of Europe rebounded more slowly, with Western Europe up 1.6 percent and the combined economies of Central Europe and the former Soviet Union up 4.4 percent. GDP in Latin America (including the Caribbean) expanded by 4.0 percent with Brazil up 3.6 percent and Mexico up 3.9 percent.

8

FAA Aerospace Forecast Fiscal Years 2012-2032

COMMERCIAL AVIATION Commercial aviation continued a slow recovery in 2011 despite rising jet fuel prices and a shaky global economy. The U.S. industry posted a net profit in 2011, with a similar outcome predicted for foreign carriers. After posting net profits of $15.8 billion in 2010, global industry net profits for calendar year 2011 are expected to be $6.9 billion. 3 All global regions are projected to see a drop in profits as fuel costs increased by $40 billion worldwide.

World Travel Demand Based on data compiled by the International Civil Aviation Organization (ICAO), world air carriers are expected to post another solid performance in CY 2011 as demand for air travel continues to rebound from the depressed levels recorded during 2009. Although traffic results are not available for full year 2011 at the time of this printing, ICAO predicts that worldwide revenue passenger kilometers (RPKs) will increase 6.4 percent following an increase of 7.9 percent in 2010. 4 World Passenger Demand 16.0 13.9

Annual Percent Change

12.0

11.6

8.3

8.1 7.9

7.4

7.1 7.3

8.0

5.9

6.4

5.2 5.0

4.0

2.6

0.0 -0.4

-1.1

-1.6

-4.0 2004

2005

2006

2007

2008

2009

2010

2011E

Calendar Year Passengers

RPKs

Source: 2004-10 ICAO; 2011 IATA

Statistics from the Association of European Airlines (AEA) available for calendar year 2011 show passengers are up 7.1 percent over calendar year 2010. Data for the same period shows capacity, as measured by available seat kilometers (ASKs), to be up 8.9 percent and 3 4

IATA Financial Forecast, December 2011. ICAO press release dated January 6, 2012. 9

FAA Aerospace Forecast Fiscal Years 2012-2032

RPKs to be up 8.0 percent. Results for April 2011 show a resurgence of traffic followed by airspace closures stemming from volcanic ash clouds that took place in April, 2010. European Carriers Capacity and Traffic Calendar Year 2011 30.0

Annual Percent Change (%)

25.0

20.0

15.0

10.0

5.0

0.0 Jan

Feb

Mar

Apr

May

Jun Jul Month

ASKs

Aug

Sep

Oct

Nov

Dec

RPKs

The Association of Asia Pacific Airlines (AAPA) reported an increase of 3.7 percent in international RPKs and a 6.3 percent increase in international ASKs; international passengers were up 3.5 percent during the same period. Asia Pacific Carriers Capacity and Traffic Calendar Year 2011 10.0

Year over Year Percent Change

8.0

6.0

4.0

2.0

0.0

-2.0 Jan

Feb

Mar

Apr

May

Jun Jul Aug Month ASKs RPKs

10

Sep

Oct

Nov

Dec

FAA Aerospace Forecast Fiscal Years 2012-2032

In CY 2011, U.S. and foreign flag carriers transported an estimated 161.8 million passengers between the United States and the rest of the world, a 2.8 percent increase from 2010. Yearover-year growth increased in the Transborder, Pacific and Latin markets (up 2.2 percent, 5.7 percent and 5.0 percent, respectively). Passengers decreased in the Atlantic market (down 0.6 percent) due to repercussions from the debt crisis in Europe, which is slowing the recovery of that region’s economy, and from the worldwide economic slowdown.

Total Passengers To/From the U.S. U.S. and Foreign Flag Carriers 180

Millions of Passengers

160 140 120 100

19

21

20

26

26

24

25

26

43

44

47

49

49

50

50

53

2004

2005

2006

80

22

22

22

22

27

28

20 24

50

48

53

56

57

55

56

56

2009

2010

2011E

60 40 20 0

Atlantic

2007 2008 Calendar Year

L. America

Pacific

Transborder

Worldwide air cargo demand contracted slightly in 2011 following a sharp rebound in 2010.5 According to IATA, worldwide freight ton kilometers were estimated to decline 0.5 percent in calendar year 2011 compared to 2010. Freight ton kilometers (FTKs) of AEA member carriers were up 2.1 percent in calendar year 2011 whereas FTKs of AAPA member carriers fell 4.8 percent during the same period.

5

IATA News Release, January 2012. 11

FAA Aerospace Forecast Fiscal Years 2012-2032

World Air Cargo Demand 25.0 18.7

20.0

Annual Percent Change

15.0 10.0

12.3 9.6 7.9 6.4 4.8

5.0

4.9 4.8

2.4 0.4

0.0 -0.7 -0.5

-1.0

-5.0

-3.4

-10.0 -10.1-9.8

-15.0 2004

2005

2006

2007

2008

2009

2010

2011E

Calendar Year Tonnes

RTKs

Source: 2004-10 ICAO; 2011 IATA

The International Air Transport Association (IATA) reports that world air carriers (including U.S. airlines) are expected to register an operating profit of $13.2 billion for 2011. IATA estimates global airline industry net profits to be $6.9 billion for the same period with all regions expected to be in the black. Based on financial data compiled by ICAO and IATA, between 2003 and 2011 world airlines produced cumulative operating profits of $76.9 billion (with seven years out of nine posting gains) and net losses of $5.5 billion (with four years out of nine posting gains). 6

6

IATA Financial Forecast, December 2011. 12

FAA Aerospace Forecast Fiscal Years 2012-2032

World Air Carrier Profit/Loss 30.0 21.7

19.9

20.0

Billions of Dollars

15.0

15.8

14.7

13.2

10.0

6.9

5.0

4.4

3.3

1.9

0.0 -1.1 -5.6

-4.1

-4.6

-10.0

-20.0

-26.1

-30.0 2004

2005

Source: 2004-10 ICAO; 2011 IATA

2006

2007 2008 Calendar Year Operating

2009

2010

2011E

Net

U.S. Travel Demand By year end of FY 2011, the U.S. commercial aviation industry consisted of 16 scheduled mainline air carriers that used large passenger jets (over 90 seats) and 68 regional carriers that used smaller piston, turboprop, and regional jet aircraft (up to 90 seats) to provide connecting passengers to the larger carriers. Mainline and regional carriers offer domestic and international passenger service between the U.S. and foreign destinations, although regional carrier international service is confined to the border markets in Canada, Mexico, and the Caribbean. Twenty-six all-cargo carriers were providing domestic and/or international air cargo service at the end 2011. Shaping today’s commercial air carrier industry are three distinct trends: (1) convergence of the network and low cost carrier business models and unit costs; (2) continuing industry consolidation and restructuring, and (3) the proliferation of ancillary revenues. A sign that the business models for the low cost and network carriers groups are converging is the narrowing share of capacity flown between these two groups and the fares they charge. After losing market share in 2008, partially due to the cessation of operations by two low cost carriers during that year, 7 low cost carrier capacity share has been on the rise (up 0.9 points in 2009, up 0.4 points in 2010, and up 1.6 points in 2011). Since 2000, the share of capacity flown by the low cost carrier group has almost doubled, going from a 17.0 percent market share in 2000 to over 32.0 percent share in 2011. Another narrowing gap is the average 7

American Trans Air and Skybus Airlines. 13

FAA Aerospace Forecast Fiscal Years 2012-2032

domestic yield (a proxy for airfare) reported by the low cost and network carrier groups. In 2000, average domestic yield for the low cost carrier group was 12.4 cents versus 14.5 cents for the network carrier group. By 2011, they were virtually identical on average; however, this does not show the variations in market premiums that each airline may command due to its unique market position. Industry restructuring and consolidation continued in 2011. Operations at Northwest Airlines were folded into Delta Airlines, while operations at Midwest Airlines were folded into Frontier Airlines. For the regional carriers, Delta Airlines sold its subsidiaries, Compass and Mesaba, to Trans States and Pinnacle, respectively, and Arctic Circle Air merged with ERA Aviation. Soon after FY 2011 ended, American Airlines declared bankruptcy at the end of November 2011. As a result of industry restructuring and consolidation, far fewer carriers now report traffic to the Bureau of Transportation Statistics when compared to 2001. Subsequently, 7.0 percent fewer domestic ASMs were flown but almost 3.0 percent more passengers were carried domestically in 2011 when compared to 2001. This has had clear implications on the size of the aircraft being used and the load factors, topics which will be discussed later in this document. The 7.0 percent reduction in domestic capacity since 2001 has not been shared equally between the mainline carriers and their regional counterparts. In 2011, the mainline carrier group provided 16 percent less capacity than it did in 2001 (and carried 12 percent fewer passengers). Conversely, capacity flown by the regional group increased 153 percent over the same ten year period (with passengers carried up 113 percent). The shift in capacity from the mainline carrier group to the regional carrier group emerged from several factors. One factor was the type of aircraft flown by the regional carriers, which has been transformed from one of predominantly turboprop and piston aircraft to that of 50-90 seat regional jets. This fleet transformation has permitted the regional carriers to fly longer haul routes that were not previously accessible with smaller turboprop aircraft. Another factor leading to the shift in capacity was the external operating environment. Air travel demand was reduced by the terror attacks of September 11, the record breaking fuel prices of 2008, and the global recession that followed. To better match demand to capacity, the mainline carriers contracted out “thin” routes to their regional counterparts because they could provide lift at a lower cost. Over the past few years, however, this trend has slowed down considerably. The most recent trend to take hold is that of ancillary revenues. Carriers generate ancillary revenues by selling products and services beyond that of an airplane ticket to customers. As noted earlier, U.S. passenger carriers posted net profits for the second consecutive year in 2011 with ancillary revenues a contributing factor to the favorable outcome. Commercial Air Carriers – Passenger Coming off of a formidable 2010 brought on by the continuing global economic slowdown and debt restructuring issues plaguing the financial recovery, U.S. commercial air carriers’ traffic and capacity results in 2011 showed a modest increase in both. System (the sum of domestic plus international) capacity increased 3.4 percent to 993.9 billion ASMs while RPMs increased 3.5 percent to 814.6 billion. During the same period system-wide passengers increased 2.5 percent to 730.7 million; U.S. mainline carrier passenger growth was 3.4 percent while 14

FAA Aerospace Forecast Fiscal Years 2012-2032

regional carrier passengers declined by 0.4 percent to 163.6 million. In the domestic market, mainline passengers saw an increase of 3.1 percent following a three year consecutive decline prior to 2011. Mainline passengers in international markets posted strong growth for the second year in a row (up 4.7 percent). Even though the recession was officially over in June 2009, 8 carriers continued to face economic uncertainty in 2011 as corporate travel budgets remained strained and double-digit unemployment persisted accompanied by uncertainty surrounding debt restructuring and the payroll tax break. Despite this, the industry expanded capacity, after three consecutive years of capacity reductions that were instituted in the latter part of 2008 to counter skyrocketing fuel prices and reduced demand. Counter intuitively, with a slight increase in seats available to the travelling public, carriers were still able to raise airfares as demand returned. Combining this new found pricing power with ancillary revenues, U.S. carriers finished 2011 with a net profit. System load factor and trip length climbed in 2011, as seats per aircraft mile increased. The average load factor reached a record-breaking 82.0 points, up 0.1 points from 2010. Trip length increased by 10.9 miles to 1,114.9 miles. This marks the ninth consecutive annual increase in trip length. Seats per aircraft mile increased to 141.0 seats (up 1.3 seats per aircraft mile). U.S. Commercial Air Carriers System ASMs and Aircraft Operations 8.0

7.0

6.0

Annual Percent Change

4.0

5.3 3.5

3.4

3.2

2.7

2.0

1.4

0.9

0.9

0.0 -0.2

-0.5

-2.0

-1.5

-2.0 -4.0

-3.4

-6.0 -8.0

-7.3 -8.4

-10.0 2004

2005

2006

2007 2008 Fiscal Year Operations

8

According to the National Bureau of Economic Research. 15

ASMs

2009

2010

2011

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Air Carriers System RPMs and Enplanements 12.0

10.6

10.0

Annual Percent Change

8.0

7.5

7.4

7.0

6.0 3.9

4.0

2.7

2.0

3.5

3.4

2.5

2.2 1.2

0.8

0.4

0.0 -0.8

-2.0 -4.0 -6.0 -8.0

-7.1 -7.2

-10.0 2004

2005

2006

2007 2008 Fiscal Year RPMs

2009

2010

2011

Enplanement

Domestic Passenger Markets Domestic capacity 9 was up 2.0 percent in 2011 after a decline of 0.4 percent in 2010. This was preceded by the steepest decline (in 2009 of 9.0 percent) ever recorded since deregulation of the industry in 1978. Departures were flat for the year after falling 1.8 percent in FY 2010. A year-over-year increase in capacity was posted for the first seven months of 2011 with the first quarter up 2.9 percent and the second and third quarters up by 2.2 and 1.9 percent, respectively. Capacity declined 0.3 percent year-over-year in the fourth quarter. Mainline carrier capacity was up 2.3 percent for the year, while regional carrier capacity was up 0.6 percent. Despite this increase, domestic ASMs were still 7.8 percent below pre-recession levels (2007) with departures down 12.1 percent at the end of 2011.

9

The 50 states, Puerto Rico, and the U.S. Virgin Islands. 16

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Carriers Domestic Capacity Fiscal Year 2011 5.0

Year over Year Percent Change

4.0 3.0 2.0 1.0 0.0 -1.0 -2.0 Oct-11

Nov

Dec

Jan-12

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Month Departures

ASMs

Domestic passenger enplanements grew at a faster rate than ASMs in 2011 up 2.3 percent. In the first half of the year, domestic passengers were up 3.2 percent but growth slowed in the second half of the year with passengers up just 1.5 percent. On a year-over-year basis, mainline carrier enplanements were up 3.1 percent for the year while regional carrier enplanements fell 0.2 percent, posting the second decline in three years for this segment of the industry.

17

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Carriers Domestic Traffic Fiscal Year 2011 8.0

Year over Year Percent Change

7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Oct

Nov

Dec

Jan-11

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

-1.0 Month Enplanement

RPMs

Similar to passenger counts, domestic RPMs grew faster than ASMs with domestic RPMs up 3.0 percent in FY 2011. Growth slowed during the year with the first quarter up 5.1 percent, the second quarter up 2.6 percent, and the last half of the year up 2.2 percent. For the year, mainline carrier RPM growth was 3.3 percent, while regional carrier growth was just 0.6 percent. Domestic carrier load factor increased 0.8 points to 82.5 percent, with both the mainline and regional carriers groups posting record high loads. Mainline carrier load factor increased 0.9 points from FY 2010 to 83.6 percent, while regional carrier load factor remained constant at 76.2 percent. Since FY 2000, total domestic capacity has decreased by 4.5 percent. Mainline carriers have reduced their domestic capacity by 13.6 percent with cutbacks by network carriers more than offsetting the growth of low-cost carriers. Making up some of the shortfall from network carrier capacity cuts during this time are the regional carriers. This segment of the industry has greatly expanded capacity (up 158.4 percent from 2000). During the same period, mainline carrier RPMs have increased 1.4 percent, while enplanements have fallen 13.0 percent. In comparison, regional carrier RPMs and enplanements have increased 230.8 percent and 102.4 percent, respectively. As a result, mainline carrier domestic capacity share has fallen from 94.7 percent in 2000 to 85.7 percent in 2011, with the share of domestic RPMs flown by mainline carriers dropping from 95.5 percent to 86.8 percent during the same period. Regional carriers now fly one in every four passengers, up from one in eight in 2000.

18

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Air Carriers Enplanements by Carrier Group 800 700 600

146.4 125.9

152.2

156.2

159.1 154.0

161.6

161.3

476.8

473.6

488.6

2009

2010

2011E

Millions

500 400 300 502.6

523.1

516.2

533.9

2004

2005

2006

2007 2008 Fiscal Year

521.6

200 100 0

Mainline

Regionals

International Passenger Markets U.S. carrier ASMs were up 6.7 percent and departures were up 3.9 percent in 2011. ASMs increased in all three regions with the Atlantic, Latin, and Pacific markets, up 5.6, 5.3 and 10.4 percent, respectively.

19

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Carriers International Capacity Fiscal Year 2011 14.0

Year over Year Percent Change

12.0 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 Oct

Nov

Dec

Jan

Feb

Mar Apr Month

ASMs

May

Jun

Jul

Aug

Sep

Departures

International RPMs were up 4.8 percent and passenger enplanements were up 4.4 percent in 2011. The Atlantic market posted an increase, with RPMs up 2.8 percent and enplanements up 3.2 percent. RPMs and enplanements increased 5.9 and 4.9 percent, respectively, in the Latin American market, while RPMs and enplanements increased 7.4 and 4.7 percent, respectively, in the Pacific market.

20

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Carriers International Traffic Fiscal Year 2011 14.0

Year over Year Percent Change

12.0 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 Oct

Nov

Dec

Jan

Feb

Mar Apr May Jun Month RPMs Enplanements

Jul

Aug

Sep

The international load factor dropped 1.4 percentage points overall in 2011 to 80.7 percent. Load factor decreased in all markets except Latin America: in the Pacific market load factor was down 3.0 points to 81.5 percent; in the North Atlantic market load factor was down 2.7 points to 80.7 percent; and in the Latin America market the load factor increased by 0.6 points to 79.7 percent. In 2011, 51.9 percent of the passengers flying abroad on U.S. flag carriers traveled to the Latin America market. The remaining 48.1 percent of international passengers was split between the Atlantic market (31.3 percent) and the Pacific market (16.7 percent). Commercial Air Carriers – Cargo Air cargo traffic contains both domestic and international freight/express and mail. The demand for air cargo is a derived demand resulting from economic activity. Cargo moves in the bellies of passenger aircraft and in dedicated all-cargo aircraft on both scheduled and nonscheduled service. Cargo carriers face price competition from alternative shipping modes such as trucks, container ships, and rail cars. U.S. air carriers flew 37.3 billion revenue ton miles (RTMs) in 2011, up 3.7 percent from 2010. Domestic cargo revenue ton miles (RTMs) fell by 6.1 percent to 12.0 billion. However, international RTMs increased by 9.1 percent to 25.2 billion, more than offsetting the decline in domestic RTMs. The strong growth in international RTMs reflects a rebound from the recession and the global financial crisis, with international air cargo RTMs now exceeding the pre-crisis (FY 2007) levels by 4.1 percent.

21

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Air Carriers Cargo Revenue Ton Miles 45.0 40.0 35.0 30.0

Billions

25.0

20.1

23.1

24.0

24.2

24.6 23.1

25.2

11.9

12.8

12.0

2009

2010

2011E

19.1

20.0 15.0 10.0 16.3

16.1

15.7

15.8

14.4

5.0 0.0 2004

2005

2006

2007 2008 Fiscal Year

Domestic RTMs

International RTMs

Air cargo RTMs flown by all-cargo carriers were 75.1 percent of total RTMs in 2011, with passenger carriers flying the rest, or 24.9 percent. Total RTMs flown by the all-cargo carriers increased 3.0 percent in 2011 from 27.2 billion to 28.0 billion. Total RTMs flown by passenger carriers were 9.3 billion in 2011, 5.9 percent higher than in 2010. On August 3, 2007, “Recommendations of the 9/11 Commission Act of 2007” was signed into law. Section 1602 of this Act states that air cargo placed on passenger aircraft will receive the same level of screening as passenger-checked baggage. The legislation went into effect on August 1, 2010, and requires 100 percent inspection of cargo transported on passenger aircraft at the piece level. The legislation did not apply to cargo on U.S. bound passenger flights from overseas or on cargo-only aircraft. However, following the discovery of a bomb on an all-cargo plane bound for the U.S., the Air Cargo Security Act was introduced on November 16, 2010. The purpose of the Act is to expand the 100 percent cargo screening mandate of passenger aircraft to cargo only aircraft. The bill didn’t become a law and TSA is currently negotiating screening agreements with 20 countries where approximately 80 percent of U.S. bound international cargo originates.

22

FAA Aerospace Forecast Fiscal Years 2012-2032

International Air Cargo Revenue Ton Miles by Region International air cargo traffic can be divided into four components consisting of Atlantic, Latin, Pacific, and ‘Other International.’ While total international RTMs increased, not all regions experienced growth in 2011. Latin cargo fell from 1.9 billion RTMs to 1.8 billion RTMs, a 9.3 percent decline. However, Atlantic RTMs rose 5.4 percent, from 6.9 to 7.2 billion and the Pacific region enjoyed even more expansion, a 9.1 percent increase from 8.4 to 9.1 billion. The ‘Other International’ category experienced the most growth. RTMs in that ‘region’ expanded from 5.9 billion to 7.1 billion, growing by 20.4 percent.

U.S. Commercial Air Carriers 2011 Financial Results U.S. commercial air carriers posted a net profit of $1.6 billion during FY 2011 after reporting a net profit of $3.4 billion one year earlier. U.S. Commercial Air Carriers Operating and Net Profit/Loss 15.0 10.2

9.7

10.0

7.6 5.9

5.6

Billions of Dollars ($)

5.0

3.4 1.6

0.8

0.7 0.0 -1.2 -5.0

-0.2 -2.0

-4.6 -7.8

-10.0 -11.7 -15.0 -20.0

-18.6

-25.0 2004

2005

Source: DOT Form 41 & 298C

2006

2007 2008 Fiscal Year

Operating Profit/Loss

2009

2010

2011E

Net Profit/Loss

Operating revenues (passenger and cargo) for FY 2011 were up 10.4 percent from FY 2010. The increase in revenue underscored the ability of passenger carriers to push through fare increases and to offer value-added services that leisure and business passengers were willing to buy. The increase in revenues for cargo carriers followed a rebound from the global financial crisis that strengthened demand for air cargo services. During the same period, operating expenses increased 12.3 percent. The increase in operating expenses during FY 2011 was driven by a 24.6 percent rise in the price of fuel for the year, as 23

FAA Aerospace Forecast Fiscal Years 2012-2032

well as an increase in variable costs resulting from increased demand for passenger and cargo services. In FY 2011, passenger carriers reported operating income of $5.8 billion and net profits of $540 million, while air cargo carriers reported an operating profit of $1.9 billion and a net income of $1.1 billion. In the domestic market, passenger carriers generated an operating profit of $3.8 billion but posted a net loss of $152 million. In the international market, this carrier group posted operating and net profits of $1.9 billion and $0.7 billion, respectively. Cargo carriers posted an operating profit of $2.6 billion and a net income of $1.5 billion in domestic markets. In international markets, the cargo carriers reported an operating loss of $0.7 billion and net loss of $0.5 billion. The industry’s financial boost is largely due to a turnaround in the performance of the network carriers. After two consecutive years (FY 2008-2009) of net losses totaling $27.3 billion, this carrier group has now recorded back to back profitable years in FY 2010-2011. In FY 2011 the network carriers posted net profits of $766 million and operating profits of $4.2 billion. For the nine reporting low-cost carriers, operating profits totaled $1.1 billion and net income totaled $179 million for the full year. An upswing in leisure and business demand along with ongoing capacity discipline led to a rebound in mainline carrier passenger yield for the year. Domestic mainline carrier passenger yield increased 5.6 percent in 2011. U.S. Commercial Air Carriers Domestic Passenger Yield 30

Revenue per Mile (₵)

25

20

15

10

5

0 2004

2005

2006

2007 2008 Fiscal Year Mainline

24

Regionals

2009

2010

2011E

FAA Aerospace Forecast Fiscal Years 2012-2032

Of the reporting regional carriers, operating profits totaled $0.5 billion and net losses totaled $0.5 billion for FY 2011. During the same period, regional domestic yield was unchanged. 10 Reflecting the changing nature of the industry the network carriers are putting the squeeze on their regional partners by negotiating fee-for-departure contracts that shift more of the financial risk of contract flying to the regional carriers. Since 2000, regional carrier yield is down 59.8 percent in real terms (compared to a drop of 25.8 percent in mainline carrier yield for the same period). The drop in regional carrier yield can be attributed to longer trip lengths (due to a growing number of larger and faster regional jet aircraft entering the fleet) and rising load factors. All other things being equal, an increase in either the trip length or the load factor results in drop in yield since fee-for-departure revenues are spread over a broader base of RPMs.

U.S. Commercial Air Carriers 2011 Aircraft Fleets The commercial passenger carrier fleet is undergoing transformation. The mainline carriers are retiring older, less fuel efficient aircraft (e.g. 737-300/400/500 and MD-80) and replacing them with more technologically advanced A320 and 737-700/800/900 aircraft. The regional carriers are growing their fleet of 70 to 90 seat regional jet aircraft and reducing their fleet of 50-seat jet aircraft. The total number of aircraft in the U.S. commercial fleet (including regional carriers) is estimated at 7,185 for 2011, a decrease of 29 aircraft from 2010. This includes 3,739 mainline air carrier passenger aircraft (over 90 seats), 879 mainline air carrier cargo aircraft, and 2,567 regional carrier aircraft (jets, turboprops, and pistons).

10

Passenger revenues include payments received by regionals from mainline partners for contractual flying. 25

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Air Carriers Aircraft Fleet 879

2011E

2,567 3,739 850

2010

2,613 3,751 841

2009

2,653

Calendar Year

3,710 960

2008

2,682 3,795 974

2007

2,780 3,983 1,012

2006

2,732 3,898 1,001

2005

2,779 3,906 993

2004

2,747 4,024

0

1,000

Cargo

2,000 3,000 Number of Aircraft Regionals

4,000

5,000

Mainline AC

The mainline carriers’ passenger jet fleet shrunk by 12 aircraft in 2011, following a 41 unit increase in 2010. The decrease was driven by a 61 unit decrease by the remaining network carriers as they continued to prune their fleets in the face of uncertain economic growth and rising fuel prices. With the decline of the fleet in 2011, the mainline carrier fleet now stands at 16.7 percent below (749 aircraft) the level it was in 2000. The regional carrier fleet was also reduced in 2011, falling by 46 units, and now stands at its lowest level since 2003. Regional carriers continue to retire 50 seat and smaller regional jets as the operating economics of these aircraft get worse as fuel prices continue to climb.

26

FAA Aerospace Forecast Fiscal Years 2012-2032

GENERAL AVIATION While the signs of a slow economic recovery have been observed, difficulties in the general aviation industry continued in 2011. Based on figures released by the General Aviation Manufacturers Association (GAMA), U.S. manufacturers of general aviation aircraft delivered an estimated 1,215 aircraft in CY 2011, 8.9 percent fewer than CY 2010. This translates into a fourth consecutive year of decline in shipments, although at a slower rate. Overall piston deliveries declined 10.5 percent, with single-engine deliveries down 9.1 percent and the much smaller multi-engine category down 23.9 percent. In the turbine categories, turbojet deliveries were only slightly lower than that of last year, by 2.7 percent, while turboprops were down an estimated 13.8 percent. U.S. billings in CY 2011 are estimated to have totaled $8.4 billion, up 6.7 percent compared with 2010.

General Aviation U.S. Manufacturers Shipments and Billings 3,500 3,147

14.0

13.3

3,279

2,857

3,000

12.0

3,079 11.9 2,355

10.0

10.4

9.1 7.9

2,000

8.4

8.7

8.0

1,585 1,500

6.8

1,334

6.0 1,215

1,000

4.0

500

2.0

0

Billings ($B)

Shipments

2,500

0.0 2004

Source: GAMA

2005

2006

2007 2008 Calendar Year

Shipments

2009

2010

2011E

Billings ($ Billion)

General aviation activity at FAA air traffic facilities posted mixed results in 2011. Operations at combined FAA and contract towers declined 2.3 percent in 2011, continuing a decade long trend. General aviation activity at consolidated traffic facilities (FAA TRACONs) fell 2.6 percent, while the number of general aviation aircraft handled at FAA en-route centers was essentially flat, up a scant 0.1 percent. The FAA uses estimates of fleet size, hours flown and utilization from the General Aviation and Part 135 Activity Survey (GA Survey) as baseline figures upon which assumed growth rates are applied. This survey has been conducted annually since 1977. Beginning with the CY 2004 Survey there were significant improvements to the survey methodology. These improvements included conducting 100 percent samples for turboprops and turbojets, all 27

FAA Aerospace Forecast Fiscal Years 2012-2032

rotorcraft, all aircraft in Alaska and all aircraft operating on-demand under Part 135. In addition, the sample design was revised to stratify by aircraft type (19 categories), FAA region (9 categories), and whether the aircraft was owned by an entity certified to fly Part 135 operations (2 categories). Furthermore, a large fleet reporting form was incorporated to allow owners/operators of multiple aircraft to report aggregated data for their entire fleet on a single form. In 2005 an additional aircraft category (light sport aircraft) was added. The result of these changes was the sample size nearly doubled. Between 2003 and 2005 large changes in both the number of aircraft (turbojets up by 22.8 percent, total rotorcraft up by 33.7 percent) and hours (single-engine piston down by 17.6 percent) in many categories occurred. The results of the 2010 Survey, the latest one available, are consistent with the results of past surveys since 2004. This reinforces our belief that methodological improvements have resulted in superior estimates relative to those in the past and these are used as the basis for our forecast. Based on the latest FAA assumptions about fleet attrition and aircraft utilization along with General Aircraft Manufacturer’s Association (GAMA) aircraft shipment statistics, the active general aviation fleet is estimated to have decreased 0.4 percent in 2011 to 222,520. With the decrease in the active fleet, general aviation flight hours are estimated to have decreased 1.6 percent in 2011 to 24.4 million. Student pilots are important to general aviation and the aviation industry as a whole. Student pilot numbers had been in decline for many years but in 2010 the FAA issued a rule that increased the duration of validity for student pilot certificates for pilots under the age of 40 from 36 months to 60 months. As a result, according to statistics compiled by the FAA’s Mike Monroney Aeronautical Center, the number of student pilots at the end of 2010 increased by 64.8 percent, or approximately 47,000 pilots, compared to calendar year end 2009. While the impact of the new rule on the long term trend in student pilots has yet to be fully determined, by the end of 2011, the number of student pilots decreased by 0.4 percent from its 2010 level to 118,657. The average age of a U.S. pilot in 2011 was 44.4 years old.

