FAA Forecast Accuracy

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Table of Contents Forecast Highlights (2020–2040) ...... 1 Review of 2019 ...... 3 Glossary of Acronyms ...... 5 Acknowledgements ...... 7 FAA Aerospace Forecasts ...... 9 Economic Environment ...... 10 U.S. Airlines...... 12 Domestic Market ...... 12 International Market ...... 18 Cargo ...... 22 General Aviation ...... 24 FAA Operations ...... 30 U.S. Commercial Aircraft Fleet ...... 32 Commercial Space ...... 34 Regulatory Safety Oversight Activities of FAA ...... 35 FAA’s Operations Forecast ...... 37 Additional Factors Affecting Forecast Accuracy ...... 39 Unmanned Aircraft Systems ...... 41 Questionnaire of Recreational/Model Registrations...... 41 Trends in Recreational/Model Aircraft and Forecast...... 45 Trends in Commercial/Non-Model Aircraft and Forecast ...... 49 Remote Pilot Forecast ...... 56 Larger UAS ...... 59 Urban Air Mobility ...... 61 Forecast Uncertainties ...... 64 Appendix A: Alternative Forecast Scenarios ...... 68 Scenario Assumptions ...... 68 Alternative Forecasts ...... 73 Enplanements ...... 73 Revenue Passenger Miles ...... 74 Available Seat Miles ...... 74 Load Factor ...... 75 Yield ...... 76 Appendix B: FAA Forecast Accuracy ...... 81 Appendix C: Forecast Tables ...... 83 Forecast Highlights (2020–2040)

Since its deregulation in 1978, the U.S. com- 2019 were forecasted to fall to $53 in 2020, mercial air carrier industry has been charac- and our forecast assumes they will increase terized by boom-to-bust cycles. The volatility beginning in 2022 to reach $104 by the end that was associated with these cycles was of the forecast period. thought by many to be a structural feature of an industry that was capital intensive but Global economic conditions weakened in cash poor. However, the great recession of 2019 although the experience was consider- 2007-09 marked a fundamental change in ably different for the U.S. as compared to the the operations and finances of U.S Airlines. rest of the world. GDP growth in the U.S. Since the end of the recession in 2009, U.S. slowed from the strong rate in 2018 but re- airlines revamped their business models to mained above its estimated long-term trend, minimize losses by lowering operating costs, while in Europe, Germany and Italy flirted eliminating unprofitable routes, and ground- with recession and Asia saw high-growth ing older, less fuel-efficient aircraft. To in- China and India slow markedly. Political increase operating revenues, carriers initiated stability and trade wars dampened activity new services that customers were willing to but by the end of the year, those headwinds purchase and started charging separately for appeared to be lessening. In their place, services that were historically bundled in the however, the January 2020 coronavirus price of a ticket. The industry experienced (COVID-19) outbreak in China gained the an unprecedented period of consolidation world's attention and in February began ap- with three major mergers in five years. The pearing outside Asia. As of the preparation results of these efforts have been impres- of this forecast, the virus and its economic sive: 2019 marks the eleventh consecutive impacts were just emergent, and the range year of profitability for the U.S. airline indus- of possible outcomes too wide to include try. Looking forward, there is confidence that meaningfully in the forecast. U.S. airlines have finally transformed from a Global economic growth accelerates in 2021 capital intensive, highly cyclical industry to after slowing in 2019-20. Trade disputes an industry that generates solid returns on should be mending, the worst of Brexit un- capital and sustained profits. certainty should be past, Japan's tax-hike Fundamentally, over the medium and long shock should be fading, and oil prices, and term, aviation demand is driven by economic inflation generally, should be subdued. Over activity, and a growing U.S. and world econ- the early years of the 2020's, economies are omy provides the basis for aviation to grow expected to return to their long-run trend over the long run. The 2020 FAA forecast rates of growth. calls for U.S. carrier domestic passenger System traffic in revenue passenger miles growth over the next 20 years to average 2.0 (RPMs) is projected to increase by 2.5 per- percent per year. The uptick in passenger cent a year between 2020 and 2040. Do- growth since 2014 will continue into 2020 mestic RPMs are forecast to grow 2.3 per- driven by positive economic conditions in the cent a year while International RPMs are U.S. Oil prices averaged $60 per barrel in

forecast to grow significantly faster at 3.0 change annually). While steady growth in percent a year. System capacity as meas- both GDP and corporate profits results in ured by available seat miles (ASMs) is fore- continued growth of the turbine and rotorcraft cast to grow in line with the increases in de- fleets, the largest segment of the fleet – fixed mand. The number of seats per aircraft is wing piston aircraft continues to shrink over growing, especially in the regional jet market, the forecast. Against the marginally declin- where we expect the number of 50 seat re- ing fleet, the number of general aviation gional jets to fall to just a handful by 2030, hours flown is projected to increase by 16 replaced by 70-90 seat aircraft. percent (an average of 0.7 percent per year) during the same period, as growth in turbine, Although the U.S. economy saw solid growth rotorcraft, and experimental hours more than in 2019, economic activity around the world offset a decline in fixed wing piston hours. slowed, and labor costs rose, resulting in profits for U.S. airlines subsiding further from With increasing numbers of regional and 2016’s record levels. Nevertheless, the FAA business jets in the nation’s skies, fleet mix expects U.S. carrier profitability to remain changes, and carriers consolidating opera- steady as solid demand fed by a stable econ- tions in their large hubs, we expect increased omy offsets rising labor costs. Over the long activity growth that has the potential to in- term, we see a competitive and profitable avi- crease controller workload. Operations at ation industry characterized by increasing FAA and contract towers are forecast to grow demand for air travel and airfares growing 0.9 percent a year over the forecast period more slowly than overall inflation, reflecting with commercial activity growing at approxi- growing U.S. and global economies. mately four times the rate of non-commercial (general aviation and military) activity. The The long-term outlook for general aviation is growth in U.S. airline and business aviation relatively stable, as growth at the high-end activity is the primary driver. Large and me- offsets continuing retirements at the tradi- dium hubs will see much faster increases tional low end of the segment. The active than small and non-hub airports, largely due general aviation fleet is forecast to decline to the commercial nature of their operations. slightly by 0.9 percent between 2020 and 2040 (rounding up to an average of 0 percent

Review of 2019

Solid economic activity in the U.S. more than enplanements grew 4.1 percent. Domestic compensated for broad slowdowns through- RPMs were up 4.5 percent while enplane- out the rest of the world, making 2019 yet an- ments were up by 4.2 percent. International other good year for U.S. commercial avia- RPMs increased 3.9 percent and enplane- tion. Airlines posted their eleventh consecu- ments grew by 3.8 percent. The system- tive year of profits in spite of lower revenue wide load factor was 84.5 percent, up seven compared to a year earlier