28

FAA Aerospace Forecast Fiscal Years 2012-2032

FAA WORKLOAD In 2011, FAA facilities experienced their fourth year of decline in activity. Commercial air traffic activity increased for the first time since 2007 as increases in air carrier activity offset declines in air taxi activity. Growth was higher during the first half of the year as carriers increased capacity in response to strengthening demand. The decline in noncommercial activity is attributed to a lackluster economy and rising fuel prices. Total activity at combined FAA and contract tower airports was 50.7 million operations in 2011, down 1.0 percent from 2010 and 26.1 percent below the peak activity level recorded in 2000. Commercial activity (the sum of air carrier and commuter/air taxi) at combined FAA and contract towers rose by 0.3 percent in 2011. Air carrier operations were up 1.6 percent while commuter/air taxi operations declined 1.4 percent. Commercial operations in 2011 were 15.1 percent lower than their peak in 2005. Non-commercial activity (the sum of general aviation and military) at combined FAA and contract towers fell by 2.0 percent in 2011, the smallest decrease in four years. General aviation activity (26.0 million) was down 2.3 percent while military activity (2.6 million) was up 0.9 percent. Since 1999, general aviation activity has increased only once (2007). At the end of 2011, non-commercial aircraft activity was 33.1 percent below the activity in 2000. Aircraft Activity at Combined FAA and Contract Towers 40

37.9

37.0

35.9

35.8

34.1

35

30.6 29.2

30 25.2

26.1

25.2

25.3

Millions

25

28.6

24.8 22.4

22.1

22.1

20 15 10 5 0 2004

2005

2006

2007 2008 Fiscal Year Non Commercial

2009

2010

2011

Commercial

The FAA pays close attention to the trends occurring at the “Core 30” airports. These airports represent the top 30 airports in the country in terms of passenger activity (except Memphis which 29

FAA Aerospace Forecast Fiscal Years 2012-2032

is a major freight hub) and account for about 70 percent of commercial passengers. Commercial activity at the Core 30 airports peaked in 2005, but subsequent industry restructuring has resulted in a drop in combined commercial activity at these airports since then. In 2011, commercial activity at the Core 30 airports rose by 1.5 percent from the previous year but was 8.3 percent below 2005 activity levels. Of the Core 30 airports, 23 recorded increases in activity from 2010 with the largest increases occurring at Miami (up 6.3 percent) and Reagan National in Washington, DC (up 6.1 percent). The largest decreases in activity occurred at Memphis (down 4.9 percent), and Salt Lake City (down 3.9 percent). Only six of the Core 30 airports exceeded 2005 peak activity levels during fiscal year 2011, up from four airports in both 2009 and 2010. Only Six of Core 30 Airports are above 2005 Activity Levels FY 2011 VS. FY 2005 Commercial Activity 140

Percent of FY 2005 Ops

120 100 80 60 40 20

IAD

TPA

SLC

HNL

MSP

SAN

MEM

DTW

MDW

PHL

FLL

PHX

DFW

LAS

BOS

MCO

LAX

SEA

LGA

ORD

EWR

ATL

BWI

IAH

DCA

MIA

CLT

DEN

JFK

SFO

0

Airport

Since 2005 there has been a pronounced shift in demand which is reflected in the relative growth of commercial operations across the Core 30 airports. Commercial operations at San Francisco (up 16.2 percent), New York-Kennedy (up 14.9 percent), and Denver (up 14.9 percent) have increased the most relative to their 2005 activity levels. Commercial operations at Dulles (down 37.4 percent), and Tampa (down 26.0 percent) show the largest declines from 2005 levels. These activity level shifts reflect the impact of airline industry restructuring. The demise of Indy Air and United’s continuing restructuring of its network resulted in a dramatic reduction of operations at Dulles, while the bankruptcy of Delta and its subsequent merger with Northwest along with Continental’s continuing restructuring of its network has led to a dramatic shrinking of operations in Tampa. In 2011, total activity at FAA en-route centers (41.2 million) increased 1.8 percent from the previous year, the fastest growth since 2005. Commercial activity was up sharply (4.8 percent) with air carrier operations up 4.9 percent and commuter/air taxi operations up 4.5 percent. Noncommercial activity was down 7.8 percent for the year as general aviation activity was flat (up only 0.1 percent) while military activity decreased 25.3 percent. In 2011, air carrier operations were 6.2 percent below their 2000 activity levels and air taxi/commuter operations were 11.2 30

FAA Aerospace Forecast Fiscal Years 2012-2032

percent above activity levels for 2000. Operations for the general aviation and military user groups were 25.0 and 46.9 percent below their 2000 activity levels, respectively. Aircraft Handled at FAA En Route Centers 40 35

35.1

33.8

34.7

33.8

34.1 32.4 31.0

31.0

30

Millions

25 20 15

12.4

12.4

12.3

12.1

11.3 9.3

10

9.5

8.8

5 0 2004

2005

2006

2007 2008 Fiscal Year Commercial

31

2009

Non-Commercial

2010

2011

FAA Aerospace Forecast Fiscal Years 2012-2032

FAA AEROSPACE FORECASTS FISCAL YEARS 2012 – 2032 Developing forecasts of aviation demand and activity levels continues to be challenging as the aviation industry evolves and prior relationships change. In times of amplified volatility, the process is filled with uncertainty, particularly in the short-term. Once again, the U.S. aviation industry has shown that the demand for air travel is resilient as it rebounds from its most recent downward spiral caused by the Great Recession. With the start of 2011, lingering questions remain. Are the U.S. and global economies on firm ground? Is it plausible that evolving structural changes will revamp the industry from one of boom-to-bust to one of sustainable profits? Will industry consolidation continue? After 15 consecutive months 11 of modest increases in year-over-year domestic capacity, carriers reversed course and posted capacity declines in each of the last two months of 2011. The restraint in capacity coupled with strengthening demand led to record high load factors and recovery in yield. Yield is expected to show continued strength in 2012 as the capacity reductions at the end of FY 2011 accelerate into FY 2012. Given the current instability in the global economy, there is much uncertainty as to the timing and strength of a recovery in aviation demand. Nevertheless, the FAA has developed a set of assumptions and forecasts consistent with the emerging trends and structural changes currently taking place within the aviation industry. The FAA is confident that these forecasts accurately predict future aviation demand; however, due to the large uncertainty of the operating environment, the variance around the forecasts is wider than it was in prior years. The commercial aviation forecasts and assumptions are developed from econometric models that explain and incorporate emerging trends for the different segments of the industry. In addition the commercial aviation forecasts are considered unconstrained in that they assume there will be sufficient infrastructure to handle the projected levels of activity. These forecasts do not assume further contractions of the industry through bankruptcy, consolidation, or liquidation. The commercial aviation forecast methodology is a blended one. The starting point for developing the commercial aviation forecasts (air carriers and regionals) is the future schedules published by Innovata. To generate the short-term forecast (i.e., two years out) current monthly trends are used in conjunction with published monthly schedules to allow FAA forecasters to develop monthly capacity and demand forecasts for both mainline and regional carriers for fiscal and calendar years 2012-13. The medium to long-term forecasts (2014-2032) are based on the results of econometric models. The general aviation forecasts rely heavily on discussions with industry experts conducted at a workshop co-hosted by FAA and the Transportation Research Board (TRB) in July 2011 along 11

May 2010 through July 2011. 32

FAA Aerospace Forecast Fiscal Years 2012-2032

with the results of the 2010 General Aviation and Part 135 Activity Survey. The assumptions have been updated by FAA analysts to reflect more recent data and developing trends, as well as further information from industry experts. The FAA also presents the forecasts and assumptions to industry staff and aviation associations, who are asked to comment on the reasonableness of the assumptions and forecasts. Their comments and/or suggestions have been incorporated into the forecasts as appropriate.

33

FAA Aerospace Forecast Fiscal Years 2012-2032

ECONOMIC FORECASTS For this year’s Aerospace Forecast, the FAA is using economic forecasts developed by IHS Global Insight, Inc. to project domestic aviation demand. Furthermore, the FAA uses world and individual country economic projections provided by IHS Global Insight, Inc. to forecast the demand for international aviation services. Annual historical data and economic forecasts are presented in Tables 1 through 4. U.S. economic forecasts are presented on a U.S. government fiscal year (October through September) basis, whereas international forecasts are presented on a calendar year basis. Data suggest that unemployment hit its highest point in the first quarter of FY 2010 (10.0 percent) and will likely remain above 9.0 percent through 2012. IHS Global Insight expects the recovery to be modest by historical standards with the economy plagued by continued levels of high private and public debt, a weak housing market, and tight credit. How these issues are resolved will determine the future path of the recovery. On the bright side, prior fears of a double-dip recession are unlikely to be realized. The boost to the economy from fiscal stimulus and inventory buildup is fading, leaving the economy to depend on underlying strength in private demand. On a quarter-by-quarter basis U.S. economic growth is projected to range between 1.4 to 3.0 percent for the next two years. U.S. Gross Domestic Product Seasonally Adjusted Annual Growth by Quarter 3.5 3.0

Annual Percent Change

3.0 2.4

2.5

2.4

2.0

1.8

1.8

1.5

1.4

1.5 1.2 1.0 0.5 0.0 2011 Q4

Source: IHS Global Insight

2012 Q1

2012 Q2

2012 Q3

2012 Q4

2013 Q1

2013 Q2

2013 Q3

Fiscal Year 2013

Fiscal Year 2012

Consumer spending is by far the largest component of the U.S. economy. Burdened by high household debt and rising unemployment, consumer spending increased only 2.0 percent in 2011. The recovery in consumer spending is projected to continue with increases of 1.9 34

FAA Aerospace Forecast Fiscal Years 2012-2032

percent in 2012 and 1.8 percent in 2013 as households continue their struggle to reduce debt burdens and rebuild retirement assets. In the medium term, (the four year period between 2013 and 2017), U.S. economic growth is projected to average 3.1 percent per year with rates ranging between 2.1 and 3.5 percent. Consumption growth remains muted during the same period (up an average of 2.1 percent). For the balance of the forecast period, U.S. real GDP growth slows to around 2.5 percent annually while consumption growth increases to 2.3 percent annually. The long-term stability of U.S. economic growth depends on sustained growth in the workforce and capital stock along with improved productivity and competitiveness. U.S. Gross Domestic Product 4.0 3.5

3.5 3.0

3.0

Annual Percent Change

2.5 2.5 2.1

2.1

2.1

2.0 1.6 1.5

1.0

0.5

0.0 2010 Source: IHS Global Insight

2011

2012

2013

2014

2015

2017-2032

Fiscal Year

After the price of oil increased by 29 percent in 2011, IHS Global Insight projects the price, as measured by the Refiners’ Acquisition Cost, to be $100 per barrel in 2012 (up 6.0 percent from 2011). Oil prices are now forecast to rise to over $115 per barrel by 2020 and then gradually increase to over $118 per barrel by 2025. For the remainder of the forecast period, oil prices are projected to grow faster than inflation, reaching $138 per barrel by 2032.

35

FAA Aerospace Forecast Fiscal Years 2012-2032

Refiners' Acquisition Cost 30.0

26.9

Annual Percent Change

25.0

20.0

15.0

10.0

6.8

6.0 5.0

2.9 1.4

0.0 2011 Source: IHS Global Insight

2012

2013

2014

2015-2032

Fiscal Year

Spurred by continued economic growth, the inflation rate (as measured by the CPI), rose 2.6 percent in FY 2011 and is expected to rise 1.9 percent and 1.8 percent in 2012 and 2013, respectively. After 2012, consumer price inflation is projected to grow between 1.8 and 2.2 percent per year for the balance of the forecast. To reflect the uncertainty in the projection of economic growth, the FAA Aerospace Forecast uses high and low economic growth cases along with the base forecast. The high and low economic growth cases are based on optimistic and pessimistic scenarios from IHS Global Insight’s 30-Year Focus (released third quarter 2011). The high economic growth case incorporates higher population growth, capital spending, and productivity relative to the base case. Due to the higher productivity, inflation is lower than in the base case. Real GDP growth in the high case averages 3.0 percent annually compared to 2.6 percent in the base case. The low economic growth case incorporates lower population growth, capital spending, and productivity than does the base case. By contrast, in the low economic case, inflation is higher than in the base case due to lower productivity growth. Real GDP growth in the low case averages 2.0 percent annually over the forecast horizon. Further details about the high and low scenarios can be found in Appendix A.

World Economy After weathering the first contraction in global GDP since the Great Depression and a deepening recession in Europe, worldwide economic activity is estimated by IHS Global Insight to have expanded by 2.7 percent in 2011. The advanced economies (U.S., Canada, Europe, and Japan) posted growth in output ranging from a low of -0.6 percent to a high of 2.2 percent. 36

FAA Aerospace Forecast Fiscal Years 2012-2032

The emerging market economies grew 6.2 percent, 1.2 points lower than in 2010 with the economy of China up 9.3 percent, India up 7.5 percent, Brazil up 3.6 percent, and Russia up 4.1 percent. In 2012, economic growth is projected to slow (up 2.6 percent) as weak household finances, sluggish employment growth, and constrained banking sectors of the advanced economies prevent global aggregate demand from growing fast enough to offset weakness from inventory accumulation, the recession in Europe, and the decline of stimulus spending. Beyond 2012 the balance of the forecast period world real GDP is projected to increase an average of 3.3 percent per year. Real Gross Domestic Product by World Region 8.0 6.8

7.0

Annual Percent Change

6.0

5.6 5.0

5.0

4.5 4.0

4.0

4.2

4.2

4.0

3.4

3.2 3.0

3.3

2.7

2.5 2.2

2.6

2.2

2.0

1.6

2.4

2.4

1.9

1.0 2010

2011

2012

2012-2032

Calendar Year Total Europe/Africa/ME

Latin America & Caribbean

Asia-Pacific

Canada

World

Source: IHS Global Insight

The Asia/Pacific and Latin America/Caribbean regions will continue to have the world’s highest economic growth rates. These regions are expected to see their economic activity grow at annual rates of 4.5 and 4.2 percent a year, respectively, over the forecast period (2012-2032). China, with a population of approximately 1.3 billion, is forecast to grow 6.5 percent a year, becoming the world’s second largest economy by 2013 (surpassing Japan). India, with a population of approximately 1.2 billion, is projected to see its GDP more than quadruple in size, growing at an average rate of 7.3 percent a year during the forecast period. In contrast, Japan grows at just 0.7 percent a year over the forecast horizon as structural impediments, the effects of the 2011 earthquakes and tsunami, and an aging population continues to limit growth. The GDP of the Canadian, Western European, and Middle Eastern/North Africa regions are anticipated to rise at more moderate rates of 2.4, 1.7, and 3.8 percent a year, respectively, over the forecast period.

37

FAA Aerospace Forecast Fiscal Years 2012-2032

AVIATION TRAFFIC AND ACTIVITY FORECASTS Total traffic and activity forecasts for commercial air carriers (the sum of mainline and regional carriers) are presented in Tables 5 through 9. These tables contain year-to-year historical data and forecasts. Mainline air carrier traffic and activity forecasts and the forecast assumptions are displayed in Tables 10 through 18, 21, and 23. These tables contain year-to-year historical data and forecasts. Regional carrier forecasts and assumptions are found in Tables 24 through 27. These tables provide year-to-year historical and forecast data. Tables 19 and 20 provide year-to-year historical and forecast data for cargo activity. Table 22 provides year-to-year historical and forecast data for the cargo jet fleet. General aviation forecasts are found in Tables 28 through 31. These tables provide year-toyear historical data and forecasts. Tables 32 through 34 provide forecasts of aircraft activity at FAA and contract facilities.

Commercial Aviation Forecasts System capacity is projected to remain flat in 2012. In the domestic market, mainline carrier capacity expanded slightly (2.2 percent) in 2011 but now is projected to contract by 0.8 percent while capacity for the regional carriers is projected to also decline in FY 2012 (down 0.5 percent). In the international sector, capacity is forecast to increase in all markets -- Atlantic, Latin, and Pacific -- resulting in overall international capacity growth of 2.0 percent. Passenger demand shows very little growth in 2012 with system RPMs forecast to grow 0.5 percent and all of this increase projected to come from international markets. An upturn is projected in 2013 with system RPMs and passengers increasing 2.6 and 1.9 percent, respectively, on a capacity increase of 2.1 percent. For the overall forecast period, system capacity is projected to increase an average of 3.1 percent a year. Supported by a growing U.S. economy, with real yields increasing in the near term (2012-2013), and then falling, system RPMs are projected to increase 3.2 percent a year, with regional carriers (up 3.5 percent a year) growing faster than mainline carriers (up 3.2 percent a year). System passengers are projected to increase an average of 2.5 percent a year, with regional carriers growing at slightly higher rate (up 2.5 percent a year) than their mainline counterparts (up 2.5 percent). By 2032, U.S. commercial air carriers are projected to fly 1.9 trillion ASMs and transport 1.23 billion enplaned passengers a total of 1.57 trillion passenger miles. Planes will remain crowded, with load factors projected to grow moderately during the early years of the forecast period then tapering during the mid to latter years to 83.4 percent in 2032 38

FAA Aerospace Forecast Fiscal Years 2012-2032

(up 1.1 points compared to the beginning of the forecast period in 2012). Passenger trip length is forecast to increase by more than 157 miles over the forecast period to 1,276 miles in 2032 (up 8 miles annually). The growth in passenger trip length reflects the faster growth in the relatively longer international and domestic trips as compared to shorter-haul flights. U.S. Commercial Air Carriers System Enplanements 1,400

Millions of Passengers

1,200

1,000

800

600

400

200

0 2011

2014

2017

2020 2023 Fiscal Year Regionals Mainline

2026

2029

2032

Domestic Markets After declining for three consecutive years, domestic capacity expanded in FY 2011 but is projected to fall again in 2012 (down 0.8 percent). The contraction will be similar for both mainline and regional carriers; mainline carrier capacity is forecast to decline 0.8 percent in FY 2012 while that of regional carriers is expected to fall by 0.5 percent. Domestic commercial carrier capacity picks up in 2013 (up 1.5 percent) with mainline carriers growing faster than regional carriers, 1.6 percent versus 0.8 percent. For the entire forecast period (2012-2032), overall domestic capacity is projected to increase at an average annual rate of 2.7 percent, slightly faster than economic growth. Mainline carriers are projected to grow at an annual rate of 2.5 percent while regional carriers are projected to grow a percentage point higher.

39

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Air Carriers Domestic ASMs 4.0 3.5 3.5 3.0

Annual Percent Change

2.5 2.5

2.3

2.0 1.5 1.0 0.6 0.5 0.0 -0.5 -0.5 -1.0

-0.8

-1.5 2011

2012 Fiscal Year Mainline Regionals

2012-32

The slow pace of the economic recovery in the U.S. will dampen RPM growth during 2012, the first year of the forecast (down 0.2 percent). Traffic growth is projected to be sluggish in the first half of the year as fiscal uncertainty continues to surround the U.S. economy. Mainline carrier RPMs are projected to decline by 0.4 percent during 2012, while regional carrier RPMs are projected to increase by 1.1 percent. By 2013, traffic growth improves with RPMs up 2.1 percent as the economic recovery gains some footing. Driven by economic growth and falling real yield, domestic RPMs grow 2.8 percent a year for the remainder of the forecast (20132032). For the overall forecast period (2012-2032), domestic RPMs are projected to grow an average of 2.8 percent a year. Mainline carriers are projected to grow more slowly than the regional carriers throughout the forecast period (averaging 2.7 percent versus 3.6 percent a year, respectively).

40

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Air Carriers Domestic RPMs

4.0

3.6 3.5

3.4

Annual Percent Change

3.0

2.7

2.5 2.0 1.5 1.1 1.0 0.6 0.5 0.0 -0.5

-0.4

-1.0 2011

2012

2012-32

Fiscal Year Mainline

Regionals

Enplanements are forecast to decline slightly (down 0.1 percent) in 2012 following a 2.3 percent increase in 2011. Similar to RPMs, passenger volume is expected to pick up in 2013 (up 1.7 percent) in response to a slowly growing economy and then grow at an average rate of 2.4 percent per year for the period 2013-2032. Over the entire forecast period, domestic enplanements are projected to grow at an average annual rate of 2.4 percent with mainline carriers growing more slowly than regional carriers (2.3 versus 2.6 percent a year, respectively). Reduced capacity combined with a modest recovery in passenger demand provided pricing power for the carriers during 2011, with nominal yield increasing 4.6 percent (up 2.0 percent in real terms). In spite of slow demand, shrinking capacity will further lift fares higher in 2012, for an increase in nominal yield of 3.1 percent (1.3 percent in real terms). For the entire forecast period, nominal yield is projected to increase at an average rate of 1.2 percent a year, while in real terms it is projected to decline at an average rate of 0.8 percent a year. The decline in real yield over the forecast period assumes technological improvements, competition between carriers, and the convergence of cost structures between network carriers and their low-cost counterparts. The convergence in cost structures between the carrier groups arises from gains in productivity as network carriers retire fuel inefficient aircraft and hold the line on labor costs while low-cost carriers contend with aging fleets, maturing work forces, and unionization. Domestic commercial carrier activity (departures) at FAA air traffic facilities is projected to grow more slowly than passenger traffic over the forecast period (1.8 percent per year for departures versus 2.8 percent for RPMs). This reflects increased carrier efficiencies in three operational measures: aircraft size, load factor, and trip length.

41

FAA Aerospace Forecast Fiscal Years 2012-2032

Aircraft size increased on an individual basis for both the mainline and regional carrier groups in 2011, resulting in a 0.8 seat increase in overall domestic average aircraft size to 122.6 seats. Mainline carrier aircraft size increased 0.4 seats with the grounding of older, fuel inefficient aircraft (i.e. MD-80’s and 737-300/400/500). Regional aircraft size increased by 0.3 seats with the retirement of 50-seat jet aircraft as larger 70-90 seat jet aircraft entered the fleet. Domestic seats per aircraft are forecast to increase in 2012 (up 0.2 seats). Over the balance of the forecast (2013-2032), domestic seats per aircraft are projected to gradually increase to 126.0 seats by 2032, an average of 0.1 seats per year. The FAA’s projection of domestic carrier average aircraft size is greatly influenced by carrier fleet plans, publicly known aircraft order books, and the FAA’s expectations of the changing domestic competitive landscape. In the near-term (through 2013), the forecast incorporates several assumptions: 1) mainline carriers desire to constrain ASM capacity growth; 2) the retirement of older inefficient aircraft (many of which are narrow-body); 3) the shifting of widebody and larger narrow-body aircraft to international services, and 4) growing use of 70-90 seat regional jet aircraft. In the longer-term, network carriers will replace their older narrow-body aircraft (A320’s/B757200/300) larger narrow-body aircraft in their domestic route networks with next generation, narrow-body aircraft like the A320 Neo and the 737 Max. The use of smaller aircraft, like the 100-seat Embraer 190, to supplement carrier route structures will be limited. The use of the next generation, narrow-body aircraft will allow mainline carriers to better serve their customers by more closely matching supply (the number of seats) with demand (the number of passengers), and improve profitability through lower operating costs. Mainline carrier domestic aircraft size increased in 2011 by 0.4 seats to 152.3 seats, and is projected to increase by 0.1 seats in 2012. Domestic aircraft size for mainline carriers is projected to remain unchanged in 2013 and then gradually increase for the balance of the forecast. Overall, average aircraft size for the mainline group will increase by only 1.6 seats between 2011 and 2032, going from 152.3 to 153.9. Regional carrier aircraft size flown domestically is projected to grow at a much faster pace than that of the mainline carriers. The faster growth in aircraft size for regional carriers is stimulated by the wave of 70 to 90 seat regional jet aircraft that are entering the fleet as well as reductions in the 50-seat and under jet fleet. Regional carriers are better equipped to support operations of their mainline partners by providing capacity that complements market demand. The larger share of 70 to 90-seat regional jets in the fleet coupled with significant 50-seat jet and small turboprop retirements over the next few years increases the average seating capacity of the regional fleet from 56.4 seats in 2011 to 56.9 seats by 2012. Over the course of the forecast, seats per aircraft for the regional carriers increases an average of 0.5 seats per year to 66.4 seats in 2032. The changing aircraft fleet mix is narrowing the gap between the size and aircraft types operated by the mainline and regional carriers. The commercial carrier domestic load factor increased 0.8 points during FY 2011 to an all-time high of 82.5 percent, with record load factors posted by the mainline and regional carrier groups. The mainline carrier group posted a load factor of 83.6 percent, up 0.9 percentage points from 2010. The load factor for the regional carriers remained flat at 76.2 percent. In 2012, the domestic load factor is forecast to increase 0.5 points to 83.0 percent as mainline 42

FAA Aerospace Forecast Fiscal Years 2012-2032

carriers increase by 0.4 percentage point and regional carriers further boost their load factor by 1.2 points. Thereafter, the commercial carrier domestic load factor gradually rises to 84.8 percent by 2032. In 2011 the average domestic passenger trip length increased by 6 miles to 881 miles in total, after increasing by 5.3 miles in 2010. Passenger trip length is forecast to decline by 1.3 miles in 2012 and then increase by 3.4 miles in 2013 as carriers continue to restructure their networks and realign capacity. After 2013, trip length is projected to remain stable for a number of years before steadily increasing from 2018 onwards, reaching 951.6 miles by 2032. The increase in trip length reflects longer trips flown by the mainline and regional carrier group. Mainline carrier trip length increases as thinner, shorter haul markets are relinquished to regional partners and replaced with longer domestic trips. Regional carrier trip length increases as flying in shorter haul markets is abandoned and/or reduced as more of the larger 70 and 90seat regional jets penetrate thinner longer-haul markets previously accessible with only mainline equipment. Another key factor in predicting aviation activity relative to passenger demand is the level of connecting versus non-stop (origin-destination) traffic. However, as the current cycle of U.S. airline industry restructuring unfolds and hub structures change, the impact on local communities and airport activity levels can vary significantly. The FAA analyzes the ratio of passenger enplanements to origin-destination (O&D) passengers over time to identify changes in connecting versus non-stop traffic. This ratio is an indicator of the tendency of the average passenger to connect during a typical journey. The closer the ratio is to 1.0, the more passengers fly on a point-to-point routing. As the chart below shows, the overall ratio for the U.S. domestic industry varied within a narrow band between 1995 and 2002. After 2002, the ratio trailed downward to its lowest level (1.32 enplanements for every O&D passenger) by 2008. The decline in the ratio during this six year period is characterized by a drop in connectivity by the network carriers and a rising passenger share for the low-cost carriers. A slight uptick in the ratio started again in 2009 (1.34 enplanements for every O&D passenger) and continued into 2011 (1.35 enplanements for every O&D passenger); this highlights the retrenchment by carriers as fuel costs skyrocketed and demand for air travel plummeted. The FAA’s forecast recognizes the changing pattern of domestic traffic connectivity and these trends are captured in the forecast’s passenger enplanement totals.

43

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Carriers Domestic Enplanements per Origin-Destination Passenger 1.39 1.38 1.37

Ratio

1.36 1.35 1.34 1.33 1.32 1.31 1.30

Source: DOT T100 and O&D Survey

Fiscal Year

International Markets U.S. and Foreign Flag Carriers The FAA provides forecasts of total international passenger demand 12 for travel between the United States and three world travel areas: Atlantic, Latin America (including Mexico and the Caribbean), and Asia/Pacific, as well as for U.S.–Canadian transborder traffic. These forecasts are based on historical passenger statistics provided by the United States Immigration and Naturalization Services (INS) and Transport Canada, and on regional world historical data and economic projections from Global Insight, Inc. Total passenger traffic between the United States and the rest of the world is estimated to total 161.8 million in CY 2011, 2.8 percent higher than in 2010. Passenger demand remains consistent in 2012 (up 2.6 percent) and accelerates in 2013 (up 4.0 percent) as the world economic recovery solidifies. For the balance of the forecast period, stable worldwide economic growth leads international passengers to grow at an average rate of 4.1 percent a year, totaling 376.1 million in 2032. In the Latin America region, sustained economic growth drives passenger growth to an average of 4.7 percent a year over the entire forecast period (2011-2032). The highest growth is projected for Brazil (average annual growth of 6.2 percent) while the largest market in the region, Mexico, grows at an average of 4.9 percent a year. The slowest rates of growth are 12

The sum of U.S. and foreign flag carriers. 44

FAA Aerospace Forecast Fiscal Years 2012-2032

projected to occur in the Bahamian and Jamaican markets (averaging growth of 0.2 and 2.6 percent a year, respectively). Emerging economies in the Asia-Pacific market boost passenger demand an average of 4.1 percent per year. India, Taiwan and China (passenger growth of 6.3, 5.0 and 6.9 percent a year, respectively) are forecast to be the fastest growing markets in the region. Growth in the Japan market (the largest and most established in the region) is projected to be well below the regional average at 2.4 percent a year. In the mature Atlantic market, the Open Skies agreement between the European Union and the United States along with competition between global airline alliances helps fuel passenger growth of 3.8 percent a year over the forecast period. Over the 21-year forecast horizon, average annual passenger growth in the top four Atlantic markets (Ireland, Netherlands, Germany, and the United Kingdom) is 5.1, 4.1, 3.7, and 3.6 percent, respectively. Growth in the Canadian transborder market is forecast to be higher than that of the domestic U.S. market (2.3 percent), averaging 3.0 percent a year over the forecast period. U.S. and Foreign Flag Carriers Passengers to/from U.S. Calendar Years 2011-2032 5.0 4.7

4.5

Annual Percent Change

4.0 3.5

4.1 3.8

3.0 2.5

2.6

2.0 1.5 1.0 0.5 Atlantic

Latin America

Asia/Pacific

Canada Transborder

U.S. Flag Air Carriers International U.S. commercial air carrier capacity grew substantially in 2011, up 6.7 percent from 2010. The Pacific and Atlantic markets both made strong recoveries in 2011 (up 10.4 and 5.6 percent, respectively) whereas Latin America’s capacity was slightly sluggish at 5.3 percent. In 2012, moderate demand and increasing competition between global alliances is expected to boost capacity by 2.0 percent (up 2.5, 0.8 and 3.6 percent, respectively in the Pacific, Atlantic, and Latin markets). Capacity is projected to grow an additional 3.5 percent in 45

FAA Aerospace Forecast Fiscal Years 2012-2032

2013, fueled by stronger economic growth projected for all world regions, and is projected to average 4.4 percent a year for the remainder of the forecast period. Moderate growth over the forecast period reflects favorable U.S. and world economic activity as it recovers from the global contraction. U.S. Commercial Air Carriers International ASMs 12.0 10.4

Annual Percent Change

10.0

8.0 6.7

6.0

5.6

5.3

5.0 4.2

4.1 3.6

3.6

4.0

2.5 2.0

2.0 0.8

0.0 2011

2012 Calendar Year Atlantic

Latin

Pacific

2011-32

Total

U.S. commercial air carrier international RPMs and enplanements increased 4.8 percent and 4.4 percent, respectively, in 2011. The strong growth in capacity relative to RPMs and passengers highlights a significant change from last year when carriers actively restrained capacity as demand resumed. An increase in RPMs for the Latin market (up 5.9 percent) and Pacific market (up 7.4 percent) helped offset a more modest increase in the Atlantic market (up 2.8 percent). In 2012, U.S. carrier international RPMs are expected to increase only 2.2 percent while being led by growth in the Latin American market (up 4.7 percent) and followed by growth in the Pacific (up 1.6 percent) and the Atlantic market (up 1.0 percent). For the balance of the forecast, RPMs increase an average of 4.4 percent a year with the fastest growth showing in the Latin region (5.0 percent). International enplanement growth for 2012 shows very flat demand (1.9 percent); however, enplanements are projected rebound at 3.0 percent in 2013. Over the balance of the forecast period (2014-2032), enplanements are forecast to increase an average of 4.3 percent a year with the fastest growth in Latin and Pacific markets (up 4.7 and 4.2 percent a year, respectively).

46

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Air Carriers International RPMs 8.0

7.4

7.0

Annual Percent Change

6.2 6.0 5.0

4.9

5.0

4.2 4.0 3.0

4.3

4.1 3.6

2.8 2.2

2.2

2.0 1.0 1.0 2011

2012 Calendar Year Atlantic

Latin

Pacific

2011-32

Total

The growth in U.S. carrier international passengers over the period 2011-2032 (4.1 percent a year) compares favorably to the growth in overall international passengers (also 4.1 percent a year, including the U.S.-Canada transborder market). Forecasts of international demand assume U.S. and foreign flag carriers will benefit from improving economic activity in both the United States and world markets. International load factor for U.S. commercial carriers was 80.7 percent in 2011, a decrease of 1.7 percent from 2010. Load factor is expected to remain flat in 2012 as stronger capacity growth relative to traffic growth in the Atlantic market is offset by stronger traffic growth relative to capacity growth in the Pacific and Latin markets. International load factor is projected to increase 0.2 points in 2013 as traffic growth exceeds capacity growth in all three world markets. Load factor rises quite slowly through the remainder of the forecast to be 81.2 percent in 2032. International passenger real yields for U.S. mainline carriers were up 7.2 percent in 2011 as the rebound in passenger demand from the global recession outpaced capacity growth. The largest increase was in the Latin America market (up 11.4 percent), followed by the Pacific (up 9.8 percent) and the Atlantic market (up 3.3 percent). Buoyed by growing passenger demand, international real yields are projected to increase by 3.9 and 1.3 percent in 2012 and 2013, respectively. For the remainder of the forecast period, real yield decreases an average of 1.0 percent a year. In nominal terms, international yields are forecast to increase 5.9 percent in 2012, and 3.1 percent in 2013 and then grow at an annual rate of 1.0 percent over the remainder of the forecast. The decline in real yields assumes competitive pressures and technological improvements will hold the line on fare increases.

47

FAA Aerospace Forecast Fiscal Years 2012-2032

Commercial Air Carriers – Air Cargo During 2009, world industrial production fell 9.0 percent, producing the worst decline in freight transport in 80 years. 13 Historically, air cargo activity tracks with GDP. Additional factors that affect air cargo growth are fuel price volatility, movement of real yields, and globalization. Significant structural changes have occurred in the air cargo industry; among these are air cargo security regulations by the FAA and TSA, maturation of the domestic express market, a shift from air to other modes (especially truck), use of all-cargo carriers (e.g., FedEx) by the U.S. Postal Service to transport mail, and the increased use of mail substitutes (e.g., faxes, e-mail). The forecasts of Revenue Ton Miles (RTMs) are based on several assumptions specific to the cargo industry. First, security restrictions on air cargo transportation will remain in place. Second, most of the shift from air to ground transportation has occurred. Finally, long-term cargo activity will be tied to economic growth. The forecasts of RTMs were based on models that link cargo activity to GDP. Forecasts of domestic cargo RTMs were developed with real U.S. GDP as the primary driver. Projections of international cargo RTMs were based on growth in world GDP, adjusted for inflation. The distribution of RTMs between passenger and all-cargo carriers was forecast based on an analysis of historic trends in shares, changes in industry structure, and market assumptions. Total RTMs grew by 3.7 percent in 2011 and are forecast to grow again in 2012 by 4.5 percent. Driven by steady economic growth, total RTMs are projected to increase at an average annual rate of 4.9 percent for the balance of the forecast period. Domestic cargo RTMs contracted by 6.1 percent in 2011 and are forecast to decline by 2.7 percent in 2012. Between 2012 and 2032, domestic cargo RTMs are forecast to increase at an average annual rate of 1.8 percent. The freight/express segment of domestic air cargo is highly correlated with capital spending. Thus, this segment’s growth will be tied to growth in the economy. The mail segment of domestic air cargo will be affected by price and substitution (e.g. e-mail). The all-cargo carriers have increased their share of domestic cargo RTMs flown from 70.0 percent in 2000 to 87.6 percent in 2011. This is because of the shrinkage of the domestic freight/express business for passenger carriers as they have responded to the substantial shocks to the aviation system during this time. Shrinking networks, elimination of unprofitable flying, and consolidation have reduced opportunities for growth in their freight/express business. The all-cargo share is forecast to grow to 89.7 percent by 2032 based on increases in capacity for all-cargo carriers and security considerations.

13

Boeing World Air Cargo Forecast 2010-2011, released November 2010. 48

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Air Carriers RTMs 15.0

9.1

Annual Percent Change

10.0

8.0 5.9

5.0 1.8 0.0

-2.7 -5.0 -6.1 -10.0 2011

2012

2012-32

Fiscal Year Domestic

International

International cargo RTMs rose 9.1 percent in 2011 reflecting a continuing recovery from the global economic downturn of 2009. They are projected to grow 8.0 percent in 2012 as trade continues to expand. For the balance of the forecast period, international cargo RTMs are forecast to increase an average of 5.7 percent a year based on projected growth in world GDP. The share of international cargo RTMs flown by all-cargo carriers increased from 49.3 percent in 2000 to 69.2 percent in 2011. Beyond 2011, the all-cargo share of RTMs flown is forecast to increase modestly to 75.5 percent by 2032.

Commercial Aircraft Fleet The number of commercial aircraft is forecast to grow from 7,185 in 2011 to 9,853 in 2032, an average annual growth rate of 1.5 percent or 127 aircraft annually. The commercial fleet is projected to decrease by 97 aircraft in 2012 after shrinking by 29 aircraft in 2011 as the slow recovery in demand and rising fuel prices prompted carriers to prune their fleets. Since 2007, the U.S. commercial airline fleet has contracted by 552 aircraft. In comparison, the U.S. commercial fleet contracted by 262 aircraft between 2000 and 2003, the last downturn in aviation.

49

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Commercial Aircraft Fleet Calendar Years 2011-2032 4.0

3.4

3.0

Annual Percent Change

2.1

2.1

2.0 1.0

0.9

1.0 0.0 -0.3 -1.0 -2.0

-1.8 -2.3

-3.0 -3.1 -4.0 2011

2012

2012-32

Calendar Year Mainline AC

Regionals

Cargo

The number of passenger jets in the U.S. mainline carrier fleet fell by 12 aircraft in 2011 and is expected to fall another 87 aircraft in 2012 as network carriers continue to remove older, less fuel efficient narrow body aircraft. After 2012, the mainline air carrier passenger fleet increases an average of 97 aircraft a year over the remaining years of the forecast period, totaling 5,528 aircraft in 2032. The narrow-body fleet (including E-190’s at JetBlue and U.S. Airways) is projected to grow by 57 aircraft annually over the period 2011-2032; the wide-body fleet grows by 28 aircraft a year as the Boeing 787 and Airbus A350’s enter the fleet. The regional carrier passenger fleet is forecast to decrease by 19 aircraft in 2012 as increases in larger regional jets are more than offset by reductions in 50 seat and smaller regional jets and turboprops. After 2012, the regional carrier fleet is expected to increase by an average of 23 aircraft (0.8 percent) over the remaining years of the forecast period, totaling 2,980 aircraft in 2032. The number of regional jets (90 seats or fewer) at regional carriers is projected to grow from 1,707 in 2011 to 2,416 in 2032, an average annual increase of 1.7 percent. All of the growth in regional jets over the forecast period occurs in the larger 70 to 90-seat aircraft. During the forecast period, all regional jets of 50 or less seats are removed from the fleet, reflecting the relaxation of scope clauses. The turboprop/piston fleet is expected to shrink from 860 units in 2011 to 564 in 2032. Turboprop/piston aircraft are expected to account for just 18.9 percent of the regional carrier passenger fleet in 2032, down from a 33.5 percent share in 2011. Cargo large jet aircraft are forecast to increase by 15 aircraft over the next two years (from 879 to 894 aircraft in 2013), and total 1,345 aircraft in 2032. The narrow-body jet fleet is projected to increase by 6 aircraft a year over the 21-year forecast period as older 757’s and 737’s are converted to cargo service. The wide-body jet fleet is projected to increase by 16 aircraft yearly. 50

FAA Aerospace Forecast Fiscal Years 2012-2032

General Aviation The FAA forecasts the fleet and hours flown for single-engine piston aircraft, multi-engine piston, turboprops, turbojets, piston and turbine powered rotorcraft, light sport, experimental and “other” (which consists of gliders and lighter than air vehicles). The FAA forecasts “active aircraft,” 14 not total aircraft. The FAA uses estimates of fleet size, hours flown, and utilization from the General Aviation and Part 135 Activity Survey (GA Survey) as baseline figures upon which assumed growth rates can be applied. Beginning with the 2004 GA Survey, there were significant improvements to the survey methodology. Coinciding with the changed survey methodology, large changes in many categories were observed, both in the number of aircraft and hours flown. The results of the 2010 GA Survey are consistent with the results of surveys conducted since 2004, reinforcing our belief that the methodological improvements have resulted in superior estimates relative to those of the past. Thus, they are used as the basis for our forecast. Because results from the GA Survey are not published until the following year, the 2010 statistics are the latest available. Figures for 2011 are estimated based on other activity indicators. Activity forecasts begin in 2012 and continue through 2032. After growing rapidly for most of the past decade, and having slowed over the past few years, the most recent shipment activity indicates cautiously optimistic results that the hard impact of the recession on the business jet market may have come to an end and demand for business jet aircraft is beginning to recover. The forecast calls for robust growth in the long term outlook, driven by higher corporate profits and the growth of worldwide GDP. Additionally, continued concerns about safety, security, and flight delays keep business aviation attractive relative to commercial air travel. As the industry experts report a significant portion of piston aircraft hours are also used for business purposes, we predict business usage of general aviation aircraft will expand at a faster pace than that for personal and recreational use. The active general aviation fleet is projected to increase at an average annual rate of 0.6 percent over the 21-year forecast period, growing from an estimated 222,520 in 2011 to 253,205 aircraft by 2032. The more expensive and sophisticated turbine-powered fleet (including rotorcraft) is projected to grow at an average of 2.9 percent a year over the forecast period, with the turbine jet portion increasing at 4.0 percent a year.

14

An active aircraft is one that flies at least one hour during the year. 51

FAA Aerospace Forecast Fiscal Years 2012-2032

Active General Aviation Aircraft 3.5 2.9

3.0

Annual Percent Change

2.5 2.1

2.0 2.0 1.5 1.0

0.6 0.5 0.1 0.0 -0.5

(0.4)

-1.0 2011

2012 Calendar Year Total

2012-32

Turbines

The number of active piston-powered aircraft (including rotorcraft) is projected to decrease from the 2010 total of 159,007 to 151,685 through 2023, with declines in both single and multi-engine fixed wing aircraft, but with the smaller category of piston-powered rotorcraft growing. Beyond 2023, active piston-powered aircraft are forecast to increase to 155,395 by 2032. Over the forecast period, piston-powered aircraft is projected to decrease by an average annual rate of 0.1 percent. Although piston rotorcraft are forecast to increase by 2.1 percent a year, they are a relatively small part of this segment of general aviation aircraft and therefore have little effect on the overall trend. Single-engine fixed-wing piston aircraft, which are much more numerous, are projected to decline at a rate of 0.1 percent, while multi-engine fixed wing piston aircraft are projected to decline by 0.5 percent a year. Starting in 2005, a new category of aircraft (previously not included in the FAA's aircraft registry counts) was created: "light sport" aircraft. At the end of 2010, a total of 6,528 active aircraft were estimated to be in this category. The forecast assumes about 4 percent annual growth of the fleet until 2013. Thereafter the rate of increase in the fleet slows to about 2 percent per year. By 2032, a total of 10,195 light sport aircraft are projected to be in the fleet. The number of general aviation hours flown is projected to increase by 1.7 percent yearly over the forecast period. The FAA projects above average growth in hours will occur after 2023 with increases in the fixed wing turbine aircraft fleet, as well as a rebounding single engine piston fleet and increasing utilization of single engine piston aircraft as the aging of this fleet starts to slow down. In the medium term, much of the increase in hours flown reflects strong growth in the rotorcraft and turbine jet fleets. Hours flown by turbine aircraft (including rotorcraft) are forecast to increase 3.6 percent yearly over the forecast period, compared with essentially no growth (0.03 percent) for piston-powered aircraft. Jet aircraft are forecast to account for most of the increase, with hours flown increasing at an average annual rate of 5.3 percent over the forecast period. The large increases in jet hours result mainly from the increasing size of the 52

FAA Aerospace Forecast Fiscal Years 2012-2032

business jet fleet, along with a measured recovery in utilization rates from recession induced record lows. Rotorcraft hours, which were less impacted by the economic downturn when compared to other categories and rebounded earlier, are projected to grow by 2.6 percent yearly. An expected decline in utilization rates of turbine rotorcraft is due to the assumption that recently improved affordability at the lower end of the turbine market will sustain the recent market share shift toward turbines; however, as turbine powered rotorcraft replaces the pistons, and since most of their functions will remain unchanged, utilization rates of some of the new turbines will be closer to those of the pistons. Lastly, the light sport aircraft category is expected to see an increase in hours flown of 3.5 percent a year; this is primarily driven by growth in the fleet. Hours Flown in General Aviation Aircraft 10.0 8.7 8.0

Annual Percent Change

6.0

4.0

3.3

2.0

1.7

1.4

(0.4) (2.0)

(1.6)

(4.0) 2011

2012

2012-32

Calendar Year Total

Turbines

The number of active general aviation pilots (excluding air transport pilots) is projected to be 510,295 in 2032, an increase of over 35,000 (up 0.3 percent yearly) over the forecast period. Commercial pilots are projected to increase from 120,865 in 2011 to 130,100 in 2032, an average annual increase of 0.4 percent. The number of student pilots is forecast to decrease at an average annual rate of 0.1 percent over the forecast period, declining from 118,657 in 2011 to 116,720 in 2032. In addition, the FAA is projecting that by the end of the forecast period a total of 13,900 sport pilots will be certified. As of December 31, 2011, the number of sport pilot certificates issued was 4,066 reflecting a steady increase in this new “entry level” pilot certificate that was only created in 2005. The number of private pilots is projected to grow at an average yearly rate of 0.1 percent over the forecast period to a total of 199,300 in 2032 from 194,441 in 2011.

53

FAA Aerospace Forecast Fiscal Years 2012-2032

FAA Workload Forecasts FAA and Contract Towers Activity at the 512 FAA (264) and contract towers (248) totaled 50.7 million operations in 2011, down 1.0 percent from 2010. Activity is projected to decrease 1.2 percent in 2012, as declines in non-commercial operations more than offset increases in commercial activity. Growth in total activity at FAA and contract towers resumes in 2013 (1.1 percent) and for the balance of the forecast, activity grows at an average rate of 1.1 percent per year, reaching 62.6 million operations in 2032. Most of the growth over the forecast period results from increased commercial aircraft activity (up 1.8 percent annually). Air carrier activity is projected to increase slightly (0.2) percent in 2012 as carriers keep capacity under control given the uncertain economic environment. Beyond 2012, air carrier activity is projected to increase an average of 2.1 percent per year over the forecast period. Commuter/air taxi operations are forecast to fall 0.7 percent in 2012 then increase 1.6 percent a year for the balance of the forecast period. General aviation activity fell 2.3 percent in 2011 with declines in both itinerant (down 2.3 percent) and local (down 2.4 percent) activity. Activity is projected to fall again in 2012 (down 2.2 percent) reflecting the continuing impact of the 2009 recession before beginning to rise modestly in 2013 (up 0.4 percent) as a growing economy promotes the growth of flight hours and operations despite higher oil prices. For the entire forecast period, general aviation activity at towered airports is projected to increase an average of 0.4 percent a year, to 27.8 million operations in 2032. General aviation activity at combined FAA/contract towers grows in line with the modest increase forecast for general aviation piston hours already cited. Most operations at the smaller towers are in piston aircraft, while those at the largest airports tend to be turbine operations. Military activity rose 0.9 percent in 2011 and is assumed to remain at 2011 levels throughout the balance of the forecast period. Operations15 at FAA TRACONs (Terminal Radar Approach Control) fell 1.8 percent in 2011, the seventh year in a row. They are projected to fall an additional 1.2 percent in 2012 as both commercial and non-commercial activity decline. After 2012, TRACON operations are forecast to increase at an average annual rate of 1.3 percent for the balance of the forecast. For the entire forecast period, TRACON operations grow an average of 1.2 percent per year, totaling 49.4 million in 2032.

15

TRACON operations consist of itinerant Instrument Flight Rules (IFR) and Visual Flight Rules (VFR) arrivals and departures at all airports in the domain of the TRACON as well as IFR and VFR overflights. 54

FAA Aerospace Forecast Fiscal Years 2012-2032

Tracon Operations 2.5 1.9

2.0 1.3

Annual Percent Change

1.5 1.0 0.5 0.0 -0.5

-0.4

-1.0 -1.2

-1.5 -2.0

-1.2

-1.8

-2.5 2011

2012 Fiscal Year Total

2012-32

Commercial

Over the forecast period, commercial aircraft operations at FAA TRACONs are forecast to increase at 1.8 percent per year with increases in air carrier activity surpassing commuter/air taxi activity. General aviation operations at FAA TRACONs are projected to grow 0.3 percent a year, reflecting the slow growth in the general aviation fleet and hours. Military activity is expected to remain at its 2011 level (2.4 million) of activity throughout the forecast period.

En-route Centers The number of IFR aircraft handled at FAA en-route traffic control centers increased 1.8 percent to 41.2 million in 2011, highlighted by a 4.8 percent increase in commercial aviation activity. However given the projected declines in airline activity and general aviation hours, enroute center activity is forecast to decrease by 0.1 percent in 2012. After 2012, through the balance of the forecast period, en-route activity increases 2.1 percent annually, reaching 61.2 million aircraft handled in 2032. Over the entire forecast period, commercial activity is projected to increase at an average annual rate of 2.4 percent, reflecting increases in the commercial fleet and aircraft stage lengths. During the same period, general aviation activity is projected to grow 0.9 percent per year, reflecting growth in business aviation. Military activity is held constant at the 2011 activity level throughout the forecast period.

55

FAA Aerospace Forecast Fiscal Years 2012-2032

IFR Aircraft Handled at FAA En-Route Centers 6.0 4.8

Annual Percent Change

5.0

4.0

3.0 2.4 2.1 2.0

1.8

1.0 0.1 0.0 -0.1 -1.0 2011

2012 Fiscal Year Total

2012-32

Commercial

Activity at FAA en-route centers is growing faster than at FAA towered airports because more of the activity at en-route centers is from the faster growing commercial sector and high-end (mainly turbine) general aviation flying. Much of general aviation activity at FAA towered airports, which is growing more slowly, is local in nature, and does not impact the centers.

56

FAA Aerospace Forecast Fiscal Years 2012-2032

UNMANNED AIRCRAFT SYSTEMS Unmanned Aircraft Systems (UASs) come in a variety of shapes and sizes, and serve many purposes. Some have wingspans as large as a Boeing 737 and some are smaller than a radiocontrolled model airplane. UAS have changed from remotely piloted vehicles with limited capabilities to semi and fully autonomous vehicles with expanded potential commercial applications. In the United States alone, over 50 companies, universities, and government organizations are developing and producing some 155 unmanned aircraft designs. Market Research Media projects an annual growth of 12 percent for UAS military market. The Teal Group forecasts over $94 billion in total UAS spending over the next ten years. To address the increasing civil market and the desire by civilian operators to fly UASs, the FAA is developing new policies, procedures, and approval processes. The FAA is working closely with stakeholders in the UAS community to define operational and certification requirements. It is critical to develop and validate appropriate operational procedures, regulatory standards and policies for routine UAS access to the NAS. To facilitate this, the FAA created the Unmanned Aircraft Program Office (UAPO). The FAA has asked RTCA – a group that frequently advises the agency on technical issues – to work with the industry and develop UAS standards. The FAA chartered an Aviation Rulemaking Committee (ARC) to examine these operational and safety issues and make recommendations on how to proceed with regulating small UASs. The FAA is in the process of proposing a regulation based on the recommendations received from the ARC. Once enabled, commercial UAS markets will develop. There are many potential ways for a company to generate revenue from UAS applications, whether from new markets or more efficient applications in established markets. Based upon the expected regulatory environment, FAA predicts roughly 10,000 active commercial UASs in five years. With the safe integration into the airspace, UAS has the potential to be a significant component in commercial aviation.

57

FAA Aerospace Forecast Fiscal Years 2012-2032

COMMERCIAL SPACE TRANSPORTATION The Federal Aviation Administration’s (FAA) Office of Commercial Space Transportation (AST) licenses and regulates U.S. commercial space launch activity including launch vehicles and non-federal launch sites authorized by Executive Order 12465 and 49 U.S. Code, Subtitle IX, Chapter 701 (formerly the Commercial Space Launch Act). Title 49 and the Executive Order also direct the Department of Transportation (carried out by the FAA) to encourage, facilitate, and promote commercial launches. AST’s mission is to license and regulate commercial launch and reentry operations and non-federal launch sites to protect public health and safety, the safety of property, and the national security and foreign policy interests of the United States.

Overview Commercial space transportation primarily consists of commercial launch service providers launching satellites into orbit for either commercial or government customers. Commercial space transportation also includes suborbital launches, where a payload or a vehicle is launched on a trajectory that briefly enters space but returns to Earth without entering orbit. Finally, it includes the reentry of objects from space to Earth. The FAA licenses several expendable vehicles used for commercial orbital launches. The most frequently used vehicles are: • • • • •

Atlas V, a heavy-class vehicle built by United Launch Alliance (ULA), a joint venture between Boeing and Lockheed Martin, and marketed by Lockheed Martin Commercial Launch Services (LMCLS); Delta IV, a heavy-class vehicle and the Delta II, a medium-class vehicle, both built by ULA and marketed by Boeing Launch Services (BLS); Falcon 9, an intermediate-class launch vehicle built, operated, and marketed by Space Exploration Technologies Corp. (SpaceX). Pegasus and Taurus, two small vehicles built, operated, and marketed by Orbital Sciences Corporation (Orbital); and Zenit-3SL, a heavy-class vehicle built by the Ukrainian company KB Yuzhnoye for the multinational Sea Launch venture which conducts launches from a floating launch platform, with Long Beach, CA as its home port.

The medium-class Antares by Orbital is currently under development and its first launch is planned for 2012. From 1989 through the end of 2011, DOT/FAA has licensed 205 orbital and suborbital commercial launches.

58

FAA Aerospace Forecast Fiscal Years 2012-2032

Experimental Permits, for suborbital reusable vehicle development and test flights, were first granted by the FAA in 2006 to Blue Origin and Armadillo Aerospace. Other permits have been granted for vehicles participating in the Lunar Lander Challenge. This is a competition to demonstrate technologies potentially applicable to both future lunar spacecraft and commercial suborbital vehicles, with $2 million in prizes offered by NASA’s Centennial Challenges program. Eight commercial spaceports, located in six states, Alaska, California (Vandenberg Air Force Base and Mojave Air and Space Port), Florida (Cape Canaveral and Cecil Field Spaceport), New Mexico, Oklahoma, and Virginia, currently have FAA launch site operator licenses. Several other commercial spaceports around the United States are under development.

Review of 2011 There was one FAA-licensed orbital launch in 2011, down from four in 2010. Sea Launch performed one Zenit 3SL launch of the communications Atlantic Bird 7 satellite for Eutelsat. FAA Licensed and Permitted Launches, 2010-2011 2010 2011 2012 Forecast Licensed Launches 4 1 6-9 Permitted Launches 0 2 10-25

Worldwide there were 18 orbital commercial launches in 2011, compared to 23 in 2010. In addition to the one FAA-licensed launch, Europe performed four commercial launches, all on the Ariane 5 vehicle. Russian conducted 11 commercial launches of various vehicles, and China conduct two commercial launches on the Long March 3B vehicle. There were 84 total worldwide commercial, civil, and military launches in 2011, with commercial launches representing approximately 23 percent of the total. For more details, see the Year in Review report available online at: http://www.faa.gov/about/office_org/headquarters_offices/ast/reports_studies/year_review/.

Global Forecast In May 2011, the FAA and the Commercial Space Transportation Advisory Committee (COMSTAC) published their annual global forecast for commercial launch demand, the 2011 Commercial Space Transportation Forecasts. The report forecasts an average of 28.6 commercial orbital launches per year of geosynchronous orbit (GSO) and nongeosynchronous orbit (NGSO) payloads through 2020. That annual average includes 15.6 launches of medium-to-heavy vehicles to deploy GSO satellites, 11.1 launches of medium-toheavy vehicles to NGSO, and 1.9 launches to NGSO by small vehicles.

59

FAA Aerospace Forecast Fiscal Years 2012-2032

Commercial GSO launches are used for communications satellites with masses ranging from 2,000 to over 6,000 kilograms. There has been an increase in the number of GSO satellites that are larger and more complex; however, there is still a demand for smaller satellites. Demand for commercial NGSO launches spans a number of markets, including commercial remote sensing; science and technology demonstration; and replenishment and replacement of low Earth orbit communications satellite systems reaching the end of their lifespan. The majority of commercial NGSO launches for science and technology demonstration missions are for nations that do not have indigenous launch capability. The GSO and NGSO forecasts are not a prediction of what will actually be launched but instead represent the expected demand for launch services, based on a variety of inputs. The complete forecast report is available at: http://www.faa.gov/about/office_org/headquarters_offices/ast/reports_studies/forecasts/

60

FAA Aerospace Forecast Fiscal Years 2012-2032

RISKS TO THE FORECASTS The FAA is confident that its current outlook for aviation demand and activity can be achieved. However, this year’s forecast is driven, at least in the short-term, by a number of factors including security, as well as the strength of the economic recovery. As numerous recent incidents (the attempted bombing of a Northwest airliner on Christmas Day 2009, the discovery on multiple devices on cargo flights out of Europe in October 2010) remind us, terrorism remains among the greatest risks to achieving the forecast. Because of aviation’s high visibility and global reach, concerns remain about international terrorism. Any terrorist incident aimed at aviation would have an immediate and significant impact on the demand for aviation services. Although oil prices remained high in 2011, there is still considerable uncertainty as to the level of oil prices once the economic recovery is on firmer ground. The FAA’s baseline forecast (derived from economic assumptions in IHS Global Insight’s 30-Year Focus released during the third quarter of 2011) calls for steady increases in oil prices after 2011. The increases are relatively modest, with the price of oil approaching $110/barrel by 2015 and then remaining around that level until 2024. Thereafter, prices begin to escalate gradually, approaching $140/barrel by the end of the forecast period in 2032. Some forecasters are calling for a much sharper increase in the price of oil. The U.S. Energy Information Administration (EIA) in its 2012 Annual Energy Outlook projects oil prices exceeding $120/barrel by 2015-2016 and continuing to rise over the next 20 years, reaching $195-$210 per barrel in 2032. While lower oil prices give consumers an impetus for additional spending, including air travel, and increases the chances for industry profitability, higher oil prices could lead to further shifts in consumer expenditures away from aviation, dampening a recovery in air transport demand. Furthermore, higher oil prices, especially in the near term, could wipe out industry profitability, put increasing pressure on airline costs, delay balance sheet improvements and discourage expansion plans or orders for new aircraft as carriers focus on maintaining and increasing cash balances. Although the global economy has begun to grow again, the data suggests that a two track recovery is emerging, with growth concentrated in relatively few countries. As a result, the ensuing economic recovery may not be balanced and there is considerable doubt about the strength and sustainability of the expansion. The baseline forecast assumes that growth in China will be significantly higher than in the other large economies – U.S., Japan and the European Union. Doubts remain over the strength of demand in the U.S., Japan and in the European Union as these areas continue to be constrained by structural economic problems and institutional constraints. In addition, many countries in the European Union are implementing austerity policies, aimed at reducing government spending and personal debt, which could turn the regional downturn into a second global recession. Furthermore the steps that were taken to resuscitate the global economy may prove to be excessive, since the resulting surge in liquidity growth seems to be inflating asset bubbles and exacerbating existing global imbalances. Once the global economy recovers from the current downturn, there could be an increased risk posed by asset bubbles and macroeconomic imbalances, which could result in a deeper, more prolonged, and less manageable recession and financial 61

FAA Aerospace Forecast Fiscal Years 2012-2032

crisis. The current forecasts assume strong passenger growth for travel between the United States and other world regions. Any slowing of worldwide economic activity could seriously inhibit the growth in global passenger demand. The outlook for further consolidation via mergers and acquisitions (M&A) is mixed. For network carriers, the bankruptcy filing of American Airlines in November 2011 has led to much speculation of possible combinations with either U.S. Airways or Delta. In the low cost carrier sector, the merger between Southwest and AirTran is progressing at a steady pace with the issuance of a single operating certificate expected in early 2012. Aside from Southwest and AirTran, there appears to be little scope for further consolidation as there are significant obstacles. In particular the financial situation of many low cost carriers limits the possibilities of additional merger activity. For many low cost carriers, the sheer size of merger transactions or the amount of financial risk associated with a merger makes further merger activity unlikely. However, U.S. airlines are exploring other options including global alliances. Many of the major carriers in the U.S. are members of global alliances that operate with some measure of anti-trust immunity from the U.S. DOT. While anti-trust immunity may provide flexibility for airline operators across borders, it may create an anti-competitive environment in the marketplace. These market consolidating vehicles, particularly the anti-trust immunity provisions, may invite increased regulatory scrutiny. If such oversights are launched in the future, this will complicate the evolving structure of the airline industry and may impact demand via new regulations. The forecast assumes the addition of sizable numbers of large regional jets (70 to 90 seats) into the fleet of regional carriers. However, the regional carriers’ future is closely linked to those of the larger network carriers. As demand continues to slowly recover, increased financial pressures on regional operators have appeared. Furthermore, as consolidation has occurred among the network carriers, certain regional carriers have found themselves either saddled with excess capacity or lack of sufficient capacity, or lack of feed traffic. Unlike the period after the terror attacks of September 11, 2001, when network carriers also reduced the size and breadth of their networks, regional carriers have not necessarily seen opportunities for increased flying to backfill the loss of the mainline service. The Delta/Northwest combination and the impending United/Continental combination may reduce opportunities for regional flying substantially. After suffering through a significant downturn in 2009, business and corporate aviation saw a partial recovery in 2010-11. The pace of the recovery in business and corporate aviation is largely based upon the future prospects of economic growth and corporate profits. Future uncertainty in these leading indicators could pose a risk to the forecast, but the risk is not limited to these factors. Public perception of business and corporate aviation, potential environmental regulations and taxes, along with increased security measures placed on business jets, will place downward pressure on the forecast. Other factors, such as new and more efficient product offerings and increased competition from new entrant manufacturers, serve to broaden the potential of the industry. Estimates show that a record number of new business jets are delivered overseas and, with the potential easing of regulations on the use of airspace in foreign countries, the scenario for business jet manufacturers looks all the more promising. Raising the level of security restrictions, and the 62

FAA Aerospace Forecast Fiscal Years 2012-2032

subsequent travel hassles placed on airline passengers, could make corporate jet travel look increasingly appealing. Not only is the volume of aircraft operating at most large hubs expected to increase over the next 20 years, the mix of aircraft operating at most large hubs is also expected to become increasingly complex over the forecast period. The expected increases in the numbers of regional jets and business jets will increase the complexity of the national airspace system and make the FAA’s job more challenging. The increased complexity of the mix of aircraft serves to compound the increases in workload strictly due to the increasing demand for aviation services projected over the forecast period. Although overall activity at FAA and contract towers fell in 2011, activity at the largest airports increased in 2011 and delays remained at historically high levels at many U.S. airports. As demand recovers and workload increases, congestion and delays could become a critical limit to growth over the forecast period. FAA’s forecasts of both demand and workload are unconstrained in that they assume that there will be sufficient infrastructure to handle the projected levels of activity. Should the infrastructure be inadequate and result in even more congestion and delays, it is likely that the forecasts of both demand and workload would not be achieved. The Department of Transportation and the FAA are examining a number of options to manage congestion but the specific measures have yet to be implemented; therefore, their impacts are unknown at this time. There are concerns that aviation’s impact on the environment could potentially restrict the ability of the aviation sector to grow to meet national economic and mobility needs. Airport expansion or new construction is often a contentious issue because of noise, air quality, and water quality concerns. Concerns about the climate impacts of aviation emissions continue to grow. Although aviation currently accounts for 2 to 3 percent of global carbon emissions, this is expected to increase with the growth in operations unless mitigated with new technology, renewable fuels, operational improvements and market based measures. Market based measures could lead to increased operating costs. For example, if international objections to inclusion of aviation in the European Emissions Trading System (EU ETS) are not resolved, implementation of EU ETS has the potential to increase costs to the aviation sector. The increase in costs would not only raise the price of aviation to consumers but could also reduce available funds for needed investments in new technology that could reduce emissions. The increased costs could also conceivably hasten the adoption of more fuel efficient technologies. Energy concerns are also rising, driven by spikes in fuel prices, supply and security issues, and concerns about fossil fuel emissions contributing to global climate change. Lack of progress in improving the environmental and energy outlook for the future fleet may result in more restrictions via standards or operating limitations on the fleet in service which in turn may depress growth. By contrast, breakthroughs in quieter, cleaner aircraft technologies and renewable fuels could reduce environmental and energy constraints on the forecast, and enable sustainable growth.

63

FAA Aerospace Forecast Fiscal Years 2012-2032

APPENDIX A: ALTERNATIVE FORECAST SCENARIOS Uncertainty exists in all industries, but especially in the commercial air travel industry. As volatility in the global environment has increased, the importance of scenarios for planning purposes has increased. In order to help stakeholders better prepare for the future, the FAA has begun to provide alternative scenarios to our baseline forecasts of airline traffic and capacity. To create the baseline forecast, economic assumptions for both U.S. and international regions from IHS Global Insight’s 30-Year Focus (released third quarter 2011) were used to generate enplanements, mainline real yield and nominal yield. The baseline forecast of passenger trip length (an input variable used to forecast mainline real yield) was derived from recent historical trends and analyst judgment. To develop the alternative scenarios, assumptions from the optimistic and pessimistic scenarios contained in IHS Global Insight’s 30-Year Focus were used. Inputs from these scenarios were substituted for the baseline scenario inputs to create a “high” and “low” traffic, capacity, and yield forecast. The baseline forecast trip length was adjusted in the optimistic and pessimistic scenarios based on the movement of oil prices in Global Insight’s alternative forecasts relative to the baseline forecast. International passengers and traffic are primarily determined by GDP. Thus, the baseline forecast of GDP for both the U.S. and international regions is modified using the optimistic and pessimistic forecasts of GDP described above in order to create a high and low case.

Scenario Assumptions The FAA’s baseline forecast assumes that the economy recovers from the current downturn and suffers no major mishaps such as large oil price shocks, swings in macroeconomic policy, or financial meltdowns. In the alternative scenarios, the economy is assumed to proceed smoothly as well, however at a different pace than projected under the baseline forecast. Projections for economic growth in IHS Global Insight's alternative scenarios are rooted in demographics. In IHS Global Insight's optimistic forecast scenario, population grows more rapidly than in the baseline due to higher net immigration. The reverse is true for the pessimistic forecast; population grows more slowly than the baseline forecast due to slower net immigration. The FAA’s high case forecast uses IHS Global Insight’s optimistic forecast. The optimistic forecast is characterized by lower inflation and faster growth in the labor force and capital stock than in the baseline forecast. In this scenario productivity growth is higher and potential output climbs more rapidly, with GDP growing about 0.4 percentage points faster per year than the baseline forecast and unemployment averaging 0.4 points lower on an annual basis than the baseline (GDP and unemployment are used as an input variables to the FAA’s base, high and 64

FAA Aerospace Forecast Fiscal Years 2012-2032

low forecasts of enplanements). Conversely, FAA’s low case forecast uses IHS Global Insight’s pessimistic scenario. The pessimistic forecast is characterized by higher inflation and slower growth in the labor force and capital stock than in the baseline forecast. In this scenario, the U.S. economy grows 0.6 percentage points slower per year than in the baseline due to slower productivity and lower potential output growth, and unemployment, on average, is 0.3 points higher on an annual basis than in the baseline. Real Gross Domestic Product 4.0

3.3 3.0

2.9

Annual Percent Change

3.0 2.6

2.6

2.0

2.6

2.0

1.9

2.0

1.0

0.0 2011-2032 Source: IHS Global Insight

2011-2016 Fiscal Year Pessimistic

Baseline

2016-2032 Optimistic

Oil prices affect the supply of and demand for air travel and have a direct impact on the profitability of the industry. In all three forecast scenarios prices remain high by historical standards. In the baseline forecast, oil prices rise as the world economy recovers from the recession, but are kept in check as technological improvements act as a counterbalance to rising prices. In the baseline, the refiners acquisition cost (RAC) of oil increases 46 percent between 2011 and 2032, rising from $95 to $138 per barrel. In the high case, the RAC increases at a slower pace than in the baseline forecast resulting in a price of $114 per barrel at the end of the forecast period. The high case is characterized by availability of energy and gains in technology which help to temper prices compared to the baseline. In the low case forecast, scarcity of oil and lower productivity gains create upward pressure in oil prices. In this scenario, the RAC doubles, rising to $191 by 2032.

65

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. Refiners' Acquisition Cost 250

191.4

$ Per Barrel

200

138.2

150 119.7 100

95.3

94.7

114.1

113.6 98.2

89.3

50

0 2011 Source: IHS Global Insight

2016 Fiscal Year Pessimistic

Baseline

2032

Optimistic

The price of energy is one of the critical drivers in the growth of consumer prices over the forecast period. In the high case the consumer price index (CPI) grows at an average rate of 1.6 percent per year (compared to growth of 2.0 percent annually in the baseline) as energy prices, wages, and import prices grow more slowly than in the baseline. In the low case forecast the opposite assumptions hold with energy prices, wages and import prices rising more rapidly compared to the baseline. As a result, in the low case, CPI grows an average of 3.4 percent annually over the forecast period as the growth accelerates to almost 4 percent per year by the end of the forecast.

66

FAA Aerospace Forecast Fiscal Years 2012-2032

Consumer Price Index - All Urban Consumers 4.0 3.6 3.4

Annual Percent Change

3.0 2.6

2.0

2.0

1.9

2.0 1.6

1.6

1.5

1.0

0.0 2011-2016 Fiscal Year

2011-2032

Source: IHS Global Insight

Pessimistic

Baseline

2016-2032

Optimistic

The baseline passenger trip length forecast is predicated upon analyst judgment and recent trip length trends. Carrier behavior as a result of volatile fuel prices during 2008–2011 provided the basis for adjusting trip length in the alternative forecasts. During 2008–2011, high fuel costs made flying on some longer haul routes cost prohibitive (thus unprofitable), resulting in lower trip length compared to prior years. Since the FAA’s low case forecast is characterized by higher fuel prices relative to the baseline forecast, it is assumed that trip length rises at a slower pace than in the baseline forecast. In FAA’s high forecast, fuel prices are lower than projected in the baseline, pushing trip length up as lower fuel prices make flying longer-haul routes more affordable.

67

FAA Aerospace Forecast Fiscal Years 2012-2032

Alternative Forecasts Passengers In the baseline forecast, system passengers are forecast to grow at an average annual rate of 2.5 percent a year over the forecast horizon (with domestic and international passengers up 2.3 and 4.1 percent, respectively). In the high case, passengers grow at a quicker pace, averaging 2.9 percent per year (up 2.7 percent domestically and 4.7 percent internationally). This scenario is marked by a more favorable business environment, lower inflation, and lower fuel prices which make the price of flying more affordable to business and leisure travelers. In the high case, one billion passengers are forecast for 2022, two years earlier than predicted in the baseline forecast. The low case is characterized by increased costs of capital resulting from higher interest rates, weakened consumer confidence brought on by persistent unemployment, and higher inflation. In this scenario passengers grow an average of 1.9 percent per year (domestic up 1.7 percent and international up 3.1 percent). In the low case, one billion passengers are reached in 2028, four years later than in the baseline forecast. System Enplanements

4.0

3.3 2.9

Annual Percent Change

3.0

2.9 2.6

2.5 2.3 2.0

2.0

1.9 1.7

1.0

0.0 2011-2032 Pessimistic

2011-2016 Fiscal Year Baseline

2016-2032 Optimistic

Revenue Passenger Miles The forecast of RPMs is produced by multiplying assumptions for trip length in each forecast scenario by passengers from the same scenario. Thus, the assumptions used to create the trip length and passenger forecasts drive RPM growth. In the baseline forecast, system RPMs grow at an average annual rate of 3.2 percent a year, with domestic RPMs increasing 2.7 68

FAA Aerospace Forecast Fiscal Years 2012-2032

percent annually and international RPMs growing 4.2 percent annually. In the high case, the faster growing economy coupled with lower energy prices drives RPMs higher than the baseline, with growth averaging 3.7 percent per year (domestic and international RPMs up 3.1 and 4.7 percent, respectively). In the low case, the combination of a slower growing economy and higher energy prices result in RPM growth averaging 2.4 percent annually with domestic markets growing 2.0 percent a year while international traffic grows 3.3 percent annually. System Revenue Passenger Miles 4.0

3.8

3.7

3.6 3.3

3.2

Annual Percent Change

3.0 2.7

2.6

2.4 2.0 2.0

1.0

0.0 2011-2032 Pessimistic

2011-2016 Fiscal Year Baseline

2016-2032 Optimistic

Available Seat Miles In the base case, system capacity is forecast to increase an average of 3.1 percent annually over the forecast horizon (with growth averaging 2.5 percent annually in domestic markets and 4.2 percent a year in international markets). In the high case, capacity grows at a faster clip than in the baseline forecast, averaging growth of 3.6 percent annually (up 3.0 percent domestically and up 4.7 percent internationally). Carriers increase capacity compared to the baseline forecast to accommodate increased travel demand brought about by a more favorable economic environment. In the low case, demand for air travel is lower than in the baseline, thus system capacity grows at a slower pace of 2.3 percent annually (domestic up 1.9 percent annually and international up 3.2 percent annually).

69

FAA Aerospace Forecast Fiscal Years 2012-2032

System Available Seat Miles 4.0 3.6

3.6

3.6 3.3

3.1

Annual Percent Change

3.0 2.5

2.4

2.3 2.0

1.8

1.0

0.0 2011-2032

2011-2016 Fiscal Year Pessimistic

Baseline

2016-2032 Optimistic

Load Factor System load factors over the 20-year forecast period are relatively similar for all three forecast scenarios. In the base case, system load factor rises from 82.0 percent in 2011 to 83.4 percent in 2032. In both the optimistic and pessimistic scenarios, system load factor increases from 82.0 percent in 2011 to 83.3 percent in 2032. In all three scenarios it is assumed that carriers will keep load factors on the high side by actively managing capacity (seats) to more precisely meet demand (passengers). The domestic load factor increases over the forecast horizon from 82.5 percent to 84.8 percent in the base case, and to 84.3 percent and 84.4 percent, respectively, in the pessimistic and optimistic scenarios. The international load factor grows from 80.7 percent to 81.2 percent in the base case and 81.6 and 81.7 percent, respectively, in the optimistic and pessimistic scenarios.

Yield In the baseline forecast, nominal system yield increases 1.2 percent annually, going from 13.95 cents in 2011 to 18.08 cents in 2032. In domestic markets, yield in the baseline forecast rises from 13.9 cents in 2011 to 17.8 cents in 2032, while international yield rises from 14.1 cents to 18.5 cents. System yield rises more slowly in the high case, up 1.0 percent annually to be 17.4 cents at the end of the forecast period. Domestic yield increases to 17.4 cents while international yield increases to 17.3 cents. The slower growth in yield in the high case is due to advancements in technology, gains in productivity, more favorable fuel prices, and lower inflation. Increased competition is also assumed in this scenario. In the domestic market fares are driven lower than baseline levels due to increased market overlap between low cost and 70

FAA Aerospace Forecast Fiscal Years 2012-2032

legacy carriers. In the international market, increased competition from growing liberalization puts downward pressure on fares. In the low case, nominal yields rise more rapidly than in the baseline, growing an average of 2.9 percent annually, reaching 25.3 cents by 2032 (25.7 cents domestically and 24.4 cents internationally). This scenario reflects higher general inflation and higher energy prices than in the baseline, forcing carriers to increase fares in order to cover the higher costs of fuel, labor, and capital.

Passenger Trip Length Over the 21-year forecast horizon, baseline system passenger trip length is assumed to grow an average of 7.7 miles per year. In the high case, passenger trip length grows 8.3 miles per year, 0.6 miles per year faster than in the base case. In the high case, fuel prices are lower than in the baseline which allows carriers to operate longer-haul routes more profitably. Conversely, the low forecast is characterized by fuel prices that are higher than the baseline forecast. Higher fuel costs makes flying longer-haul routes less affordable to the carriers; hence passenger trip length trails the baseline forecast by 1.8 miles per year, growing an average of 5.9 miles per year.

71

72

Source: IHS Global Insight, 30-Year Focus, Third Quarter 2011

9.2

Optimistic

9.3 9.2

Pessimistic Baseline

2.22

Optimistic

Civilian Unemployment Rate

2.23 2.23

Pessimistic Baseline

Consumer Price Index

All Urban, 1982-84 = 1.0

(%)

89.3

Optimistic

95.3 94.7

Pessimistic Baseline

Refiners Acquisition Cost -

13,262

Optimistic

Average - $ Per Barrel

13,256

Pessimistic Baseline

13,246

2011

Historical

Real Gross Domestic Product

Scenario

(BIL 05$)

Assumptions

Economic

Variable

8.8

9.2

9.8

2.24

2.27

2.28

75.3

100.4

102.7

13,642

13,474

13,385

2012

6.2

6.5

7.0

2.44

2.51

2.63

101.5

115.9

122.9

16,081

15,511

14,857

2017

5.3

5.7

6.0

2.64

2.76

3.10

106.2

115.4

132.3

18,582

17,542

16,281

2022

FORECAST

FISCAL YEARS 2011-2032

4.9

5.4

5.6

3.09

3.35

4.46

114.1

138.2

191.4

24,801

22,614

19,993

2032

FAA FORECAST ECONOMIC ASSUMPTIONS

TABLE A-1

-0.4

0.0

0.5

0.8%

1.9%

2.2%

-15.7%

6.0%

7.8%

2.9%

1.6%

1.0%

11-12

-0.5

-0.5

-0.4

1.6%

2.0%

2.8%

2.1%

3.4%

4.3%

3.3%

2.7%

1.9%

11-17

-0.4

-0.4

-0.4

1.7%

2.0%

3.1%

3.5%

1.4%

2.6%

3.1%

2.7%

2.0%

12-22

-0.2

-0.2

-0.2

1.6%

2.0%

3.4%

1.2%

1.8%

3.4%

3.0%

2.6%

2.0%

11-32

PERCENT AVERAGE ANNUAL GROWTH

FAA Aerospace Forecast Fiscal Years 2012-2032

Baseline

(BIL)

73 13.95 13.95

Baseline Optimistic

(cents)

13.95

Pessimistic

Nominal Passenger Yield

9,505.5 9,505.5

Baseline Optimistic

(000s)

9,505.5

Pessimistic

7,047.5

Optimistic

Psgr Carrier Departures

7,047.5

Baseline

(MIL)

7,047.5

Pessimistic

Psgr Carrier Miles Flown

730.7 730.7

Baseline Optimistic

(MIL)

730.7

Pessimistic

814.6

814.6

814.6

Enplanements

Optimistic

Pessimistic

Revenue Passenger Miles

993.9 993.9

Baseline Optimistic

(BIL)

993.9

2011

Pessimistic

Scenario

Available Seat Miles

Aviation Activity

System

Variable

Historical

14.58

14.50

14.58

9,725.6

9,425.6

9,367.8

7,400.5

7,014.3

6,966.1

765.5

731.8

726.8

861.1

818.6

812.8

1,046.8

994.3

988.6

2012

16.21

15.96

17.15

11,001.4

10,491.4

10,221.0

8,477.8

8,013.0

7,720.3

881.5

841.6

811.2

1,013.4

960.4

919.9

1,222.9

1,155.6

1,110.1

2017

16.83

16.62

19.02

12,199.1

11,496.3

10,910.0

9,854.0

9,246.5

8,581.5

1,010.7

956.3

894.0

1,201.7

1,130.2

1,040.1

1,445.7

1,356.2

1,251.1

2022

FORECAST

17.37

18.08

25.25

15,089.4

13,867.8

12,505.9

13,758.0

12,469.3

10,758.8

1,345.0

1,233.0

1,085.7

1,733.0

1,573.4

1,343.9

2,080.1

1,885.5

1,612.6

2032

FISCAL YEARS 2011-2032

4.5%

3.9%

4.5%

2.3%

-0.8%

-1.4%

5.0%

-0.5%

-1.2%

4.8%

0.2%

-0.5%

5.7%

0.5%

-0.2%

5.3%

0.0%

-0.5%

2.5%

2.3%

3.5%

2.5%

1.7%

1.2%

3.1%

2.2%

1.5%

3.2%

2.4%

1.8%

3.7%

2.8%

2.0%

3.5%

2.5%

1.9%

11-17

1.4%

1.4%

2.7%

2.3%

2.0%

1.5%

2.9%

2.8%

2.1%

2.8%

2.7%

2.1%

3.4%

3.3%

2.5%

3.3%

3.2%

2.4%

12-22

1.0%

1.2%

2.9%

2.2%

1.8%

1.3%

3.2%

2.8%

2.0%

2.9%

2.5%

1.9%

3.7%

3.2%

2.4%

3.6%

3.1%

2.3%

11-32

PERCENT AVERAGE ANNUAL GROWTH 11-12

FAA FORECAST OF AVIATION ACTIVITY

TABLE A-2

FAA Aerospace Forecast Fiscal Years 2012-2032

74 13.88 13.88

Baseline Optimistic

(cents)

13.88

Pessimistic

Nominal Passenger Yield

8,915.3

Optimistic

8,915.3 8,915.3

Pessimistic Baseline

Psgr Carrier Departures

(000s)

5,661.8

Optimistic

5,661.8 5,661.8

Pessimistic Baseline

Psgr Carrier Miles Flown

(MIL)

649.9 649.9

Baseline Optimistic

(MIL)

649.9

Pessimistic

572.5

Optimistic

572.5 572.5

Baseline

Enplanements

(BIL)

Pessimistic

693.9

Optimistic

Revenue Passenger Miles

693.9

Pessimistic Baseline

693.9

2011

Historical

Available Seat Miles

Scenario

(BIL)

Aviation Activity

Domestic

Variable

14.43

14.31

14.42

9,136.5

8,828.4

8,799.7

5,978.8

5,604.0

5,582.7

682.4

649.4

646.2

611.3

571.3

568.9

737.9

688.4

686.9

2012

16.39

15.90

16.79

10,280.4

9,785.1

9,584.2

6,678.4

6,293.8

6,119.1

775.9

741.4

717.8

691.2

654.9

631.8

825.7

778.2

755.0

2017

17.10

16.53

19.15

11,319.7

10,648.1

10,190.7

7,612.6

7,133.9

6,727.4

878.3

832.6

785.3

796.1

750.6

701.6

946.8

887.8

834.8

2022

FORECAST

17.41

17.83

25.70

13,747.0

12,623.9

11,541.9

10,270.3

9,297.2

8,205.0

1,134.7

1,044.1

933.1

1,092.0

993.6

866.6

1,294.5

1,171.4

1,028.2

2032

FISCAL YEARS 2011-2032

4.0%

3.1%

3.9%

2.5%

-1.0%

-1.3%

5.6%

-1.0%

-1.4%

5.0%

-0.1%

-0.6%

6.8%

-0.2%

-0.6%

6.3%

-0.8%

-1.0%

11-12

2.8%

2.3%

3.2%

2.4%

1.6%

1.2%

2.8%

1.8%

1.3%

3.0%

2.2%

1.7%

3.2%

2.3%

1.7%

2.9%

1.9%

1.4%

11-17

1.7%

1.5%

2.9%

2.2%

1.9%

1.5%

2.4%

2.4%

1.9%

2.6%

2.5%

2.0%

2.7%

2.8%

2.1%

2.5%

2.6%

2.0%

12-22

1.1%

1.2%

3.0%

2.1%

1.7%

1.2%

2.9%

2.4%

1.8%

2.7%

2.3%

1.7%

3.1%

2.7%

2.0%

3.0%

2.5%

1.9%

11-32

PERCENT AVERAGE ANNUAL GROWTH

FAA FORECAST OF DOMESTIC AVIATION ACTIVITY

TABLE A-3

FAA Aerospace Forecast Fiscal Years 2012-2032

Variable

75 14.12

Optimistic

*Includes mainline and regional carriers.

14.12

Baseline

(cents)

14.12

Pessimistic

Nominal Passenger Yield

590.2 590.2

Baseline Optimistic

(000s)

590.2

Pessimistic

1,385.7

Optimistic

Psgr Carrier Departures

1,385.7

Baseline

1,385.7

Pessimistic

(MIL)

80.8

Optimistic

Psgr Carrier Miles Flown

80.8

Baseline

80.8

Pessimistic

(MIL)

242.1

Optimistic

Enplanements

242.1

Baseline

(BIL)

242.1

Pessimistic

Revenue Passenger Miles

300.0 300.0

Baseline Optimistic

(BIL)

300.0

2011

Pessimistic

Scenario

Available Seat Miles

Aviation Activity

International

Historical

14.95

14.95

14.94

589.1

597.2

568.1

1,421.7

1,410.2

1,383.4

83.1

82.3

80.6

249.8

247.4

244.0

308.9

305.9

301.7

2012

15.83

16.09

16.68

721.0

706.3

636.8

1,799.4

1,719.1

1,601.2

105.6

100.2

93.4

322.2

305.5

288.0

397.2

377.4

355.0

2017

16.31

16.80

18.75

879.4

848.2

719.3

2,241.4

2,112.6

1,854.1

132.4

123.7

108.7

405.5

379.6

338.6

498.9

468.4

416.3

2022

FORECAST

FISCAL YEARS 2011-2032

17.32

18.50

24.43

1,342.4

1,243.9

964.0

3,487.7

3,172.1

2,553.8

210.3

188.8

152.6

641.0

579.8

477.3

785.6

714.1

584.4

2032

5.9%

5.9%

5.8%

-0.2%

1.2%

-3.7%

2.6%

1.8%

-0.2%

2.9%

1.9%

-0.3%

3.2%

2.2%

0.8%

3.0%

2.0%

0.6%

11-12

1.9%

2.2%

2.8%

3.4%

3.0%

1.3%

4.5%

3.7%

2.4%

4.6%

3.7%

2.5%

4.9%

4.0%

2.9%

4.8%

3.9%

2.8%

11-17

0.9%

1.2%

2.3%

4.1%

3.6%

2.4%

4.7%

4.1%

3.0%

4.8%

4.2%

3.0%

5.0%

4.4%

3.3%

4.9%

4.4%

3.3%

12-22

1.0%

1.3%

2.6%

4.0%

3.6%

2.4%

4.5%

4.0%

3.0%

4.7%

4.1%

3.1%

4.7%

4.2%

3.3%

4.7%

4.2%

3.2%

11-32

PERCENT AVERAGE ANNUAL GROWTH

FAA FORECAST OF INTERNATIONAL AVIATION ACTIVITY*

TABLE A-4

FAA Aerospace Forecast Fiscal Years 2012-2032

FAA Aerospace Forecast Fiscal Years 2012-2032

APPENDIX B: FAA FORECAST ACCURACY Forecasts, by their nature, have a degree of uncertainty incorporated in them. They involve not only statistical analyses and various scientific methods, but also judgment and reliance on industry knowledge and the forecaster’s experience to incorporate industry trends not yet reflected in recent results. The FAA’s annual Aerospace Forecast is no exception. Given the volatile nature of the U.S. airline industry, it is not surprising that each year’s forecast would contain a certain degree of forecast variance. Therefore, FAA forecasters have tried to build forecast models that give a consistent and predictable pattern of results. Analysts relying on the forecasts produced by the models would then be able to adjust for the predictable variance from actual results. The table below presents an analysis of the variance from historical results for five key forecast metrics during the FY 2006-2011 forecast period. Although this brief period has experienced industry upheaval, the FAA’s forecast methodology remained consistent during this time. For this reason, inclusion of prior periods in an analysis of forecast variance might lead to inconclusive or inaccurate implications about the accuracy of FAA’s current forecast methodology. The table below contains the mean absolute percent errors for the projected values versus the actual results for U.S. carriers’ domestic operations. Each metric has five values showing the relative forecast variance by the number of years in advance the preparation of the forecast took place. For example, the “3 Years” column for ASMs shows that the mean absolute percent error was 11.6 percent for ASM forecasts prepared 3 years in advance. For the period under examination, preparation of the forecasts for FY 2006 through FY 2011 occurred in FY 2005, FY 2006, FY 2007, FY 2008, FY 2009, and FY 2010, respectively. 16

16

It should be noted that the first forecasted year for each respective fiscal year is that very same year. Therefore, FY 2003’s first forecasted year is FY 2003, and the third forecasted year is FY 2005. 76

FAA Aerospace Forecast Fiscal Years 2012-2032

U.S. AIR CARRIERS DOMESTIC SCHEDULED PASSENGER ACTIVITY FORECAST EVALUATION

Forecast Variable

Mean Absolute Percent Error (Combined FY 2006 - FY 2011) (Forecast Variance from Actual) Forecast Performed Years Prior to Actual 1 Year 2 Years 3 Years 4 Years 5 Years

ASMs 0.7% 5.6% 11.6% RPMs 0.9% 3.7% 7.4% Passenger Enplanements 0.7% 3.8% 8.1% Mainline Yield 4.2% 5.4% 5.9% IFR Aircraft Handled* 2.9% 7.8% 12.4% *Total - scheduled and nonscheduled commercial plus noncommercial

16.1% 11.5% 11.3% 4.8% 15.9%

19.9% 12.2% 12.8% 8.0% 17.5%

Presenting forecast variances from actual data in such a manner simplifies a review of longerterm trends. Typically, one would expect the variances to decrease as the forecast year is closer to the year the forecast is prepared. Presenting forecast variances in this way allows an examination of changes in the relative variances by time horizon, signaling when dramatic shifts in accuracy occur. Examination of the forecast variances reveals several items. First, all the metrics examined show declining variances as the forecast time horizon decreases, as expected. The largest variances were found in the forecasts of ASMs the variable most directly affected by exogenous events. Second, the relative divergence in forecast variances between RPMs and ASMs suggests errors in forecasting load factors. Third, the ASM forecast variance being larger than the RPM forecast variance indicates a consistent underestimation of load factors, one of the critical elements in converting passenger demand into aviation activity. All other things being equal, large variances in forecasts of load factor will lead to large variances in the long-term forecasts of aviation activity, as can been seen in the variances of the IFR aircraft handled forecasts. Furthermore, ASMs and aircraft handled are becoming increasingly difficult to forecast beyond a relatively short time horizon, as carriers often react to changing market conditions. The relatively large variances in these forecasts suggest that carriers have been permanently removing capacity by reducing flights and by changing the mix of aircraft to satisfy demand. In the short term, such capacity reductions can be identified by using advance schedule information. However, the FAA’s longer-term forecasts rely on anticipated aircraft deliveries and retirements as well as historic relationships between economic activity and capacity deployed. Given the volatile nature of many of the factors that may influence longer term ASM and aircraft handled forecasts, a simpler approach to projecting ASMs, such as RPMs divided by load factors, may improve the long run accuracy of the ASM and aircraft handled 77

FAA Aerospace Forecast Fiscal Years 2012-2032

forecasts. It should also be noted that the low variance of the mainline passenger yield relative to the other metrics is due in large part to the inclusion of FY 2011 in the sample period.

78

FAA Aerospace Forecast Fiscal Years 2012-2032

APPENDIX C: ACKNOWLEDGEMENTS This document was prepared by the Forecasts and Performance Analysis Division (APO-100), Office of Aviation Policy and Plans, under the direction of Mr. Roger D. Schaufele, Jr. The following individuals were responsible for individual subject areas: Economic Environment: Commercial Air Carriers: – Passengers

Roger D. Schaufele, Jr.

(202) 267-3306

Roger D. Schaufele, Jr. Dipasis Bhadra Katherine Lizotte

(202) 267-3306 (202) 267-9027 (202) 267-3302

Nick Miller

(202) 267-8031

General Aviation: – Forecasts – Survey Data

Anna Barlett Anna Barlett

(202) 267-4070 (202) 267-4070

FAA Workload Measures: – Forecasts – Data

Roger D. Schaufele, Jr. (202) 267-3306 Forecasts and Performance Analysis Division, APO-100

Unmanned Aircraft Systems:

Michael Lukacs

Commercial Space:

John Sloan, Commercial Space Transportation, AST-100 (202) 267-7989

Text and Table Preparation:

Forecasts and Performance Analysis Division Staff

– Cargo

(202) 267-9641

Forecast Conference Planner: Linda Baranovics APO Websites: – Forecasts/Statistical Publications – APO Data System Email: – APO staff

(202) 267-7924

http://www.faa.gov/data_statistics http://aspm.faa.gov

first name.last [email protected]

79

FAA Aerospace Forecast Fiscal Years 2012-2032

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80

FAA Aerospace Forecast Fiscal Years 2012-2032

APPENDIX D: FORECAST TABLES

81

219.5

Consumer Price Index (1982-84 equals 100) Seasonally Adjusted Annual Rate 222.3 5.2%

93.85 75.7%

13,227.9 0.4%

Source: IHS Global Insight, 30-Year Focus, Third Quarter 2011

81.52

13,216.1

224.5 4.1%

107.78 73.9%

13,270.1 1.3%

225.7 2.0%

95.54 -38.2%

13,309.1 1.2%

226.1 0.8%

96.81 5.4%

13,357.4 1.5%

226.9 1.4%

99.63 12.2%

13,438.4 2.4%

227.4 0.9%

101.58 8.1%

13,519.0 2.4%

228.6 2.1%

103.52 7.9%

13,580.6 1.8%

229.6 1.8%

105.47 7.7%

13,642.9 1.8%

230.7 1.9%

106.04 2.2%

13,690.6 1.4%

231.8 2.0%

107.68 6.3%

13,791.1 3.0%

233.1 2.1%

109.48 6.9%

13,887.4 2.8%

FISCAL YEAR 2011 FISCAL YEAR 2012 FISCAL YEAR 2013 1ST. QTR. 2ND. QTR. 3RD QTR. 4TH. QTR. 1ST. QTR. 2ND. QTR. 3RD QTR. 4TH. QTR. 1ST. QTR. 2ND. QTR. 3RD QTR. 4TH. QTR.

Refiners' Acquisition Cost - Average (Dollars) Seasonally Adjusted Annual Rate

Real GDP (Billions of 2005$) Seasonally Adjusted Annual Rate

ECONOMIC VARIABLE

U.S. SHORT-TERM ECONOMIC FORECASTS

TABLE 1

FAA Aerospace Forecast Fiscal Years 2012-2032

82

83

13,473.8 13,753.0 14,158.7 14,649.2 15,099.7 15,511.1 15,899.2 16,302.1 16,723.4 17,127.0 17,541.9 18,001.3 18,476.7 18,961.5 19,451.4 19,946.5 20,444.9 20,955.5 21,498.7 22,056.2 22,614.2

Forecast 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

2.5% 1.9% 2.0% 2.0%

302.81 308.78 315.00 321.41 328.04 334.89

275.73 280.67 285.89 291.34 297.01

251.36 256.39 261.27 265.89 270.73

227.24 231.29 236.09 240.92 246.22

Source: IHS Global Insight, 30-Year Focus, Third Quarter 2011

1.6% 1.6% 2.6% 2.6%

12,535.9 12,882.8 13,134.5 13,272.6 12,720.6 12,987.3 13,255.8

2005 2006 2007 2008 2009 2010 2011E

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

170.74

11,136.4 193.48 200.58 205.31 214.43 213.77 217.43 222.98

CONSUMER PRICE INDEX (1982-84=100)

GROSS DOMESTIC PRODUCT (Billions 2005$)

FISCAL YEAR Historical 2000

12.2% 6.0% 2.0% 1.8%

122.90 126.04 129.21 132.39 135.27 138.18

115.44 114.56 116.34 118.43 120.60

115.92 117.29 117.52 115.34 115.34

100.38 107.17 110.22 109.83 113.58

47.20 59.94 60.62 101.52 54.68 74.61 94.67

26.70

REFINERS' ACQUISITION COST AVERAGE (Dollars per barrel)

U.S. LONG-TERM ECONOMIC FORECASTS

TABLE 2

FAA Aerospace Forecast Fiscal Years 2012-2032

84

1,000.2 1,134.1 1,166.1 1,191.8 1,200.0 1,166.7 1,204.2 1,230.4

1,253.7 1,286.3 1,322.4 1,358.8 1,394.4 1,429.5 1,465.8 1,500.9 1,534.4 1,569.6 1,605.5 1,642.6 1,679.6 1,717.5 1,755.9 1,795.1 1,835.6 1,877.2 1,920.1 1,964.8 2,011.8

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

Avg Annual Growth 2000-11 1.9% 2011-12 1.9% 2011-21 2.5% 2011-32 2.4% *Source: IHS Global Insight website, GDP Components

16,058.1

CANADA

CALENDAR YEAR Historical* 2000

30,082.7 31,309.8 32,576.2 33,874.3 35,209.2 36,570.0

24,480.8 25,532.0 26,608.1 27,731.5 28,885.2

19,534.9 20,465.1 21,425.0 22,416.9 23,440.5

15,118.8 15,958.2 16,837.6 17,723.9 18,627.9

11,054.2 11,679.9 12,437.7 12,813.9 12,932.5 13,816.2 14,397.3

9,046.4

JAPAN/PACIFIC BASIN/CHINA/OTHER ASIA/AUSTRALIA/ N. ZEALAND

3.1% 4.3% 3.4% 5.0% 4.2% 5.0% 4.1% 4.5% Monthly), Release date 14 OCT 2011.

6,709.1 6,976.2 7,254.8 7,543.3 7,841.9 8,150.8

5,503.0 5,726.4 5,957.9 6,199.2 6,450.2

4,484.5 4,673.8 4,871.9 5,075.2 5,286.5

3,609.3 3,767.3 3,949.4 4,119.3 4,302.5

2,815.0 2,968.6 3,126.8 3,246.6 3,178.1 3,356.7 3,491.3

2,483.8

LATIN AMERICA/ MEXICO

2.1% 1.6% 2.5% 2.4% Tables (Interim Forecast,

29,502.8 30,171.8 30,848.2 31,539.1 32,245.4 32,961.4

26,302.8 26,928.3 27,558.2 28,196.9 28,843.1

23,287.9 23,870.6 24,463.6 25,071.4 25,687.0

20,410.2 20,910.5 21,496.9 22,108.1 22,702.3

18,144.3 18,901.6 19,635.9 19,872.2 19,162.5 19,649.1 20,087.7

EUROPE/ AFRICA/ MIDDLE EAST

GROSS DOMESTIC PRODUCT (In Billions of 2005 U.S. Dollars)

INTERNATIONAL GDP FORECASTS BY TRAVEL REGION

TABLE 3

2.6% 2.6% 3.4% 3.2%

88,097.7 90,800.2 93,577.5 96,447.7 99,388.4 102,375.5

75,493.3 77,891.4 80,343.2 82,868.4 85,448.0

64,322.8 66,426.0 68,606.2 70,867.5 73,155.1

53,883.5 55,732.4 57,904.5 60,088.9 62,227.3

45,770.6 47,674.6 49,598.5 50,294.6 49,143.0 51,114.2 52,514.8

39,805.0

WORLD

FAA Aerospace Forecast Fiscal Years 2012-2032

85

15,728.0 16,114.3 16,685.0 17,243.2 17,743.9 18,207.4 18,652.4 19,127.5 19,632.2 20,118.5 20,633.2 21,180.9 21,746.9 22,322.5 22,906.7 23,496.6 24,092.4 24,708.6 25,362.8 26,027.1 26,692.8

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

1.6% 1.5% 2.6% 2.6%

14,605.5 15,016.6 15,319.2 15,294.5 14,745.3 15,214.8 15,496.9

2005 2006 2007 2008 2009 2010 2011E

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32 Source: IHS Global Insight

9,382.9

13,003.4

1.2% 0.3% 1.6% 1.6%

13,738.8 13,953.1 14,166.4 14,381.7 14,602.5 14,824.9

12,699.9 12,903.0 13,109.3 13,315.8 13,525.5

11,696.0 11,893.8 12,094.6 12,295.0 12,497.7

10,707.9 10,860.5 11,065.2 11,288.3 11,495.3

10,106.0 10,432.1 10,743.3 10,772.8 10,319.4 10,500.1 10,672.3

EUROZONE

NORTH AMERICA (NAFTA)

CALENDAR YEAR Historical 2000

1.6% 1.0% 2.2% 2.2%

3,321.3 3,391.4 3,461.3 3,534.0 3,608.5 3,684.3

2,993.8 3,057.9 3,121.8 3,186.1 3,252.1

2,677.8 2,739.4 2,801.3 2,865.8 2,930.5

2,374.2 2,424.0 2,484.5 2,551.5 2,615.8

2,279.7 2,339.1 2,420.2 2,393.5 2,288.8 2,329.2 2,349.7

1,978.6

UNITED KINGDOM

GROSS DOMESTIC PRODUCT (In Billions of 2005 U.S. Dollars)

0.6% 2.7% 1.3% 0.8%

5,283.9 5,302.8 5,320.4 5,336.9 5,353.5 5,369.8

5,193.4 5,211.6 5,229.9 5,247.7 5,265.4

5,075.5 5,103.0 5,129.5 5,154.3 5,174.7

4,672.4 4,802.4 4,901.3 4,977.2 5,037.0

4,553.8 4,646.5 4,753.5 4,698.0 4,401.6 4,578.4 4,551.2

4,268.6

JAPAN

10.4% 8.1% 7.7% 6.6%

12,448.7 13,124.5 13,823.6 14,537.9 15,276.3 16,024.3

9,374.0 9,951.5 10,536.7 11,152.6 11,787.6

6,704.3 7,195.6 7,707.4 8,238.9 8,800.6

4,532.9 4,921.5 5,341.8 5,779.7 6,235.7

2,257.1 2,543.7 2,904.9 3,183.7 3,477.0 3,836.0 4,192.2

1,417.2

CHINA

INTERNATIONAL GDP FORECASTS – SELECTED AREAS/COUNTRIES

TABLE 4

FAA Aerospace Forecast Fiscal Years 2012-2032

86

669.5 668.4 690.1 680.7 630.8 635.2 649.9

649.4 660.8 673.7 703.6 723.9 741.4 759.1 777.1 796.4 814.3 832.6 852.8 872.9 892.9 913.7 934.9 955.9 976.9 998.8 1,021.5 1,044.1

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

153.6 160.1 166.9 174.0 181.3 188.8

123.7 129.2 135.0 141.0 147.2

100.2 104.4 108.9 113.7 118.5

82.3 84.8 88.4 92.1 96.1

67.4 71.6 75.3 78.3 73.6 77.4 80.8

56.4

Avg Annual Growth 2000-11 0.1% 3.3% 2011-12 -0.1% 1.9% 2011-21 2.3% 3.9% 2011-32 2.3% 4.1% *Source: Forms 41 and 298-C, U.S. Department of Transportation. 1 Sum of U.S. Mainline and Regional Air Carriers.

641.2

0.4% 0.2% 2.5% 2.5%

1,088.5 1,116.0 1,143.8 1,172.9 1,202.8 1,233.0

956.3 981.9 1,007.9 1,033.9 1,060.9

841.6 863.5 886.1 910.1 932.9

731.8 745.6 762.2 795.7 820.0

737.0 740.0 765.3 759.1 704.4 712.6 730.7

697.6

REVENUE PASSENGER ENPLANEMENTS (Millions) DOMESTIC INTERNATIONAL SYSTEM

FISCAL YEAR Historical* 2000

1.0% -0.2% 2.5% 2.7%

864.3 888.9 913.8 939.7 966.5 993.6

750.6 772.3 794.1 816.0 839.7

654.9 673.4 691.8 711.5 730.8

571.3 583.5 594.5 620.2 638.4

573.2 582.4 600.5 594.6 548.6 555.8 572.5

512.8

2.6% 2.2% 4.1% 4.2%

471.5 491.7 512.5 534.4 556.7 579.8

379.6 396.4 414.1 432.6 451.9

305.5 319.1 333.3 348.1 363.4

247.4 256.1 267.6 279.1 292.1

197.2 208.5 221.2 233.8 221.3 230.9 242.1

181.8

1.5% 0.5% 3.0% 3.2%

1,335.8 1,380.6 1,426.4 1,474.1 1,523.2 1,573.4

1,130.2 1,168.6 1,208.2 1,248.6 1,291.6

960.4 992.5 1,025.0 1,059.7 1,094.3

818.6 839.7 862.1 899.3 930.5

770.4 790.9 821.7 828.5 769.9 786.7 814.6

694.6

REVENUE PASSENGER MILES (Billions) DOMESTIC INTERNATIONAL SYSTEM

TOTAL SCHEDULED U.S. PASSENGER TRAFFIC

U.S. COMMERCIAL AIR CARRIERS1

TABLE 5

FAA Aerospace Forecast Fiscal Years 2012-2032

512.8

726.6 755.2 740.2 752.5 749.6 682.5 680.0 693.9

688.4 698.7 710.0 739.2 759.6 778.2 799.2 820.1 842.8 865.0 887.8 913.0 938.3 963.8 991.4 1,020.1 1,048.9 1,078.0 1,108.3 1,139.6 1,171.4

-0.4% -0.8% 2.2% 2.5%

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

87

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

1.4% 0.6% 0.2% 0.1%

84.7 84.7 84.8 84.8 84.8 84.8

84.5 84.6 84.6 84.7 84.7

84.2 84.3 84.3 84.4 84.5

83.0 83.5 83.7 83.9 84.0

75.9 78.7 79.8 79.3 80.4 81.7 82.5

70.6

% LOAD FACTOR

*Source: Forms 41 and 298-C, U.S. Department of Transportation. 1 Sum of U.S. Mainline and Regional Air Carriers.

1.0% -0.2% 2.5% 2.7%

864.3 888.9 913.8 939.7 966.5 993.6

750.6 772.3 794.1 816.0 839.7

654.9 673.4 691.8 711.5 730.8

571.3 583.5 594.5 620.2 638.4

573.2 582.4 600.5 594.6 548.6 555.8 572.5

DOMESTIC RPMs (BIL)

ASMs (BIL)

FISCAL YEAR Historical* 2000

2.1% 2.0% 4.1% 4.2%

581.2 605.9 631.5 658.3 685.8 714.1

468.4 488.9 510.7 533.5 557.1

377.4 394.0 411.4 429.7 448.5

305.9 316.5 330.8 344.9 360.9

248.5 261.3 275.9 292.7 283.3 281.2 300.0

239.3

ASMs (BIL)

2.6% 2.2% 4.1% 4.2%

471.5 491.7 512.5 534.4 556.7 579.8

379.6 396.4 414.1 432.6 451.9

305.5 319.1 333.3 348.1 363.4

247.4 256.1 267.6 279.1 292.1

197.2 208.5 221.2 233.8 221.3 230.9 242.1

181.8

0.6% 0.2% 0.0% 0.0%

81.1 81.1 81.2 81.2 81.2 81.2

81.1 81.1 81.1 81.1 81.1

81.0 81.0 81.0 81.0 81.0

80.8 80.9 80.9 80.9 80.9

79.4 79.8 80.2 79.9 78.1 82.1 80.7

76.0

INTERNATIONAL RPMs % LOAD (BIL) FACTOR

0.3% 0.0% 2.8% 3.1%

1,601.3 1,654.8 1,709.5 1,766.6 1,825.4 1,885.5

1,356.2 1,401.9 1,449.0 1,497.2 1,548.5

1,155.6 1,193.2 1,231.6 1,272.5 1,313.5

994.3 1,015.1 1,040.8 1,084.1 1,120.5

1,003.6 1,001.5 1,028.4 1,042.4 965.8 961.3 993.9

965.9

ASMs (BIL)

1.5% 0.5% 3.0% 3.2%

1,335.8 1,380.6 1,426.4 1,474.1 1,523.2 1,573.4

1,130.2 1,168.6 1,208.2 1,248.6 1,291.6

960.4 992.5 1,025.0 1,059.7 1,094.3

818.6 839.7 862.1 899.3 930.5

770.4 790.9 821.7 828.5 769.9 786.7 814.6

694.6

SYSTEM RPMs (BIL)

SCHEDULED PASSENGER CAPACITY, TRAFFIC, AND LOAD FACTORS

U.S. COMMERCIAL AIR CARRIERS1

TABLE 6

1.2% 0.4% 0.2% 0.1%

83.4 83.4 83.4 83.4 83.4 83.4

83.3 83.4 83.4 83.4 83.4

83.1 83.2 83.2 83.3 83.3

82.3 82.7 82.8 83.0 83.0

76.8 79.0 79.9 79.5 79.7 81.8 82.0

71.9

% LOAD FACTOR

FAA Aerospace Forecast Fiscal Years 2012-2032

88

21.6 22.5 24.1 26.0 24.7 24.5 25.3

25.5 26.2 27.1 27.9 29.0 30.1 31.2 32.3 33.5 34.7 36.0 37.2 38.6 40.0 41.4 42.9 44.5 46.0 47.6 49.2 51.0

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

85.2 89.2 93.4 98.0 102.6 107.3

66.9 70.2 73.8 77.5 81.4

53.3 55.7 58.2 61.0 63.8

43.3 44.9 46.9 49.0 51.2

32.5 35.2 37.6 39.1 36.8 40.0 42.0

24.3

25.4 26.4 27.4 28.4 29.5 30.5

20.8 21.7 22.6 23.5 24.4

16.8 17.6 18.3 19.2 20.0

13.6 13.7 14.4 15.2 16.0

13.2 13.9 13.6 13.2 12.0 12.9 13.5

11.2

Avg Annual Growth 2000-11 1.8% 5.1% 1.7% 2011-12 0.7% 3.2% 0.3% 2011-21 3.2% 4.3% 4.0% 2011-32 3.4% 4.6% 4.0% * Source: Forms 41 and 298-C, U.S. Department of Transportation. 1 Sum of U.S. Mainline and Regional Air Carriers.

20.9

FISCAL YEAR Historical* 2000

3.3% 1.9% 3.9% 4.1%

153.6 160.1 166.9 174.0 181.3 188.8

123.7 129.2 135.0 141.0 147.2

100.2 104.4 108.9 113.7 118.5

82.3 84.8 88.4 92.1 96.1

67.4 71.6 75.3 78.3 73.6 77.4 80.8

56.4

REVENUE PASSENGER ENPLANEMENTS LATIN TOTAL ATLANTIC AMERICA PACIFIC INTERNATIONAL (Mil) (Mil) (Mil) (Mil)

2.3% 1.0% 3.9% 4.1%

211.8 221.0 230.4 240.0 250.1 260.7

170.8 178.2 185.9 194.1 202.8

137.6 143.9 150.2 156.6 163.5

112.8 116.5 121.0 125.4 131.3

89.5 93.9 102.2 112.7 108.9 108.6 111.7

87.1

ATLANTIC (Bil)

5.7% 4.7% 4.8% 5.0%

145.2 152.4 159.9 168.0 176.3 184.7

112.3 118.3 124.7 131.4 138.3

87.9 92.1 96.8 101.8 106.9

69.9 73.2 76.4 80.2 84.0

48.6 53.6 57.7 60.7 57.7 63.1 66.8

36.3

0.8% 1.6% 3.9% 3.6%

114.5 118.4 122.3 126.3 130.3 134.4

96.4 99.9 103.4 107.1 110.8

79.9 83.1 86.3 89.7 93.0

64.6 66.4 70.1 73.5 76.8

59.2 61.1 61.4 60.4 54.7 59.2 63.6

58.4

2.6% 2.2% 4.1% 4.2%

471.5 491.7 512.5 534.4 556.7 579.8

379.6 396.4 414.1 432.6 451.9

305.5 319.1 333.3 348.1 363.4

247.4 256.1 267.6 279.1 292.1

197.2 208.5 221.2 233.8 221.3 230.9 242.1

181.8

REVENUE PASSENGER MILES LATIN TOTAL AMERICA PACIFIC INTERNATIONAL (Bil) (Bil) (Bil)

TOTAL SCHEDULED U.S. INTERNATIONAL PASSENGER TRAFFIC

U.S. COMMERCIAL AIR CARRIERS1

TABLE 7

FAA Aerospace Forecast Fiscal Years 2012-2032

117.5 122.9 128.6 134.6 140.9 147.3

2.9% 3.1% 4.8% 4.7%

49.9 49.8 53.3 57.1 55.0 55.9 55.6

56.5 58.2 61.2 64.5 67.4 70.2 72.9 75.8 78.9 81.9 85.0 88.3 91.7 95.1 98.6 102.3 105.9 109.7 113.7 117.8 122.0

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

89

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

Avg Annual Growth 2000-11 0.4% 2011-12 1.7% 2011-21 3.9% 2011-32 3.8% *Source: INS Immigration Service

93.2 97.7 102.3 107.1 112.2

73.8 77.3 81.1 85.0 89.0

57.5 60.2 63.6 67.0 70.4

44.2 47.1 48.6 49.8 48.0 53.1 55.7

40.8

53.0

ATLANTIC

CALENDAR YEAR Historical* 2000

0.8% 4.1% 4.5% 4.1%

54.7 56.6 58.6 60.7 62.8 64.9

45.6 47.3 49.1 50.9 52.7

37.6 39.1 40.7 42.3 43.9

29.3 31.0 32.8 34.5 36.1

25.1 25.6 26.3 25.8 24.4 26.7 28.2

26.0

0.6% 1.9% 3.1% 3.0%

36.1 37.1 38.2 39.4 40.6 41.8

31.1 32.0 33.0 34.0 35.0

26.9 27.7 28.5 29.4 30.2

22.7 23.4 24.3 25.2 26.1

19.7 21.0 21.5 21.7 20.2 21.8 22.3

20.8

TOTAL PASSENGERS BY WORLD TRAVEL AREA (Millions) U.S./CANADA LATIN AMERICA PACIFIC TRANSBORDER

TOTAL PASSENGER TRAFFIC TO/FROM THE UNITED STATES

U.S. AND FOREIGN FLAG CARRIERS

TABLE 8

1.3% 2.6% 4.2% 4.1%

310.4 322.6 335.2 348.4 362.1 376.1

254.9 265.3 276.0 287.2 298.6

208.4 217.0 226.0 235.5 245.0

166.0 172.7 181.9 191.1 199.9

139.0 143.5 149.7 154.4 147.5 157.5 161.8

140.6

TOTAL

FAA Aerospace Forecast Fiscal Years 2012-2032

90 124.5 124.6 124.8 124.9 125.1

2022 2023 2024 2025 2026

221.7 222.0 222.4 222.7 223.0

219.5 220.0 220.5 220.9 221.3

144.2 144.7 145.2 145.7 146.2

141.8 142.6 143.1 143.3 143.7 883.4 887.1 890.1 893.4 897.5

879.7 883.1 882.4 881.4 881.9

856.2 871.4 870.2 873.5 869.7 875.0 881.0

924.4 929.9 935.4 940.8 946.2 951.6

123.6 123.8 124.0 124.1 124.3

2017 2018 2019 2020 2021

217.0 217.3 218.0 218.4 219.0

135.3 135.7 136.6 138.2 140.0 139.7 141.0

799.8

2027 125.2 223.4 149.0 2028 125.4 223.8 149.4 2029 125.5 224.1 149.9 2030 125.7 224.4 150.3 2031 125.8 224.8 150.8 2032 126.0 225.1 151.2 *Source: Forms 41 and 298-C, U.S. Department of Transportation. 1 Sum of U.S. Mainline and Regional Air Carriers.

122.8 123.3 123.4 123.5 123.5

Forecast 2012 2013 2014 2015 2016

217.1 215.0 216.1 218.6 219.0 216.4 216.5

145.0

901.5 905.6 909.7 913.8 919.0

120.4 120.1 120.4 120.8 121.8 121.8 122.6

2005 2006 2007 2008 2009 2010 2011E

230.6

3,070.2 3,071.4 3,071.6 3,070.5 3,070.0 3,071.0

3,068.8 3,069.0 3,068.4 3,068.2 3,068.8

3,048.2 3,055.5 3,059.7 3,061.9 3,066.0

3,004.8 3,020.7 3,026.3 3,028.9 3,038.6

2,924.6 2,911.5 2,939.0 2,985.2 3,008.1 2,983.8 2,997.4

3,223.2

1,227.2 1,237.1 1,247.1 1,256.8 1,266.4 1,276.2

1,181.9 1,190.2 1,198.7 1,207.6 1,217.4

1,141.2 1,149.3 1,156.8 1,164.3 1,173.0

1,118.7 1,126.2 1,131.1 1,130.1 1,134.7

1,045.4 1,068.8 1,073.7 1,091.4 1,093.1 1,104.0 1,114.9

995.7

AVERAGE PASSENGER TRIP LENGTH DOMESTIC INT'L. SYSTEM (Miles) (Miles) (Miles)

146.7 147.1 147.6 148.1 148.5

129.3

FISCAL YEAR Historical* 2000

AVERAGE SEATS PER AIRCRAFT MILE DOMESTIC INT'L. SYSTEM (Seats/Mile) (Seats/Mile) (Seats/Mile)

SEATS PER AIRCRAFT MILE AND PASSENGER TRIP LENGTH

U.S. COMMERCIAL AIR CARRIERS' FORECAST ASSUMPTIONS1

TABLE 9

FAA Aerospace Forecast Fiscal Years 2012-2032

91

523.1 516.2 533.9 521.6 476.8 473.6 488.6

487.0 497.3 506.3 528.1 542.6 555.4 568.3 581.4 595.4 608.4 621.5 636.1 650.7 665.0 679.9 695.2 710.2 725.2 740.9 757.0 773.1

-1.3% -0.3% 2.2% 2.2%

2005 2006 2007 2008 2009 2010 2011E Forecast 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

3.6% 2.1% 4.0% 4.2%

150.0 156.5 163.1 170.2 177.4 184.8

120.6 126.0 131.7 137.7 143.8

97.5 101.6 106.0 110.7 115.5

79.9 82.4 86.0 89.5 93.5

64.2 68.1 71.9 74.8 71.0 74.7 78.3

53.3

*Source: Form 41, U.S. Department of Transportation.

561.5

FISCAL YEAR Historical* 2000

-0.7% 0.0% 2.5% 2.5%

845.2 866.7 888.3 911.1 934.4 957.9

742.1 762.1 782.3 802.7 823.7

652.9 669.9 687.4 706.2 723.9

566.9 579.7 592.3 617.6 636.1

587.3 584.4 605.7 596.5 547.8 548.3 566.9

614.8

REVENUE PASSENGER ENPLANEMENTS (Millions) DOMESTIC INTERNATIONAL SYSTEM

0.1% -0.4% 2.4% 2.5%

735.5 755.4 775.4 796.1 817.6 839.2

643.2 660.9 678.7 696.5 715.7

564.5 579.9 595.1 611.3 627.1

494.9 506.0 514.8 536.2 551.0

509.6 513.9 529.9 521.3 478.2 480.7 497.0

490.0

2.6% 2.4% 4.2% 4.3%

469.4 489.5 510.2 532.0 554.3 577.3

377.8 394.5 412.1 430.6 449.8

304.0 317.5 331.6 346.4 361.7

246.1 254.8 266.2 277.6 290.6

195.8 206.8 219.5 231.9 220.0 229.6 240.3

181.0

0.9% 0.5% 3.0% 3.2%

1,204.9 1,244.9 1,285.7 1,328.1 1,371.8 1,416.5

1,021.0 1,055.4 1,090.9 1,127.1 1,165.5

868.5 897.4 926.7 957.7 988.8

741.0 760.9 781.0 813.9 841.6

705.4 720.7 749.4 753.3 698.2 710.3 737.4

670.9

REVENUE PASSENGER MILES (Billions) DOMESTIC INTERNATIONAL SYSTEM

SCHEDULED PASSENGER TRAFFIC

U. S. MAINLINE AIR CARRIERS

TABLE 10

FAA Aerospace Forecast Fiscal Years 2012-2032

490.0

688.3 665.1 648.7 659.0 650.2 587.8 581.5 594.8

589.8 599.3 607.9 631.7 647.7 662.5 679.6 696.5 714.7 732.5 750.7 770.8 791.1 811.3 833.2 855.9 878.6 901.6 925.3 949.8 974.6

-1.3% -0.8% 2.1% 2.4%

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

92

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

1.5% 0.4% 0.2% 0.1%

85.9 86.0 86.0 86.0 86.1 86.1

85.7 85.7 85.8 85.9 85.9

85.2 85.3 85.4 85.5 85.6

83.9 84.4 84.7 84.9 85.1

76.6 79.2 80.4 80.2 81.4 82.7 83.6

71.2

% LOAD FACTOR

* Source: Form 41, U.S. Department of Transportation.

0.1% -0.4% 2.4% 2.5%

735.5 755.4 775.4 796.1 817.6 839.2

643.2 660.9 678.7 696.5 715.7

564.5 579.9 595.1 611.3 627.1

494.9 506.0 514.8 536.2 551.0

509.6 513.9 529.9 521.3 478.2 480.7 497.0

DOMESTIC RPMs (BIL)

ASMs (BIL)

FISCAL YEAR Historical* 2000

2.1% 2.0% 4.1% 4.2%

578.4 603.1 628.6 655.3 682.6 710.9

465.9 486.5 508.1 530.8 554.4

375.3 391.9 409.2 427.4 446.1

304.1 314.6 328.9 342.9 358.9

246.3 258.9 273.4 290.1 281.5 279.4 298.2

238.0

ASMs (BIL)

2.6% 2.4% 4.2% 4.3%

469.4 489.5 510.2 532.0 554.3 577.3

377.8 394.5 412.1 430.6 449.8

304.0 317.5 331.6 346.4 361.7

246.1 254.8 266.2 277.6 290.6

195.8 206.8 219.5 231.9 220.0 229.6 240.3

181.0

0.5% 0.4% 0.1% 0.0%

81.1 81.2 81.2 81.2 81.2 81.2

81.1 81.1 81.1 81.1 81.1

81.0 81.0 81.0 81.1 81.1

80.9 81.0 81.0 81.0 81.0

79.5 79.9 80.3 80.0 78.2 82.2 80.6

76.0

INTERNATIONAL RPMs % LOAD (BIL) FACTOR

-0.3% 0.1% 2.8% 3.1%

1,434.3 1,481.7 1,530.1 1,580.5 1,632.5 1,685.5

1,216.6 1,257.3 1,299.2 1,342.1 1,387.6

1,037.8 1,071.5 1,105.7 1,142.1 1,178.6

893.9 913.9 936.8 974.5 1,006.6

911.4 907.6 932.4 940.3 869.3 860.9 893.0

926.2

ASMs (BIL)

0.9% 0.5% 3.0% 3.2%

1,204.9 1,244.9 1,285.7 1,328.1 1,371.8 1,416.5

1,021.0 1,055.4 1,090.9 1,127.1 1,165.5

868.5 897.4 926.7 957.7 988.8

741.0 760.9 781.0 813.9 841.6

705.4 720.7 749.4 753.3 698.2 710.3 737.4

670.9

SYSTEM RPMs (BIL)

SCHEDULED PASSENGER CAPACITY, TRAFFIC, AND LOAD FACTORS

U.S. MAINLINE AIR CARRIERS

TABLE 11

1.2% 0.4% 0.2% 0.1%

84.0 84.0 84.0 84.0 84.0 84.0

83.9 83.9 84.0 84.0 84.0

83.7 83.8 83.8 83.9 83.9

82.9 83.3 83.4 83.5 83.6

77.4 79.4 80.4 80.1 80.3 82.5 82.6

72.4

% LOAD FACTOR

FAA Aerospace Forecast Fiscal Years 2012-2032

93

21.6 22.5 24.1 26.0 24.7 24.5 25.3

25.5 26.2 27.1 27.9 29.0 30.1 31.2 32.3 33.5 34.7 36.0 37.2 38.6 40.0 41.4 42.9 44.5 46.0 47.6 49.2 51.0

2005 2006 2007 2008 2009 2010 2011E Forecast 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

5.8% 3.4% 4.4% 4.7%

81.7 85.6 89.7 94.2 98.7 103.3

63.8 67.0 70.5 74.2 77.9

50.6 52.8 55.3 58.1 60.8

40.9 42.5 44.4 46.4 48.5

29.3 31.7 34.2 35.6 34.3 37.3 39.6

21.2

1.7% 1.1% 4.1% 4.0%

25.4 26.4 27.4 28.4 29.5 30.5

20.8 21.7 22.6 23.5 24.4

16.8 17.6 18.3 19.2 20.0

13.6 13.7 14.4 15.2 16.0

13.2 13.9 13.6 13.2 12.0 12.9 13.4

11.2

REVENUE PASSENGER ENPLANEMENTS (MIL) LATIN AMERICA PACIFIC

Avg Annual Growth 2000-11 1.7% 2011-12 0.7% 2011-21 3.2% 2011-32 3.4% * Source: Form 41, U.S. Department of Transportation.

20.9

ATLANTIC

FISCAL YEAR Historical* 2000

3.6% 2.1% 4.0% 4.2%

150.0 156.5 163.1 170.2 177.4 184.8

120.6 126.0 131.7 137.7 143.8

97.5 101.6 106.0 110.7 115.5

79.9 82.4 86.0 89.5 93.5

64.2 68.1 71.9 74.8 71.0 74.7 78.3

53.3

TOTAL

SCHEDULED INTERNATIONAL PASSENGER ENPLANEMENTS

U.S. MAINLINE AIR CARRIERS

TABLE 12

FAA Aerospace Forecast Fiscal Years 2012-2032

109.9 108.6 115.8 126.6 141.0 138.2 130.9 138.3

139.4 143.9 149.4 154.8 162.1 169.9 177.5 185.3 193.2 201.8 210.7 219.8 229.3 239.4 250.0 261.1 272.4 283.9 295.8 308.1 321.2

2.1% 0.8% 3.8% 4.1% Department

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

94

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32 * Source: Form 41, U.S.

81.1 81.1 81.1 81.2 81.2 81.2

81.1 81.1 81.1 81.1 81.1

81.0 81.0 81.0 81.1 81.1

80.9 81.0 81.0 81.0 81.0

82.4 81.1 80.7 80.0 78.9 82.9 80.7

79.2

2.3% 0.2% 1.0% 0.2% 3.9% 0.0% 4.1% 0.0% of Transportation.

211.8 221.0 230.4 240.0 250.1 260.7

170.8 178.2 185.9 194.1 202.8

137.6 143.9 150.2 156.6 163.5

112.8 116.5 121.0 125.4 131.3

89.5 93.9 102.2 112.7 108.9 108.6 111.7

87.1

ATLANTIC RPMs % LOAD (BIL) FACTOR

FISCAL YEAR Historical* 2000

ASMs (BIL)

4.3% 3.6% 4.8% 5.0%

177.7 186.5 195.8 205.8 216.0 226.3

137.3 144.6 152.5 160.8 169.2

107.4 112.5 118.2 124.4 130.6

85.0 88.9 93.3 97.8 102.5

65.4 69.4 72.7 74.2 73.5 77.9 82.0

51.4

ASMs (BIL)

5.7% 4.2% 4.8% 5.0%

143.0 150.1 157.6 165.7 173.9 182.1

110.5 116.4 122.8 129.4 136.2

86.4 90.5 95.1 100.1 105.1

68.3 71.5 75.1 78.7 82.5

47.2 51.9 55.9 58.8 56.4 61.7 65.5

35.5

1.3% 0.6% 0.1% 0.0%

80.5 80.5 80.5 80.5 80.5 80.5

80.5 80.5 80.5 80.5 80.5

80.5 80.5 80.5 80.5 80.5

80.4 80.4 80.5 80.5 80.5

72.2 74.9 76.9 79.3 76.8 79.2 79.9

69.0

LATIN AMERICA RPMs % LOAD (BIL) FACTOR

0.1% 2.5% 3.9% 3.6%

139.6 144.2 148.9 153.6 158.5 163.4

117.9 122.1 126.3 130.7 135.1

98.1 101.9 105.8 109.8 113.8

79.7 81.9 86.2 90.3 94.2

72.3 73.7 74.1 74.9 69.9 70.5 77.8

76.6

ASMs (BIL)

0.8% 2.2% 3.9% 3.6%

114.5 118.4 122.3 126.3 130.3 134.4

96.4 99.9 103.4 107.1 110.8

79.9 83.1 86.3 89.7 93.0

65.0 66.8 70.1 73.5 76.8

59.2 61.1 61.4 60.4 54.7 59.2 63.6

58.4

PACIFIC RPMs (BIL)

0.6% -0.2% 0.0% 0.0%

82.0 82.1 82.1 82.2 82.2 82.3

81.8 81.8 81.9 81.9 82.0

81.5 81.6 81.6 81.7 81.7

81.6 81.6 81.4 81.4 81.5

81.8 82.8 82.9 80.6 78.3 84.1 81.8

76.2

% LOAD FACTOR

2.1% 2.0% 4.1% 4.2%

578.4 603.1 628.6 655.3 682.6 710.9

465.9 486.5 508.1 530.8 554.4

375.3 391.9 409.2 427.4 446.1

304.1 314.6 328.9 342.9 358.9

246.3 258.9 273.4 290.1 281.5 279.4 298.2

238.0

ASMs (BIL)

2.6% 2.2% 4.2% 4.3%

469.4 489.5 510.2 532.0 554.3 577.3

377.8 394.5 412.1 430.6 449.8

304.0 317.5 331.6 346.4 361.7

246.1 254.8 266.2 277.6 290.6

195.8 206.8 219.5 231.9 220.0 229.6 240.8

181.0

0.6% 0.2% 0.0% 0.0%

81.1 81.2 81.2 81.2 81.2 81.2

81.1 81.1 81.1 81.1 81.1

81.0 81.0 81.0 81.1 81.1

80.9 81.0 81.0 81.0 81.0

79.5 79.9 80.3 80.0 78.2 82.2 80.8

76.0

INTERNATIONAL RPMs % LOAD (BIL) FACTOR

SCHEDULED PASSENGER CAPACITY, TRAFFIC, AND LOAD FACTORS BY INTERNATIONAL TRAVEL REGIONS

U.S. MAINLINE AIR CARRIERS

TABLE 13

FAA Aerospace Forecast Fiscal Years 2012-2032

233.7

148.8 150.4 150.5 150.6 150.3 151.2 151.9 152.3

152.4 152.4 152.5 152.6 152.7 152.7 152.8 152.9 153.0 153.0 153.1 153.2 153.3 153.3 153.4 153.5 153.6 153.6 153.7 153.8 153.9

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

95

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

* Source: Form 41, U.S. Department of Transportation.

238.5 239.0 239.5 240.0 240.5 241.0

236.0 236.5 237.0 237.5 238.0

233.5 234.0 234.5 235.0 235.5

231.0 231.5 232.0 232.5 233.0

230.8 229.4 229.2 229.2 230.0 231.7 230.5

ATLANTIC (Seats/Mile)

DOMESTIC (Seats/Mile)

FISCAL YEAR Historical* 2000

180.3 180.8 181.3 181.8 182.3 182.8

177.8 178.3 178.8 179.3 179.8

175.3 175.8 176.3 176.8 177.3

172.8 173.3 173.8 174.3 174.8

175.5 175.2 176.2 177.3 175.8 171.5 172.3

179.5

294.9 295.7 296.4 297.2 297.9 298.7

291.2 291.9 292.7 293.4 294.2

287.4 288.2 288.9 289.7 290.4

283.7 284.4 285.2 285.9 286.7

278.7 274.4 279.6 292.3 291.3 287.2 282.9

307.8

INTERNATIONAL LATIN AMERICA PACIFIC (Seats/Mile) (Seats/Mile)

SEATS PER AIRCRAFT MILE

226.5 226.8 227.1 227.4 227.7 228.0

225.1 225.4 225.6 225.9 226.2

223.2 223.7 224.0 224.4 224.7

221.0 221.2 221.8 222.2 222.8

223.4 221.4 222.3 224.9 223.7 220.9 220.7

236.6

TOTAL (Seats/Mile)

U.S. MAINLINE AIR CARRIER FORECAST ASSUMPTIONS

TABLE 14

176.4 176.8 177.2 177.6 177.9 178.3

174.5 174.9 175.2 175.7 176.0

172.4 172.8 173.3 173.6 174.1

170.4 170.7 171.3 171.5 172.0

165.0 165.7 166.3 167.5 168.9 169.0 169.9

164.5

SYSTEM (Seats/Mile)

FAA Aerospace Forecast Fiscal Years 2012-2032

4,168.1

872.6 981.5 995.4 992.8 999.4 1,003.0 1,015.1 1,017.9

1,016.3 1,017.6 1,016.7 1,015.4 1,015.4 1,016.4 1,020.5 1,023.6 1,026.6 1,030.7 1,034.9 1,039.0 1,043.1 1,047.3 1,052.6 1,058.0 1,063.6 1,069.3 1,074.6 1,080.0 1,085.4

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

96

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

* Source: Form 41, U.S. Department of Transportation.

4,931.3 4,968.2 5,004.9 5,041.5 5,078.3 5,115.8

4,749.1 4,784.4 4,820.3 4,856.9 4,894.1

4,572.7 4,608.1 4,642.8 4,677.5 4,713.0

4,427.4 4,440.3 4,470.7 4,499.9 4,536.0

4,133.1 4,175.4 4,247.8 4,332.7 4,402.4 4,433.0 4,414.7

ATLANTIC (Miles)

DOMESTIC (Miles)

FISCAL YEAR Historical* 2000

1,750.9 1,753.7 1,756.3 1,758.8 1,761.0 1,763.1

1,732.7 1,736.9 1,740.8 1,744.5 1,747.8

1,707.7 1,713.2 1,718.5 1,723.6 1,728.3

1,669.2 1,682.7 1,689.2 1,695.7 1,701.8

1,611.1 1,637.0 1,634.3 1,651.6 1,645.6 1,654.7 1,655.9

1,675.2

4,509.3 4,487.0 4,465.0 4,443.3 4,422.1 4,401.5

4,628.3 4,603.6 4,579.4 4,555.4 4,532.1

4,761.4 4,733.6 4,706.2 4,679.3 4,653.5

4,797.1 4,893.3 4,856.6 4,822.3 4,790.5

4,466.1 4,390.4 4,515.1 4,583.5 4,549.9 4,586.6 4,706.9

5,219.9

INTERNATIONAL LATIN AMERICA PACIFIC (Miles) (Miles)

AVERAGE PASSENGER TRIP LENGTH

3,128.2 3,128.2 3,127.4 3,125.1 3,123.6 3,123.6

3,132.8 3,131.8 3,129.9 3,128.4 3,127.8

3,118.2 3,124.4 3,127.4 3,128.4 3,131.3

3,078.8 3,093.2 3,097.5 3,100.5 3,109.6

3,051.2 3,037.0 3,054.2 3,100.1 3,097.6 3,072.6 3,072.2

3,397.3

TOTAL (Miles)

U.S. MAINLINE AIR CARRIER FORECAST ASSUMPTIONS

TABLE 15

1,425.5 1,436.4 1,447.3 1,457.7 1,468.1 1,478.6

1,375.8 1,384.9 1,394.4 1,404.2 1,414.8

1,330.3 1,339.6 1,348.1 1,356.2 1,365.9

1,307.1 1,312.6 1,318.7 1,317.7 1,323.1

1,201.1 1,233.4 1,237.2 1,262.9 1,274.6 1,295.5 1,301.7

1,091.4

SYSTEM (Miles)

FAA Aerospace Forecast Fiscal Years 2012-2032

97

11.45 12.36 12.45 13.11 11.95 12.87 13.59

14.01 14.28 14.62 14.93 15.28 15.56 15.70 15.85 15.96 16.06 16.16 16.25 16.38 16.53 16.64 16.74 16.86 16.98 17.12 17.26 17.40

-0.3% 3.1% 1.7% 1.2%

2005 2006 2007 2008 2009 2010 2011E Forecast 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

-2.7% 1.2% -0.3% -0.8%

12.33 12.17 12.02 11.87 11.73 11.59

13.07 12.91 12.78 12.65 12.49

13.80 13.65 13.53 13.38 13.22

13.75 13.77 13.81 13.82 13.84

13.19 13.74 13.52 13.63 12.47 13.20 13.59

18.32

* Source: Form 41, U.S. Department of Transportation.

14.03

FISCAL YEAR Historical* 2000

DOMESTIC CURRENT $ FY 2011 $ (Cents) (Cents)

2.8% 5.9% 1.7% 1.3%

17.60 17.78 17.96 18.14 18.34 18.53

16.84 16.97 17.12 17.27 17.44

16.13 16.28 16.43 16.56 16.69

14.98 15.44 15.60 15.77 15.96

10.87 11.63 12.45 13.37 11.68 12.86 14.14

10.46

0.3% 3.9% -0.3% -0.6%

12.96 12.84 12.71 12.59 12.46 12.34

13.61 13.48 13.35 13.22 13.09

14.30 14.16 14.02 13.89 13.75

14.70 14.88 14.74 14.60 14.45

12.53 12.93 13.53 13.91 12.18 13.19 14.14

13.65

INTERNATIONAL CURRENT $ FY 2011 $ (Cents) (Cents)

REVENUE PER PASSENGER MILE

PASSENGER YIELDS

0.5% 4.1% 1.7% 1.2%

17.08 17.22 17.37 17.53 17.69 17.86

16.41 16.52 16.66 16.81 16.95

15.76 15.91 16.06 16.17 16.29

14.33 14.67 14.95 15.22 15.51

11.29 12.15 12.45 13.19 11.87 12.87 13.77

13.06

-1.9% 2.1% -0.3% -0.7%

12.58 12.43 12.29 12.16 12.03 11.89

13.27 13.12 12.99 12.87 12.72

13.98 13.83 13.71 13.56 13.42

14.06 14.14 14.12 14.08 14.05

13.01 13.51 13.52 13.72 12.38 13.20 13.77

17.06

SYSTEM CURRENT $ FY 2011 $ (Cents) (Cents)

U.S. MAINLINE AIR CARRIER FORECAST ASSUMPTIONS

TABLE 16

FAA Aerospace Forecast Fiscal Years 2012-2032

98

10.75 11.64 12.46 13.29 11.25 12.73 13.48

14.20 14.47 14.62 14.77 14.95 15.10 15.25 15.39 15.50 15.63 15.76 15.88 16.01 16.15 16.30 16.46 16.61 16.78 16.95 17.12 17.31

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

12.12 12.00 11.88 11.76 11.64 11.52

12.74 12.61 12.49 12.36 12.24

13.40 13.26 13.13 13.00 12.87

13.93 13.95 13.81 13.67 13.53

12.38 12.94 13.53 13.82 11.73 13.05 13.48

12.71

Avg Annual Growth 2000-11 3.0% 0.5% 2011-12 5.3% 3.3% 2011-21 1.5% -0.5% 2011-32 1.2% -0.7% * Source: Form 41, U.S. Department of Transportation.

9.73

FISCAL YEAR Historical* 2000

ATLANTIC CURRENT $ FY 2011 $ (Cents) (Cents)

1.5% 6.6% 1.8% 1.3%

19.30 19.48 19.67 19.87 20.08 20.29

18.48 18.62 18.78 18.94 19.12

17.71 17.88 18.04 18.18 18.32

16.36 16.97 17.14 17.32 17.52

12.16 12.68 13.37 14.19 12.99 13.43 15.34

13.00

-0.9% 4.6% -0.2% -0.6%

14.21 14.07 13.93 13.79 13.65 13.51

14.94 14.79 14.64 14.50 14.35

15.71 15.55 15.40 15.24 15.09

16.05 16.36 16.19 16.03 15.87

14.01 14.10 14.52 14.76 13.55 13.77 15.34

16.98

3.2% 5.8% 1.7% 1.3%

17.62 17.78 17.96 18.14 18.33 18.53

16.87 17.00 17.14 17.29 17.45

16.17 16.33 16.47 16.60 16.73

14.88 15.49 15.65 15.81 16.00

10.04 10.73 11.61 12.73 11.20 12.50 14.07

9.99

0.7% 3.8% -0.2% -0.6%

12.97 12.84 12.71 12.59 12.46 12.34

13.64 13.50 13.37 13.24 13.10

14.34 14.20 14.06 13.92 13.78

14.60 14.93 14.78 14.63 14.49

11.57 11.93 12.61 13.24 11.68 12.82 14.07

13.04

REVENUE PER PASSENGER MILE LATIN AMERICA PACIFIC CURRENT $ FY 2011 $ CURRENT $ FY 2011 $ (Cents) (Cents) (Cents) (Cents)

INTERNATIONAL PASSENGER YIELDS BY REGION

2.8% 5.9% 1.7% 1.3%

17.60 17.78 17.96 18.14 18.34 18.53

16.84 16.97 17.12 17.27 17.44

16.13 16.28 16.43 16.56 16.69

14.98 15.44 15.60 15.77 15.96

10.87 11.63 12.45 13.37 11.68 12.86 14.14

10.46

0.3% 3.9% -0.3% -0.6%

12.96 12.84 12.71 12.59 12.46 12.34

13.61 13.48 13.35 13.22 13.09

14.30 14.16 14.02 13.89 13.75

14.70 14.88 14.74 14.60 14.45

12.53 12.93 13.53 13.91 12.18 13.19 14.14

13.65

TOTAL INTERNATIONAL CURRENT $ FY 2011 $ (Cents) (Cents)

U.S. MAINLINE AIR CARRIER FORECAST ASSUMPTIONS

TABLE 17

FAA Aerospace Forecast Fiscal Years 2012-2032

99

149.39 194.69 194.01 292.64 202.31 219.19 274.41

299.72 321.27 333.12 334.68 343.96 351.50 356.37 357.96 353.09 352.07 352.07 349.99 353.79 359.58 365.99 372.84 381.76 391.21 400.80 409.71 418.54

13.0% 9.2% 2.5% 2.0%

2005 2006 2007 2008 2009 2010 2011E Forecast 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

10.3% 7.2% 0.6% 0.1%

274.55 275.68 276.93 278.05 278.49 278.67

284.72 278.05 275.93 275.21 274.76

311.81 309.92 305.50 296.10 289.97

294.10 309.71 314.62 309.75 311.48

172.14 216.43 210.88 304.22 211.02 224.79 274.41

93.36

* Source: Form 41, U.S. Department of Transportation.

71.49

FISCAL YEAR Historical* 2000

DOMESTIC CURRENT $ FY 2011 $ (Cents) (Cents)

11.8% 9.2% 2.5% 2.0%

369.25 378.09 387.45 396.94 405.77 414.51

348.69 346.62 350.39 356.12 362.47

348.12 352.94 354.52 349.70 348.68

296.84 318.18 329.91 331.46 340.65

157.26 204.69 203.31 314.57 208.41 220.06 271.77

79.35

9.2% 7.2% 0.6% 0.1%

271.90 273.02 274.26 275.38 275.81 275.99

281.98 275.37 273.28 272.56 272.12

308.81 306.94 302.56 293.25 287.18

291.27 306.73 311.59 306.77 308.49

181.21 227.54 220.81 327.11 217.38 225.70 271.77

103.63

INTERNATIONAL CURRENT $ FY 2011 $ (Cents) (Cents)

JET FUEL PRICES

12.7% 9.2% 2.5% 2.0%

371.52 380.41 389.83 399.38 408.26 417.06

350.83 348.75 352.54 358.31 364.70

350.26 355.11 356.70 351.85 350.82

298.66 320.13 331.94 333.50 342.74

151.58 197.72 196.90 299.74 204.35 219.49 273.44

73.57

10.0% 7.2% 0.6% 0.1%

273.57 274.70 275.95 277.07 277.51 277.68

283.71 277.06 274.96 274.24 273.79

310.70 308.83 304.42 295.06 288.94

293.06 308.62 313.51 308.65 310.38

174.66 219.80 213.85 311.69 213.15 225.09 273.44

96.08

SYSTEM CURRENT $ FY 2011 $ (Cents) (Cents)

U.S. MAINLINE AIR CARRIER FORECAST ASSUMPTIONS

TABLE 18

FAA Aerospace Forecast Fiscal Years 2012-2032

100 7.9% 8.4% 7.5% 6.4%

49,750.0 52,377.8 55,118.3 58,006.1 61,004.8 64,087.6

37,933.2 40,123.3 42,394.6 44,759.0 47,206.8

28,069.3 29,912.9 31,830.5 33,818.5 35,832.5

18,906.4 20,556.4 22,425.9 24,352.4 26,236.6

14,581.2 15,475.2 16,164.4 15,587.4 13,206.4 15,966.6 17,437.1

7,573.1

INT'L.

4.2% 4.3% 5.6% 5.1%

63,735.6 66,566.4 69,520.6 72,682.2 75,940.0 79,246.1

50,705.2 53,139.4 55,671.6 58,285.7 60,972.4

40,021.0 41,970.8 44,053.3 46,266.8 48,417.4

29,183.6 30,933.3 33,357.4 35,795.7 37,997.7

27,589.0 27,956.4 28,959.6 27,845.1 23,472.5 27,179.0 27,987.8

17,856.6

TOTAL

-9.4% -3.5% 0.8% 0.7%

1,698.7 1,705.5 1,713.1 1,727.3 1,739.2 1,746.3

1,632.0 1,646.7 1,662.8 1,677.0 1,689.3

1,603.6 1,602.4 1,608.6 1,622.4 1,624.1

1,445.4 1,446.0 1,509.1 1,564.9 1,593.2

3,081.7 3,229.4 3,022.8 2,152.9 1,633.9 1,620.9 1,497.7

4,415.2

DOMESTIC

0.0% 6.9% 5.9% 4.8%

17,492.8 18,130.8 18,781.0 19,453.5 20,134.1 20,812.8

14,398.8 15,002.0 15,612.1 16,232.5 16,858.3

11,472.9 12,049.1 12,634.4 13,226.4 13,806.9

8,302.7 8,900.1 9,571.9 10,246.1 10,880.7

8,547.7 8,483.5 8,050.0 9,027.0 5,898.6 7,128.0 7,766.2

7,784.6

INT'L.

-2.5% 5.2% 5.2% 4.3%

19,191.4 19,836.3 20,494.2 21,180.8 21,873.3 22,559.1

16,030.8 16,648.7 17,275.0 17,909.5 18,547.6

13,076.6 13,651.5 14,243.0 14,848.8 15,431.0

9,748.1 10,346.1 11,081.0 11,811.1 12,473.9

11,629.5 11,712.8 11,072.8 11,179.9 7,532.5 8,748.9 9,263.9

12,199.9

TOTAL

PASSENGER CARRIER RTMS (Millions)

-1.8% -2.7% 1.7% 1.6%

15,684.3 15,894.0 16,115.4 16,403.4 16,674.3 16,904.8

14,403.9 14,662.8 14,939.8 15,203.8 15,454.8

13,555.3 13,660.4 13,831.5 14,070.7 14,209.1

11,722.7 11,822.9 12,440.6 13,008.3 13,354.3

16,089.6 15,710.5 15,818.0 14,410.5 11,900.0 12,833.2 12,048.4

14,698.7

DOMESTIC

4.6% 8.0% 7.0% 6.0%

67,242.7 70,508.6 73,899.4 77,459.6 81,139.0 84,900.4

52,332.1 55,125.3 58,006.7 60,991.5 64,065.2

39,542.3 41,962.0 44,464.9 47,044.9 49,639.3

27,209.0 29,456.5 31,997.8 34,598.5 37,117.3

23,128.9 23,958.7 24,214.4 24,614.4 19,105.0 23,094.6 25,203.3

15,357.8

INT'L.

TOTAL RTMS (Millions)

Domestic figures from 2003 and beyond include Airborne Express. Inc.

3

reporting of contract service by U.S. carriers for foreign flag carriers.

Domestic figures from 2000 through 2002 exclude Airborne Express, Inc.; international figures for 2003 and beyond include new

2

* Source: Form 41, U.S. Department of Transportation. 1 Includes freight/express and mail revenue ton miles on mainline air carriers and regionals/commuters.

0.2% -2.6% 1.8% 1.7%

13,985.6 14,188.6 14,402.3 14,676.1 14,935.1 15,158.5

2027 2028 2029 2030 2031 2032 Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

12,771.9 13,016.1 13,277.0 13,526.7 13,765.5

2022 2023 2024 2025 2026

10,277.3 10,377.0 10,931.5 11,443.3 11,761.1

Forecast 2012 2013 2014 2015 2016 11,951.6 12,058.0 12,222.8 12,448.3 12,584.9

13,007.9 12,481.2 12,795.2 12,257.7 10,266.1 11,212.3 10,550.7

2005 2006 2007 2008 2009 2010 2011E

2017 2018 2019 2020 2021

10,283.5

DOMESTIC

ALL-CARGO CARRIER RTMS (Millions)

Historical* 2000

YEAR

FISCAL

AIR CARGO REVENUE TON MILES1, 2, 3

U.S. COMMERCIAL AIR CARRIERS

TABLE 19

2.0% 4.5% 5.5% 4.9%

82,927.0 86,402.7 90,014.7 93,863.0 97,813.3 101,805.2

66,736.0 69,788.1 72,946.6 76,195.3 79,520.0

53,097.5 55,622.4 58,296.4 61,115.6 63,848.4

38,931.7 41,279.4 44,438.4 47,606.8 50,471.6

39,218.5 39,669.2 40,032.4 39,025.0 31,005.0 35,927.9 37,251.7

30,056.5

TOTAL

FAA Aerospace Forecast Fiscal Years 2012-2032

101

7,605.8 8,041.8 8,564.1 9,111.9 9,636.5 10,142.7 10,647.6 11,174.9 11,724.5 12,279.0 12,861.9 13,478.7 14,120.7 14,785.8 15,474.0 16,187.4 16,925.4 17,693.5 18,509.3 19,356.7 20,228.1

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

0.1% 10.2% 7.5% 6.2%

4,999.3 5,242.4 5,498.1 5,772.9 6,058.1 6,351.4

3,897.8 4,101.8 4,314.9 4,535.4 4,763.9

2,978.0 3,155.7 3,338.5 3,524.3 3,705.7

1,990.7 2,176.1 2,386.1 2,596.5 2,794.7

1,884.1 2,004.9 2,304.2 2,336.3 1,793.4 1,990.6 1,805.8

1,791.2

LATIN AMERICA (MILLIONS)

1.7% 8.9% 6.9% 5.9%

23,984.5 25,143.7 26,354.8 27,630.6 28,955.4 30,311.9

18,761.1 19,731.2 20,733.3 21,778.7 22,859.9

14,306.9 15,149.6 16,021.2 16,919.9 17,821.8

9,919.9 10,758.4 11,661.5 12,577.5 13,461.3

9,059.1 9,564.2 9,497.3 9,050.0 6,855.4 8,348.4 9,105.4

7,543.8

PACIFIC (MILLIONS)

18.5% 9.0% 8.4% 6.8%

22,071.5 23,197.2 24,353.0 25,546.8 26,768.7 28,009.0

16,811.3 17,813.6 18,837.8 19,891.6 20,967.5

12,114.7 13,009.0 13,930.2 14,876.1 15,832.8

7,692.6 8,480.2 9,386.1 10,312.6 11,224.7

6,180.2 6,555.6 6,763.5 6,619.8 4,711.2 5,860.3 7,056.5

1,088.7

OTHER INTERNATIONAL (MILLIONS)

Figures for 2003 and beyond include new reporting of contract service by U.S. carriers for foreign flag carriers.

2

* Source: Form 41, U.S. Department of Transportation. 1 Includes freight/express and mail revenue ton miles on mainline air carriers and regionals/commuters.

2.7% 5.1% 5.4% 5.0%

6,006.7 6,084.1 6,124.7 6,415.4 5,740.1 6,865.3 7,235.5

2005 2006 2007 2008 2009 2010 2011E

Avg. Annual Growth 2000-11 2011-12 2011-21 2011-32

5,416.8

ATLANTIC (MILLIONS)

Historical* 2000

FISCAL YEAR

INTERNATIONAL AIR CARGO REVENUE TON MILES BY REGION1, 2

U.S. COMMERCIAL AIR CARRIERS

TABLE 20

4.3% 8.0% 7.0% 6.0%

67,242.7 70,508.6 73,899.4 77,459.6 81,139.0 84,900.4

52,332.1 55,125.3 58,006.7 60,991.5 64,065.2

39,542.3 41,962.0 44,464.9 47,044.9 49,639.3

27,209.0 29,456.5 31,997.8 34,598.5 37,117.3

23,130.0 24,208.9 24,689.7 24,421.5 19,100.2 23,064.5 25,203.3

15,840.5

TOTAL (MILLIONS)

FAA Aerospace Forecast Fiscal Years 2012-2032

3,364 3,308 3,302 3,354 3,170 3,109 3,127 3,112

3,004 3,011 3,034 3,088 3,139 3,171 3,226 3,297 3,351 3,419 3,482 3,569 3,639 3,724 3,795 3,870 3,989 4,060 4,145 4,240 4,325

-0.7% -3.5% 0.9% 1.6%

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

2 ENGINE

CALENDAR YEAR Historical 2000

102 -28.9% 0.0% -7.8% -100.0%

0 0 0 0 0 0

3 1 1 0 0

6 6 5 4 4

9 9 9 9 9

37 26 29 10 9 10 9

385

N/A 0.0% -100.0% -100.0%

0 0 0 0 0 0

0 0 0 0 0

1 1 1 1 0

1 1 1 1 1

0 0 0 1 2 1 1

0

LARGE NARROWBODY 3 ENGINE 4 ENGINE

-1.7% -3.5% 0.9% 1.6%

3,870 3,989 4,060 4,145 4,240 4,325

3,485 3,570 3,640 3,724 3,795

3,178 3,233 3,303 3,356 3,423

3,014 3,021 3,044 3,098 3,149

3,345 3,328 3,383 3,181 3,120 3,138 3,122

3,749

TOTAL

1.1% 4.0% 4.5% 4.1%

914 939 983 1,026 1,064 1,103

763 795 821 853 878

617 649 681 708 737

495 515 533 555 594

466 463 477 470 447 471 476

424

2 ENGINE

-25.1% -28.6% -100.0% -100.0%

0 0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

5 3 1 0 0

29 19 12 9 9 9 7

169

-9.8% 0.0% -16.2% -100.0%

0 0 0 0 0 0

5 2 0 0 0

20 13 11 9 7

41 41 41 41 37

54 49 47 44 42 43 41

120

LARGE WIDEBODY 3 ENGINE 4 ENGINE

PASSENGER JET AIRCRAFT

U.S. MAINLINE AIR CARRIERS

TABLE 21

-2.8% 3.2% 3.6% 3.6%

914 939 983 1,026 1,064 1,103

768 797 821 853 878

637 662 692 717 744

541 559 575 596 631

549 531 536 523 498 523 524

713

TOTAL

-1.8% -2.5% 1.3% 1.9%

4,784 4,928 5,043 5,171 5,304 5,428

4,253 4,367 4,461 4,577 4,673

3,815 3,895 3,995 4,073 4,167

3,555 3,580 3,619 3,694 3,780

3,894 3,859 3,919 3,704 3,618 3,661 3,646

4,462

LARGE JETS

12.3% 4.3% 3.2% 0.3%

120 115 110 105 100 100

127 128 128 128 125

133 137 127 127 127

97 102 110 117 125

12 39 64 91 92 90 93

26

REGIONAL JETS

-1.6% -2.3% 1.4% 1.9%

4,904 5,043 5,153 5,276 5,404 5,528

4,380 4,495 4,589 4,705 4,798

3,948 4,032 4,122 4,200 4,294

3,652 3,682 3,729 3,811 3,905

3,906 3,898 3,983 3,795 3,710 3,751 3,739

4,488

TOTAL JETS

FAA Aerospace Forecast Fiscal Years 2012-2032

166 164 162 162 161 160 153 175

178 188 198 209 221 231 246 266 281 294 308 321 335 345 357 369 381 391 404 415 427

0.5% 1.7% 5.3% 4.3%

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

2 ENGINE

CALENDAR YEAR Historical 2000

103 -10.8% -3.2% -29.1% -100.0%

0 0 0 0 0 0

2 0 0 0 0

26 13 7 5 3

91 79 67 56 43

233 220 162 143 104 104 94

332

-15.7% 0.0% -28.1% -100.0%

0 0 0 0 0 0

0 0 0 0 0

10 8 5 3 1

27 23 18 14 12

90 78 75 68 33 31 27

176

LARGE NARROWBODY 3 ENGINE 4 ENGINE

-7.2% 0.0% 0.1% 1.8%

369 381 391 404 415 427

310 321 335 345 357

267 267 278 289 298

296 290 283 279 276

487 460 399 372 297 288 296

674

TOTAL

5.0% 3.2% 4.8% 3.9%

556 568 582 596 614 631

464 482 502 523 541

373 392 411 430 449

290 297 310 339 356

246 264 276 276 253 265 281

164

2 ENGINE

CARGO JET AIRCRAFT

2.4% 0.0% -1.5% -1.4%

147 147 149 150 152 152

171 168 159 152 145

194 188 185 180 176

204 207 207 205 199

193 208 213 215 209 200 204

158

3.4% 0.0% 0.9% 1.5%

118 121 125 128 132 135

106 109 112 115 118

104 104 105 105 107

98 100 101 103 102

75 80 86 97 82 97 98

68

LARGE WIDEBODY 3 ENGINE 4 ENGINE

U.S. MAINLINE AIR CARRIERS

TABLE 22

3.7% 1.5% 2.3% 2.2%

821 836 856 874 898 918

741 759 773 790 804

671 684 701 715 732

592 604 618 647 657

514 552 575 588 544 562 583

390

TOTAL

-1.7% 1.0% 1.6% 2.0%

1,190 1,217 1,247 1,278 1,313 1,345

1,051 1,080 1,108 1,135 1,161

938 951 979 1,004 1,030

888 894 901 926 933

1,001 1,012 974 960 841 850 879

1,064

TOTAL

FAA Aerospace Forecast Fiscal Years 2012-2032

104

14,221 13,775 13,882 13,397 11,896 11,973 12,036

11,764 11,763 11,778 12,081 12,230 12,344 12,491 12,628 12,786 12,929 13,074 13,245 13,412 13,572 13,755 13,944 14,125 14,303 14,487 14,677 14,863

-2.0% -2.3% 0.7% 1.0%

2005 2006 2007 2008 2009 2010 2011E

Forecast 2 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

1.6% 0.5% 2.6% 2.7%

9,996 10,268 10,543 10,828 11,113 11,401

8,678 8,926 9,185 9,453 9,725

7,533 7,749 7,972 8,203 8,435

6,579 6,705 6,904 7,092 7,312

6,059 6,186 6,309 6,499 6,033 6,290 6,547

5,484

INT'L.

-0.9% -1.3% 1.4% 1.7%

23,940 24,393 24,846 25,315 25,790 26,265

21,752 22,171 22,597 23,025 23,480

19,877 20,240 20,600 20,989 21,364

18,343 18,468 18,682 19,173 19,543

20,281 19,961 20,191 19,896 17,929 18,263 18,583

20,513

TOTAL

3.6% 15.2% 5.0% 3.9%

2,770 2,850 2,940 3,034 3,130 3,230

2,395 2,468 2,543 2,624 2,696

2,058 2,132 2,198 2,268 2,327

1,651 1,747 1,836 1,918 1,992

1,527 1,643 1,486 1,706 1,447 1,435 1,433

972

AVIATION

GENERAL

-0.6% -0.1% 1.7% 1.9%

26,710 27,244 27,787 28,349 28,920 29,495

24,147 24,638 25,140 25,649 26,176

21,936 22,371 22,798 23,257 23,691

19,994 20,215 20,518 21,091 21,534

21,807 21,603 21,676 21,602 19,376 19,698 20,017

21,485

TOTAL

0.0% 0.0% 0.0% 0.0%

2 2 2 2 2 2

2 2 2 2 2

2 2 2 2 2

2 2 2 2 2

2 2 2 2 2 2 2

2

CARRIER

-3.9% -2.0% -0.6% 0.2%

211 214 216 218 220 223

203 204 206 207 209

203 203 203 203 202

210 208 207 205 203

295 283 274 248 227 221 215

333

AVIATION

GENERAL

Forecast assumes 1.5% annual improvement in ASMs/Gallon for U.S. Commercial Air Carrier

2

-3.9% -2.0% -0.6% 0.2%

213 216 218 220 222 225

205 206 208 209 211

205 205 205 205 204

212 210 209 207 205

297 285 276 250 229 223 217

335

TOTAL

AVIATION GASOLINE AIR

* Source: Air carrier jet fuel, Form 41, U.S. Department of Transportation; all others, FAA APO estimates. 1 Includes both passenger (mainline and regional air carrier) and cargo carriers.

15,030

DOMESTIC

JET FUEL U.S. AIR CARRIERS1

Historical* 2000

YEAR

FISCAL

(Millions of Gallons)

U.S. CIVIL AVIATION AIRCRAFT

FUEL

TOTAL

-0.5% -0.1% 1.7% 1.8%

26,923 27,459 28,004 28,569 29,142 29,720

24,351 24,844 25,348 25,858 26,386

22,141 22,576 23,003 23,462 23,894

20,207 20,425 20,727 21,298 21,739

22,104 21,889 21,952 21,852 19,606 19,921 20,233

21,350

CONSUMED

TOTAL JET FUEL AND AVIATION GASOLINE FUEL CONSUMPTION

TABLE 23

FAA Aerospace Forecast Fiscal Years 2012-2032

105

48.6 49.3 49.9 52.9 55.2 56.1 56.4

56.9 57.3 57.8 58.2 58.7 59.1 59.6 60.1 60.5 61.0 61.5 61.9 62.4 62.9 63.4 63.9 64.4 64.9 65.4 65.9 66.4

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

58.3 58.6 58.9 59.2 59.5 59.8

56.8 57.1 57.4 57.7 58.0

55.3 55.6 55.9 56.2 56.5

53.8 54.1 54.4 54.7 55.0

52.4 52.2 54.0 53.4 52.8 53.2 53.5

41.8

63.8 64.3 64.8 65.3 65.8 66.3

61.4 61.9 62.3 62.8 63.3

59.1 59.5 60.0 60.4 60.9

56.8 57.3 57.7 58.2 58.6

48.7 49.4 50.0 53.0 55.1 56.1 56.3

38.5

Avg Annual Growth 2000-11 3.5% 2.3% 3.5% 2011-12 0.9% 0.6% 0.9% 2011-21 0.8% 0.5% 0.8% 2011-32 0.8% 0.5% 0.8% * Source: Form 41 and 298C, U.S. Department of Transportation. ** Reporting carriers.

38.4

FISCAL YEAR Historical* 2000

AVERAGE SEATS PER AIRCRAFT MILE DOMESTIC INT'L. SYSTEM (Seats/Mile) (Seats/Mile) (Seats/Mile)

4.6% 0.4% 0.7% 0.9%

536.9 543.4 549.9 556.5 563.2 569.9

508.8 513.9 519.1 524.3 530.5

486.1 490.0 493.9 498.8 503.8

470.0 474.0 476.1 478.4 482.2

434.7 450.4 451.5 460.8 456.9 464.3 468.3

286.5

6.7% 0.9% 0.9% 0.9%

610.2 615.2 620.2 625.2 630.2 635.2

585.2 590.2 595.2 600.2 605.2

560.2 565.2 570.2 575.2 580.2

535.2 540.2 545.2 550.2 555.2

434.2 467.2 518.1 532.7 512.3 502.9 530.2

260.0

4.6% 0.4% 0.7% 0.9%

538.0 544.4 550.9 557.5 564.1 570.9

509.9 515.0 520.2 525.4 531.6

487.1 491.0 495.0 499.9 504.9

470.9 475.0 477.1 479.4 483.3

434.7 450.7 452.9 462.3 457.8 465.0 469.2

285.5

-5.8% 2.9% 1.7% 1.2%

19.27 19.40 19.54 19.70 19.87 20.04

18.60 18.70 18.85 19.02 19.15

17.91 18.07 18.24 18.36 18.48

16.14 16.44 16.83 17.19 17.58

19.70 19.84 19.95 21.04 17.04 15.64 15.68

30.28

-8.0% 1.0% -0.3% -0.8%

14.19 14.01 13.83 13.67 13.50 13.34

15.04 14.85 14.70 14.56 14.37

15.89 15.71 15.57 15.40 15.22

15.83 15.85 15.89 15.91 15.92

22.70 22.06 21.67 21.88 17.78 16.04 15.68

39.00

REVENUE PER PASSENGER MILE** AVERAGE PASSENGER TRIP LENGTH DOMESTIC INT'L. SYSTEM CURRENT $ 2011$ (Miles) (Miles) (Miles) (Cents) (Cents)

U.S. REGIONAL CARRIER FORECAST ASSUMPTIONS

TABLE 24

FAA Aerospace Forecast Fiscal Years 2012-2032

106

146.4 152.2 156.2 159.1 154.0 161.6 161.3

162.4 163.5 167.4 175.5 181.3 186.0 190.8 195.7 201.0 205.9 211.0 216.6 222.3 227.9 233.7 239.8 245.7 251.7 258.0 264.5 271.0

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

Avg Annual Growth 2000-11 6.6% 2011-12 0.7% 2011-21 2.5% 2011-32 2.5% * Source: Form 41 and 298C, U.S. Department

3.1

79.7

-2.5% 0.7% 2.5% 2.5% of Transportation.

3.5 3.6 3.7 3.8 3.9 4.0

3.1 3.2 3.3 3.4 3.4

2.7 2.8 2.9 3.0 3.0

2.4 2.4 2.5 2.6 2.7

3.3 3.5 3.4 3.5 2.5 2.7 2.4

REVENUE PASSENGERS INTERNATIONAL

DOMESTIC

FISCAL YEAR Historical* 2000

6.4% 0.7% 2.5% 2.5%

243.3 249.3 255.4 261.8 268.4 275.0

214.1 219.8 225.5 231.3 237.2

188.7 193.6 198.6 204.0 209.0

164.8 165.9 169.9 178.1 183.9

149.7 155.7 159.6 162.6 156.6 164.3 163.6

82.8

SYSTEM

(In Millions)

11.5% 1.1% 3.2% 3.5%

128,727 133,511 138,411 143,564 148,941 154,452

107,371 111,333 115,375 119,476 124,014

90,408 93,494 96,668 100,256 103,741

76,337 77,491 79,722 83,973 87,405

63,654 68,532 70,528 73,305 70,374 75,053 75,510

22,825

4.1% 1.7% 3.4% 3.4%

2,156 2,227 2,300 2,377 2,456 2,537

1,820 1,884 1,949 2,016 2,085

1,535 1,589 1,645 1,704 1,760

1,281 1,301 1,345 1,423 1,483

1,417 1,634 1,772 1,867 1,304 1,347 1,260

814

11.3% 1.1% 3.2% 3.5%

130,882 135,739 140,712 145,941 151,397 156,988

109,191 113,217 117,324 121,491 126,099

91,943 95,083 98,312 101,959 105,502

77,618 78,792 81,068 85,396 88,888

65,071 70,166 72,300 75,172 71,678 76,400 76,770

23,639

REVENUE PASSENGER MILES DOMESTIC INTERNATIONAL SYSTEM

SCHEDULED PASSENGER TRAFFIC

U.S. REGIONAL CARRIERS

TABLE 25

FAA Aerospace Forecast Fiscal Years 2012-2032

22,825

38,332 90,028 91,458 93,452 99,469 94,664 98,489 99,062

98,571 99,353 102,159 107,552 111,895 115,688 119,587 123,599 128,140 132,549 137,142 142,159 147,277 152,469 158,220 164,191 170,253 176,461 182,991 189,805 196,789

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

107

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

78.4 78.4 78.4 78.5 78.5 78.5

78.3 78.3 78.3 78.4 78.4

78.1 78.2 78.2 78.2 78.3

77.4 78.0 78.0 78.1 78.1

70.7 74.9 75.5 73.7 74.3 76.2 76.2

59.5

% LOAD FACTOR

Avg Annual Growth 2000-11 9.0% 11.5% 2.3% 2011-12 -0.5% 1.1% 1.6% 2011-21 3.0% 3.2% 0.3% 2011-32 3.3% 3.5% 0.1% * Source: Form 41 and 298C, U.S. Department of Transportation.

128,727 133,511 138,411 143,564 148,941 154,452

107,371 111,333 115,375 119,476 124,014

90,408 93,494 96,668 100,256 103,741

76,337 77,491 79,722 83,973 87,405

63,654 68,532 70,528 73,305 70,374 75,053 75,510

DOMESTIC RPMs (MIL)

ASMs (MIL)

FISCAL YEAR Historical* 2000

2.7% 1.0% 2.7% 2.8%

2,785 2,868 2,953 3,047 3,144 3,243

2,413 2,482 2,551 2,621 2,702

2,106 2,165 2,225 2,289 2,350

1,819 1,835 1,884 1,979 2,048

2,213 2,387 2,550 2,632 1,859 1,857 1,802

1,338

ASMs (MIL)

4.1% 1.7% 3.4% 3.4%

2,156 2,227 2,300 2,377 2,456 2,537

1,820 1,884 1,949 2,016 2,085

1,535 1,589 1,645 1,704 1,760

1,281 1,301 1,345 1,423 1,483

1,417 1,634 1,772 1,867 1,304 1,347 1,260

814

1.3% 0.7% 0.7% 0.5%

77.4 77.7 77.9 78.0 78.1 78.2

75.4 75.9 76.4 76.9 77.2

72.9 73.4 73.9 74.4 74.9

70.4 70.9 71.4 71.9 72.4

64.0 68.5 69.5 70.9 70.2 72.5 69.9

60.8

INTERNATIONAL RPMs % LOAD (MIL) FACTOR

8.9% -0.5% 3.0% 3.3%

166,976 173,122 179,414 186,038 192,950 200,033

139,555 144,641 149,828 155,090 160,921

117,794 121,752 125,825 130,429 134,899

100,391 101,189 104,043 109,531 113,943

92,240 93,845 96,002 102,101 96,523 100,346 100,864

39,670

ASMs (MIL)

11.3% 1.1% 3.2% 3.5%

130,882 135,739 140,712 145,941 151,397 156,988

109,191 113,217 117,324 121,491 126,099

91,943 95,083 98,312 101,959 105,502

77,618 78,792 81,068 85,396 88,888

65,071 70,166 72,300 75,172 71,678 76,400 76,770

23,639

SYSTEM RPMs (MIL)

SCHEDULED PASSENGER CAPACITY, TRAFFIC, AND LOAD FACTORS

U.S. REGIONAL CARRIERS

TABLE 26

2.3% 1.6% 0.3% 0.1%

78.4 78.4 78.4 78.4 78.5 78.5

78.2 78.3 78.3 78.3 78.4

78.1 78.1 78.1 78.2 78.2

77.3 77.9 77.9 78.0 78.0

70.5 74.8 75.3 73.6 74.3 76.1 76.1

59.6

% LOAD FACTOR

FAA Aerospace Forecast Fiscal Years 2012-2032

108

457 430 399 372 327 317 307 296 286 274 260 248 237 223 210 201 188 177 165 155 143

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

-11.1% -8.5% -4.4% -5.1%

44 41 39 36 34 31

57 54 52 49 46

72 69 66 63 60

86 84 81 78 75

-11.7% -6.0% -4.1% -5.0%

32 30 28 26 25 23

42 40 38 36 34

52 50 48 46 44

63 61 59 57 55

99 88 79 68 65 82 67

262

20 TO 30 SEATS

-12.2% 0.0% -1.8% -3.9%

69 65 61 57 53 49

89 85 81 76 72

105 103 100 98 94

113 112 110 108 106

253 224 228 180 153 144 113

474

PROP

-10.8% -71.4% -100.0% -100.0%

0 0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

6 6 3 0 0

96 92 91 25 29 28 21

74

-12.0% -11.2% -3.5% -4.7%

69 65 61 57 53 49

89 85 81 76 72

105 103 100 98 94

119 118 113 108 106

349 316 319 205 182 172 134

548

-3.5% 6.7% 6.9% 5.4%

266 276 287 297 307 318

216 226 235 246 257

160 171 184 195 205

112 118 128 139 150

81 87 101 121 115 99 105

155

PROP

REGIONAL AIRCRAFT 31 TO 40 SEATS JET TOTAL

*Source: The Velocity Group for the Regional Airline Association through 2004. **Independence Air A319 aircraft are included in Table 20 - U.S. Mainline Air Carriers Passenger Jet Aircraft.

0.2% -5.0% -5.5% -5.6%

449 453 453 451 466 440 481

2005 2006 2007 2008 2009 2010 2011E

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

343

470 220 204 172 107 103 92 94

10 TO 19 SEATS

LESS THAN 9 SEATS

AS OF JANUARY 1 Historical* 2000

PASSENGER AIRCRAFT

U.S. REGIONAL CARRIERS

TABLE 27

11.8% 1.5% 0.9% 1.7%

2,024 2,097 2,172 2,250 2,335 2,416

1,841 1,852 1,867 1,905 1,959

1,836 1,839 1,832 1,832 1,837

1,711 1,746 1,806 1,860 1,835

1,581 1,584 1,656 1,730 1,722 1,728 1,686

496

9.6% 1.8% 1.3% 2.0%

2,290 2,373 2,459 2,547 2,642 2,734

2,057 2,078 2,102 2,151 2,216

1,996 2,010 2,016 2,027 2,042

1,823 1,864 1,934 1,999 1,985

1,662 1,671 1,757 1,851 1,837 1,827 1,791

651

OVER 40 SEATS JET** TOTAL

-6.0% -3.4% -2.4% -2.0%

612 600 592 581 574 564

664 653 643 630 619

706 700 694 688 677

831 805 777 754 713

1,102 1,056 1,033 927 902 857 860

1,704

NON JET

10.5% 0.6% 0.7% 1.7%

2,024 2,097 2,172 2,250 2,335 2,416

1,841 1,852 1,867 1,905 1,959

1,836 1,839 1,832 1,832 1,837

1,717 1,752 1,809 1,860 1,835

1,677 1,676 1,747 1,755 1,751 1,756 1,707

570

1.1% -0.7% -0.2% 0.7%

2,636 2,697 2,764 2,831 2,909 2,980

2,505 2,505 2,510 2,535 2,578

2,542 2,539 2,526 2,520 2,514

2,548 2,557 2,586 2,614 2,548

2,779 2,732 2,780 2,682 2,653 2,613 2,567

2,274

TOTAL FLEET JET TOTAL

FAA Aerospace Forecast Fiscal Years 2012-2032

148,101 145,036 147,569 145,497 140,649 139,519 138,560

137,600 136,650 135,790 135,010 134,285

133,650 133,090 132,645 132,335 132,125

132,010 131,975 132,015 132,150 132,370

132,660 133,020 133,470 134,000 134,625 135,340

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

109

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

147,340 147,630 148,010 148,470 149,030 149,690

147,020 146,910 146,890 146,965 147,115

149,075 148,430 147,905 147,510 147,215

153,335 152,310 151,405 150,580 149,785

167,513 163,744 166,906 163,012 157,123 155,419 154,370

170,513

TOTAL

10,860 10,975 11,090 11,205 11,320 11,445

10,300 10,400 10,515 10,625 10,740

9,870 9,950 10,030 10,120 10,205

9,505 9,570 9,645 9,720 9,795

7,942 8,063 9,514 8,907 9,055 9,369 9,430

5,762

PROP

TURBO

FIXED WING

21,760 22,700 23,690 24,730 25,805 26,935

17,620 18,370 19,170 20,020 20,865

14,470 15,060 15,650 16,265 16,915

12,050 12,410 12,835 13,340 13,880

9,823 10,379 10,385 11,042 11,268 11,484 11,760

7,001

JET

TURBO

TURBINE

32,620 33,675 34,780 35,935 37,125 38,380

27,920 28,770 29,685 30,645 31,605

24,340 25,010 25,680 26,385 27,120

21,555 21,980 22,480 23,060 23,675

17,765 18,442 19,899 19,949 20,323 20,853 21,190

12,763

TOTAL

5,180 5,285 5,390 5,495 5,600 5,705

4,680 4,775 4,875 4,975 5,075

4,250 4,335 4,420 4,505 4,590

3,780 3,875 3,975 4,075 4,165

3,039 3,264 2,769 3,498 3,499 3,588 3,685

2,680

10,965 11,275 11,590 11,905 12,225 12,550

9,465 9,745 10,040 10,345 10,650

8,180 8,435 8,685 8,940 9,200

6,940 7,165 7,415 7,675 7,930

5,689 5,895 6,798 6,378 6,485 6,514 6,725

4,470

TURBINE 7,150

TOTAL

16,145 16,560 16,980 17,400 17,825 18,255

14,145 14,520 14,915 15,320 15,725

12,430 12,770 13,105 13,445 13,790

10,720 11,040 11,390 11,750 12,095

8,728 9,159 9,567 9,876 9,984 10,102 10,410

ROTORCRAFT PISTON

Avg Annual Growth 2000-11 -0.7% -2.6% -0.9% 4.6% 4.8% 4.7% 2.9% 3.8% 3.5% 2011-12 -0.7% -0.5% -0.7% 0.8% 2.5% 1.7% 2.6% 3.2% 3.0% 2011-21 -0.5% -0.5% -0.5% 0.8% 3.7% 2.5% 2.2% 3.2% 2.9% 2011-32 -0.1% -0.5% -0.1% 0.9% 4.0% 2.9% 2.1% 3.0% 2.7% * Source: 2000-2010, FAA General Aviation and Air Taxi Activity (and Avionics) Surveys. Note: An active aircraft is one that has a current registration and was flown at least one hour during the calendar year.

14,680 14,610 14,540 14,470 14,405 14,350

15,010 14,935 14,875 14,815 14,745

15,425 15,340 15,260 15,175 15,090

15,735 15,660 15,615 15,570 15,500

19,412 18,708 19,337 17,515 16,474 15,900 15,810

21,091

149,422

MULTIENGINE

SINGLE

ENGINE

AS OF

DEC. 31 Historical* 2000

PISTON SPORT

1.6% 1.1% 1.3% 1.2%

29,480 29,815 30,145 30,480 30,810 31,140

27,825 28,155 28,490 28,820 29,150

26,165 26,500 26,830 27,160 27,490

24,480 24,810 25,170 25,500 25,835

23,627 23,047 23,228 23,364 24,419 24,784 24,225

20,407

NA 4.3% 2.5% 2.1%

9,410 9,570 9,725 9,880 10,040 10,195

8,630 8,785 8,940 9,100 9,255

7,845 8,000 8,160 8,315 8,470

6,930 7,180 7,365 7,530 7,690

170 1,273 6,066 6,811 6,547 6,528 6,645

NA

MENTAL AIRCRAFT

EXPERI-

-1.5% -0.2% -0.1% -0.1%

5,575 5,570 5,560 5,555 5,550 5,545

5,605 5,600 5,590 5,585 5,580

5,635 5,630 5,625 5,615 5,610

5,670 5,665 5,655 5,650 5,640

6,454 6,277 5,940 5,652 5,480 5,684 5,680

6,700

OTHER

ACTIVE GENERAL AVIATION AND AIR TAXI AIRCRAFT

TABLE 28

TOTAL

0.2% 0.1% 0.3% 0.6%

240,570 242,820 245,200 247,720 250,380 253,205

231,145 232,740 234,510 236,435 238,430

225,490 226,340 227,305 228,430 229,695

222,690 222,985 223,465 224,070 224,720

224,257 221,942 231,606 228,664 223,876 223,370 222,520

217,533

FLEET

AVIATION

GENERAL TOTAL

-0.8% -0.6% -0.4% -0.1%

152,520 152,915 153,400 153,965 154,630 155,395

151,700 151,685 151,765 151,940 152,190

153,325 152,765 152,325 152,015 151,805

157,115 156,185 155,380 154,655 153,950

170,552 167,008 169,675 166,510 160,622 159,007 158,055

173,193

PISTONS

TOTAL

4.5% 2.1% 2.7% 2.9%

43,585 44,950 46,370 47,840 49,350 50,930

37,385 38,515 39,725 40,990 42,255

32,520 33,445 34,365 35,325 36,320

28,495 29,145 29,895 30,735 31,605

23,454 24,337 26,697 26,327 26,808 27,367 27,915

17,233

TURBINES

FAA Aerospace Forecast Fiscal Years 2012-2032

13,739 13,976 13,571 12,746 11,730 12,161 11,841

11,391 11,091 10,820 10,594 10,409

10,285 10,205 10,150 10,125 10,092

10,124 10,159 10,247 10,391 10,545

10,708 10,866 10,997 11,145 11,300 11,467

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

110

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

12,404 12,574 12,717 12,874 13,044 13,227

11,790 11,827 11,920 12,066 12,229

11,974 11,882 11,817 11,792 11,758

13,167 12,849 12,564 12,322 12,112

2,841 2,859 2,879 2,897 2,912 2,930

2,745 2,762 2,782 2,802 2,822

2,624 2,657 2,685 2,704 2,723

2,409 2,471 2,523 2,554 2,591

2,106 2,162 2,661 2,457 2,215 2,325 2,324

1,986

8,044 8,381 8,753 9,149 9,557 9,987

6,516 6,802 7,102 7,420 7,726

5,321 5,558 5,774 6,009 6,251

4,037 4,330 4,605 4,865 5,106

3,771 4,077 3,938 3,600 3,161 3,375 3,394

2,755

10,885 11,239 11,632 12,046 12,469 12,917

9,261 9,564 9,884 10,222 10,548

7,945 8,215 8,459 8,713 8,975

6,445 6,801 7,128 7,419 7,697

5,877 6,240 6,600 6,057 5,376 5,700 5,718

4,741

1,149 1,174 1,200 1,225 1,250 1,275

1,028 1,051 1,075 1,099 1,124

924 944 965 986 1,006

812 834 858 881 903

617 918 704 751 755 794 789

530

3,852 3,963 4,076 4,191 4,313 4,438

3,336 3,431 3,531 3,636 3,742

2,903 2,988 3,071 3,156 3,242

2,550 2,611 2,674 2,739 2,819

2,439 2,528 2,541 2,470 2,248 2,611 2,561

1,661

5,001 5,137 5,275 5,416 5,563 5,714

4,364 4,482 4,606 4,736 4,866

3,827 3,932 4,036 4,142 4,248

3,362 3,445 3,532 3,620 3,722

3,056 3,446 3,245 3,222 3,003 3,405 3,350

2,191

ROTORCRAFT PISTON TURBINE TOTAL

1,913 1,944 1,975 2,007 2,039 2,071

1,761 1,791 1,821 1,851 1,882

1,591 1,627 1,664 1,702 1,731

1,236 1,315 1,401 1,462 1,525

1,339 1,218 1,275 1,155 1,286 1,226 1,211

1,307

EXPERIMENTAL

Avg Annual Growth 2000-11 -3.8% -5.7% -4.1% 1.4% 1.9% 1.7% 3.7% 4.0% 3.9% -0.7% 2011-12 -3.8% -0.2% -3.3% 3.6% 18.9% 12.7% 2.8% -0.4% 0.4% 2.1% 2011-21 -1.6% -0.7% -1.5% 1.6% 6.3% 4.6% 2.5% 2.4% 2.4% 3.6% 2011-32 -0.2% -0.1% -0.1% 1.1% 5.3% 4.0% 2.3% 2.7% 2.6% 2.6% * Source: 2000-2010, FAA General Aviation and Air Taxi Activity (and Avionics) Surveys. Note: An active aircraft is one that has a current registration and was flown at least one hour during the previous calendar year.

1,696 1,709 1,719 1,729 1,743 1,760

1,667 1,668 1,673 1,675 1,684

1,689 1,678 1,668 1,667 1,665

1,776 1,758 1,744 1,728 1,703

2,677 2,550 2,686 2,328 1,903 1,818 1,780

16,416 16,525 16,257 15,074 13,634 13,979 13,621

21,489

18,089

3,400

TOTAL

CALENDAR YEAR Historical* 2000

TURBINE TURBO TURBO PROP JET TOTAL

FIXED WING

PISTON SINGLE MULTIENGINE ENGINE

(In Thousands)

NA 6.3% 4.4% 3.5%

574 590 605 621 637 654

501 515 530 544 559

421 438 455 473 487

337 356 372 388 404

9 66 260 293 286 311 317

NA

SPORT AIRCRAFT

-6.4% 0.4% 0.4% 0.4%

193 193 194 195 196 197

189 190 190 191 192

185 186 187 188 188

182 183 183 184 185

267 211 215 209 178 181 181

374

OTHER

ACTIVE GENERAL AVIATION AND AIR TAXI HOURS FLOWN

TABLE 29

-1.9% 1.4% 1.2% 1.7%

30,970 31,678 32,398 33,159 33,948 34,779

27,866 28,368 28,951 29,610 30,276

25,943 26,281 26,619 27,009 27,387

24,728 24,949 25,180 25,396 25,645

26,964 27,705 27,852 26,009 23,763 24,802 24,397

30,102

TOTAL GENERAL AVIATION HOURS

-3.8% -3.0% -1.2% 0.0%

13,553 13,749 13,916 14,099 14,294 14,502

12,819 12,878 12,995 13,165 13,353

12,898 12,827 12,782 12,777 12,764

13,978 13,683 13,422 13,204 13,015

17,032 17,443 16,962 15,825 14,389 14,773 14,410

22,019

TOTAL PISTONS

2.4% 8.7% 4.0% 3.6%

14,737 15,202 15,707 16,237 16,782 17,355

12,597 12,995 13,415 13,858 14,290

10,848 11,203 11,530 11,868 12,216

8,996 9,413 9,802 10,158 10,516

8,316 8,767 9,141 8,527 7,624 8,311 8,279

6,402

TOTAL TURBINES

FAA Aerospace Forecast Fiscal Years 2012-2032

111 113,830 114,430 114,965 115,520 116,100 116,720

2027 2028 2029 2030 2031 2032

220 220 220 220 220 220

225 225 225 225 220

230 230 230 230 225

230 230 230 230 230

11,100 11,600 12,150 12,700 13,300 13,900

8,800 9,200 9,650 10,100 10,600

6,850 7,200 7,600 8,000 8,400

4,800 5,550 5,850 6,150 6,500

134 939 2,031 2,623 3,248 3,682 4,066

N/A

SPORT PILOT

194,300 195,400 196,300 197,350 198,250 199,300

189,600 190,300 191,250 192,250 193,250

189,250 188,850 188,750 188,800 189,100

193,000 192,200 191,300 190,550 189,800

228,619 219,233 211,096 222,596 211,619 202,020 194,441

251,561

PRIVATE

124,450 125,450 126,500 127,600 128,800 130,100

120,650 121,250 122,000 122,750 123,550

119,050 119,200 119,450 119,750 120,150

119,200 114,250 118,600 118,950 119,000

120,614 117,610 115,127 124,746 125,738 123,705 120,865

121,858

COMMERCIAL

154,700 155,700 156,800 158,000 159,100 160,300

149,800 150,700 151,600 152,600 153,600

145,900 146,600 147,400 148,100 148,900

142,500 143,100 143,700 144,500 145,200

141,992 141,935 143,953 146,838 144,600 142,198 142,511

141,596

AIRLINE TRANSPORT

23,900 24,750 25,600 26,450 27,350 28,250

20,100 20,800 21,550 22,300 23,100

16,955 17,550 18,150 18,800 19,450

15,225 15,365 15,630 16,000 16,445

9,518 10,690 12,290 14,647 15,298 15,377 15,220

7,775

ROTORCRAFT ONLY

21,645 21,680 21,700 21,735 21,770 21,805

21,480 21,520 21,535 21,570 21,610

21,315 21,350 21,390 21,405 21,445

21,165 21,200 21,220 21,260 21,275

21,369 21,597 21,274 21,055 21,268 21,275 21,141

9,387

GLIDER ONLY

644,145 649,230 654,235 659,575 664,890 670,595

622,515 625,955 630,035 634,480 639,160

612,315 613,350 615,075 617,035 619,490

613,460 608,035 611,580 611,755 611,785

609,737 597,109 590,349 613,746 594,285 627,588 617,128

625,581

TOTAL PILOTS

489,445 493,530 497,435 501,575 505,790 510,295

472,715 475,255 478,435 481,880 485,560

466,415 466,750 467,675 468,935 470,590

470,960 464,935 467,880 467,255 466,585

467,745 455,174 446,396 466,908 449,685 485,390 474,617

483,985

TOTAL LESS AT PILOTS

Avg Annual Growth 2000-11 2.2% -3.6% NA -2.3% -0.1% 0.1% 6.3% 7.7% -0.1% -0.2% 2011-12 -1.1% 1.3% 18.1% -0.7% -1.4% 0.0% 0.0% 0.1% -0.6% -0.8% 2011-21 -0.6% -0.1% 7.5% -0.3% -0.1% 0.4% 2.5% 0.1% 0.0% -0.1% 2011-32 -0.1% -0.1% 6.0% 0.1% 0.4% 0.6% 3.0% 0.1% 0.4% 0.3% * Source: FAA U.S. Civil Airmen Statistics. 1 Instrument rated pilots should not be added to other categories in deriving total. 2 In July 2010, the FAA issued a rule that increased the duration of validity for student pilot certificates for pilots under the age of 40 from 36 to 60 months. This resulted in the increase in active student pilots to 119,119 from 72,280 at the end of 2009. Note: An active pilot is a person with a pilot certificate and a valid medical certificate.

111,860 111,960 112,225 112,685 113,230

2022 2023 2024 2025 2026

117,340 116,140 115,050 114,115 113,335

Forecast 2012 2013 2014 2015 2016 112,765 112,370 112,105 111,950 111,820

87,213 84,866 84,339 80,989 72,280 119,119 118,657

2005 2006 2007 2008 2009 2010 2011

2017 2018 2019 2020 2021

93,064

2

340

STUDENTS

278 239 239 252 234 212 227

RECREATIONAL

AS OF DEC. 31 Historical* 2000

ACTIVE PILOTS BY TYPE OF CERTIFICATE

TABLE 30

0.1% -0.5% 0.2% 0.4%

329,400 331,250 333,200 335,300 337,450 339,700

321,150 322,650 324,200 325,850 327,600

314,900 316,050 317,250 318,500 319,750

312,550 312,100 312,300 312,950 313,850

311,500 309,333 309,865 325,247 323,495 318,001 314,122

311,944

INSTRUMENT RATED PILOTS1

FAA Aerospace Forecast Fiscal Years 2012-2032

112

173.1 164.9 157.6 143.0 132.3 133.1 129.0

124.1 120.8 117.9 114.8 112.8 111.5 110.6 110.0 109.2 107.7 108.1 108.4 109.4 109.8 110.3 111.5 112.6 113.3 114.3 115.3 116.4

2005 2006 2007 2008 2009 2010 2011E

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

49.5 49.9 50.2 50.5 50.9 51.3

48.6 48.7 48.8 48.9 49.1

49.8 49.4 49.1 49.1 48.6

52.3 51.8 51.7 51.2 50.2

89.7 79.9 83.0 69.5 57.1 53.9 52.4

108.4

217.5 218.8 220.4 221.7 223.0 224.3

214.4 215.8 217.3 218.9 218.2

208.1 210.7 212.9 213.3 212.7

194.9 197.9 202.1 204.5 205.4

196.1 190.1 205.2 230.4 208.7 187.1 188.0

176.3

2,384.3 2,459.4 2,542.8 2,631.5 2,721.3 2,815.2

2,031.0 2,098.9 2,169.5 2,244.0 2,313.4

1,717.8 1,785.3 1,845.6 1,911.0 1,968.1

1,336.3 1,426.3 1,509.2 1,586.6 1,656.7

1,181.3 1,303.9 1,148.0 1,313.2 1,104.6 1,122.9 1,123.6

736.7

Avg Annual Growth 2000-11 -3.9% -6.4% 0.6% 3.9% 2011-12 -3.8% -0.2% 3.6% 18.9% 2011-21 -1.8% -0.8% 1.2% 5.8% 2011-32 -0.5% -0.1% 0.8% 4.5% *Source: FAA APO Estimates. Note: Detail may not add to total because of independent rounding.

200.8

CALENDAR YEAR Historical* 2000

FIXED WING TURBINE PISTON SINGLE MULTITURBOTURBOENGINE ENGINE PROP JET

2.1% 1.8% 2.2% 2.2%

14.9 15.2 15.6 15.9 16.2 16.5

13.4 13.7 14.0 14.3 14.6

12.1 12.4 12.6 12.9 13.1

10.7 11.0 11.2 11.5 11.8

14.6 16.7 9.3 10.7 10.7 10.7 10.5

8.4

6.8% -1.4% 1.8% 2.2%

168.2 172.2 177.1 180.3 185.5 190.9

149.4 152.9 156.5 161.2 164.2

132.6 135.8 139.6 143.5 145.9

120.1 122.3 124.7 127.0 129.4

149.2 148.6 132.4 162.1 133.6 124.8 121.8

59.0

ROTORCRAFT PISTON TURBINE

(In Millions of Gallons)

3.1% 2.1% 3.4% 2.4%

32.7 33.2 33.7 34.3 34.8 35.4

30.4 30.9 31.4 31.9 32.1

27.7 28.4 29.0 29.7 29.9

21.7 23.1 24.5 25.6 26.6

17.7 21.6 22.6 23.3 25.8 21.6 21.3

15.2

EXPERIMENTAL/ OTHER

n/a 5.8% 4.1% 3.3%

2.6 2.7 2.7 2.8 2.9 3.0

2.3 2.4 2.4 2.5 2.5

1.9 2.0 2.1 2.2 2.2

1.6 1.7 1.7 1.8 1.9

0.0 0.3 1.2 1.5 1.4 1.5 1.5

NA

SPORT

-3.9% -2.0% -0.6% 0.2%

211.1 213.5 215.5 217.7 220.1 222.6

202.8 204.1 206.0 207.4 208.7

203.0 202.8 202.9 203.1 201.5

210.5 208.4 207.0 205.0 203.3

295.0 283.4 273.6 248.1 227.4 220.7 214.8

332.8

3.6% 15.2% 5.0% 3.9%

2,770.1 2,850.4 2,940.3 3,033.5 3,129.7 3,230.4

2,394.8 2,467.5 2,543.4 2,624.0 2,695.8

2,058.5 2,131.9 2,198.1 2,267.8 2,326.7

1,651.2 1,746.5 1,835.9 1,918.2 1,991.6

1,526.7 1,642.6 1,485.6 1,705.7 1,447.0 1,434.8 1,433.4

972.0

2.1% 13.0% 4.4% 3.6%

2,981.2 3,063.9 3,155.8 3,251.3 3,349.8 3,453.1

2,597.5 2,671.6 2,749.4 2,831.5 2,904.5

2,261.5 2,334.7 2,401.0 2,470.8 2,528.3

1,861.7 1,954.9 2,042.9 2,123.1 2,194.8

1,821.7 1,926.0 1,759.2 1,953.8 1,674.4 1,655.6 1,648.1

1,304.8

TOTAL FUEL CONSUMED JET AVGAS FUEL TOTAL

GENERAL AVIATION AIRCRAFT FUEL CONSUMPTION

TABLE 31

FAA Aerospace Forecast Fiscal Years 2012-2032

113

12,887.3 13,180.5 13,547.8 13,924.2 14,286.7

14,565.3 14,849.6 15,137.8 15,432.3 15,733.3

16,037.1 16,347.8 16,665.6 16,990.8 17,323.5

17,663.9 18,012.2 18,368.7 18,733.6 19,107.1 19,489.7

Forecast 2012 2013 2014 2015 2016

2017 2018 2019 2020 2021

2022 2023 2024 2025 2026

2027 2028 2029 2030 2031 2032

* Source: FAA Air Traffic Activity.

-1.5% 0.2% 2.0% 2.0%

13,533.6 13,256.3 13,611.2 13,780.1 12,836.4 12,657.6 12,866.0

2005 2006 2007 2008 2009 2010 2011E

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

10,760.5

15,158.7

-1.3% -0.7% 1.5% 1.5%

11,763.3 11,950.8 12,142.3 12,338.0 12,538.0 12,742.3

10,883.1 11,051.8 11,224.1 11,400.0 11,579.7

10,087.1 10,242.4 10,397.6 10,556.1 10,717.9

9,217.2 9,349.2 9,549.9 9,745.6 9,935.1

12,550.5 11,967.6 11,667.3 11,032.1 9,520.8 9,410.4 9,278.5

AIR TAXI/ COMMUTER

AIR CARRIER

FISCAL YEAR Historical* 2000

-4.0% -2.0% 0.2% 0.3%

15,120.7 15,184.1 15,248.2 15,312.8 15,378.0 15,443.9

14,812.5 14,873.0 14,934.0 14,995.7 15,057.9

14,518.0 14,575.8 14,634.2 14,693.1 14,752.5

14,235.6 14,290.8 14,347.6 14,403.9 14,460.7

19,303.2 18,707.1 18,575.2 17,492.7 15,571.1 14,863.9 14,527.9

22,844.1

-3.6% -2.5% 0.2% 0.4%

12,008.4 12,069.8 12,131.8 12,194.4 12,257.6 12,321.5

11,710.4 11,768.9 11,827.9 11,887.5 11,947.6

11,426.5 11,482.2 11,538.5 11,595.2 11,652.5

11,155.6 11,208.9 11,262.6 11,316.8 11,371.4

14,843.6 14,365.4 14,556.8 14,081.2 12,448.0 11,716.3 11,437.0

17,034.4

-3.8% -2.2% 0.2% 0.3%

27,129.1 27,253.9 27,380.0 27,507.2 27,635.6 27,765.4

26,522.9 26,641.9 26,761.9 26,883.2 27,005.5

25,944.5 26,058.0 26,172.7 26,288.3 26,405.0

25,391.2 25,499.7 25,610.2 25,720.7 25,832.1

34,146.8 33,072.5 33,132.0 31,573.8 28,019.0 26,580.1 25,964.9

39,878.5

GENERAL AVIATION ITINERANT LOCAL TOTAL

-0.8% 0.0% 0.0% 0.0%

1,318.7 1,318.7 1,318.7 1,318.6 1,318.6 1,318.6

1,318.8 1,318.8 1,318.8 1,318.7 1,318.7

1,318.9 1,318.9 1,318.8 1,318.8 1,318.8

1,319.0 1,319.0 1,318.9 1,318.9 1,318.9

1,414.5 1,358.4 1,313.9 1,285.0 1,305.2 1,309.0 1,319.0

1,439.8

ITINERANT

(In Thousands)

-0.9% 0.0% 0.0% 0.0%

1,311.2 1,311.2 1,311.2 1,311.2 1,311.2 1,311.1

1,311.2 1,311.2 1,311.2 1,311.2 1,311.2

1,311.3 1,311.3 1,311.2 1,311.2 1,311.2

1,311.3 1,311.3 1,311.3 1,311.3 1,311.3

1,449.2 1,417.3 1,405.7 1,245.6 1,280.4 1,297.9 1,311.3

1,448.2

MILITARY LOCAL

-0.8% 0.0% 0.0% 0.0%

2,629.9 2,629.9 2,629.8 2,629.8 2,629.8 2,629.8

2,630.0 2,630.0 2,630.0 2,629.9 2,629.9

2,630.2 2,630.1 2,630.1 2,630.1 2,630.0

2,630.3 2,630.3 2,630.2 2,630.2 2,630.2

2,863.7 2,775.7 2,719.5 2,530.6 2,585.5 2,606.9 2,630.3

2,888.0

TOTAL

WITH FAA AND CONTRACT TRAFFIC CONTROL SERVICE

TOTAL

-2.7% -1.2% 0.9% 1.0%

59,186.1 59,846.8 60,520.8 61,208.6 61,910.5 62,627.2

56,073.1 56,671.4 57,281.6 57,903.9 58,538.6

53,227.0 53,780.1 54,338.2 54,906.7 55,486.3

50,126.0 50,659.6 51,338.1 52,020.7 52,684.1

63,094.6 61,072.1 61,130.0 58,916.6 52,961.7 51,255.0 50,739.8

68,685.7

TOTAL COMBINED AIRCRAFT OPERATIONS AT AIRPORTS

TABLE 32

264 264 264 264 264 264

264 264 264 264 264

264 264 264 264 264

264 264 264 264 264

264 263 264 264 264 264 264

266

248 248 248 248 248 248

248 248 248 248 248

248 248 248 248 248

248 248 248 248 248

229 231 235 239 244 244 248

192

NUMBER OF TOWERS FAA CONTRACT

FAA Aerospace Forecast Fiscal Years 2012-2032

114

13,088.0 13,387.7 13,763.2 14,148.0 14,518.4 14,802.9 15,093.3 15,387.7 15,688.5 15,996.0 16,306.2 16,623.3 16,947.7 17,279.5 17,619.0 17,966.1 18,321.2 18,684.4 19,055.9 19,435.9 19,824.9

Forecast 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

* Source: FAA Air Traffic Activity.

-2.0% 0.2% 2.0% 2.0%

14,123.4 13,963.3 14,366.0 14,443.0 13,302.3 13,174.3 13,068.0

2005 2006 2007 2008 2009 2010 2011E

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

11,197.7

16,395.0

-1.6% -1.2% 1.5% 1.6%

11,902.5 12,098.9 12,299.7 12,504.9 12,714.7 12,929.1

10,981.7 11,158.0 11,338.1 11,522.2 11,710.3

10,150.0 10,312.7 10,474.7 10,640.1 10,809.1

9,241.5 9,373.8 9,584.5 9,791.2 9,991.0

12,751.1 12,035.7 11,675.8 11,048.3 9,622.8 9,511.3 9,349.4

AIR TAXI/ COMMUTER

AIR CARRIER

FISCAL YEAR Historical* 2000

-3.9% -2.8% 0.1% 0.3%

13,950.1 14,008.2 14,066.8 14,125.9 14,185.5 14,245.7

13,666.6 13,722.4 13,778.6 13,835.3 13,892.5

13,394.5 13,448.0 13,502.0 13,556.4 13,611.3

13,128.7 13,182.7 13,236.4 13,288.7 13,341.4

17,388.9 17,005.3 16,747.4 15,763.0 14,151.1 13,863.6 13,503.1

20,799.2

GENERAL AVIATION

(In Thousands)

-3.4% -0.2% 0.0% 0.0%

2,369.5 2,369.4 2,369.4 2,369.3 2,369.3 2,369.2

2,369.8 2,369.7 2,369.7 2,369.6 2,369.5

2,370.0 2,370.0 2,369.9 2,369.9 2,369.8

2,370.3 2,370.2 2,370.2 2,370.1 2,370.1

2,798.7 2,669.9 2,498.7 2,399.5 2,398.8 2,437.5 2,374.6

3,466.9

MILITARY

TOTAL TRACON OPERATIONS

TABLE 33

-2.7% -1.2% 1.1% 1.2%

46,188.1 46,797.7 47,420.3 48,056.0 48,705.4 49,368.9

43,324.2 43,873.4 44,434.1 45,006.6 45,591.3

40,717.5 41,224.0 41,734.3 42,254.9 42,786.2

37,828.5 38,314.4 38,954.2 39,598.0 40,220.8

47,062.1 45,674.2 45,288.0 43,653.8 39,474.9 38,986.7 38,295.2

51,858.8

TOTAL

FAA Aerospace Forecast Fiscal Years 2012-2032

115

23,539.4 24,218.4 24,970.5 25,815.1 26,610.7 27,281.6 27,949.6 28,636.0 29,329.3 30,042.4 30,765.2 31,510.0 32,275.0 33,060.2 33,867.8 34,699.2 35,548.8 36,423.5 37,324.0 38,251.3 39,206.3

Forecast 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

* Source: FAA Air Traffic Activity.

-0.6% 0.5% 2.5% 2.5%

25,004.6 24,394.5 25,006.2 23,895.3 22,406.8 22,341.5 23,431.7

2005 2006 2007 2008 2009 2010 2011E

Avg Annual Growth 2000-11 2011-12 2011-21 2011-32

8,100.9

24,987.0

1.0% -0.7% 1.7% 1.8%

11,847.2 12,077.0 12,312.4 12,553.7 12,801.0 13,054.7

10,808.8 11,005.8 11,206.9 11,415.5 11,628.8

9,906.1 10,075.0 10,247.0 10,424.6 10,616.6

8,944.8 9,108.6 9,298.9 9,509.8 9,731.9

10,053.9 9,436.7 9,652.9 10,179.0 8,561.8 8,623.8 9,010.4

AIR TAXI/ COMMUTER

AIR CARRIER

FISCAL YEAR Historical* 2000

-2.6% -1.4% 0.5% 0.8%

7,277.7 7,352.1 7,430.9 7,514.3 7,602.5 7,695.7

6,965.9 7,020.8 7,079.3 7,141.5 7,207.5

6,727.8 6,772.3 6,816.4 6,863.4 6,914.2

6,468.3 6,483.0 6,542.4 6,611.1 6,685.6

8,367.7 8,197.0 8,294.3 7,670.7 6,331.8 6,550.3 6,557.3

8,744.3

-5.6% 0.0% 0.0% 0.0%

2,227.6 2,227.6 2,227.6 2,227.6 2,227.6 2,227.6

2,227.6 2,227.6 2,227.6 2,227.6 2,227.6

2,227.6 2,227.6 2,227.6 2,227.6 2,227.6

2,227.6 2,227.6 2,227.6 2,227.6 2,227.6

4,052.0 4,149.7 3,803.3 3,649.2 2,993.0 2,982.2 2,227.6

4,192.5

IFR AIRCRAFT HANDLED GENERAL AVIATION MILITARY

(In Thousands)

TOTAL

-1.0% -0.1% 1.9% 2.0%

56,051.8 57,205.5 58,394.5 59,619.6 60,882.5 62,184.3

50,767.5 51,764.3 52,788.8 53,844.7 54,931.7

46,143.1 47,024.6 47,927.0 48,844.8 49,800.8

41,180.0 42,037.6 43,039.3 44,163.6 45,255.8

47,478.1 46,177.8 46,756.7 45,394.1 40,293.5 40,497.8 41,227.1

46,024.8

AT FAA EN ROUTE TRAFFIC CONTROL CENTERS

IFR AIRCRAFT HANDLED

TABLE 34

FAA Aerospace Forecast Fiscal Years 2012-2032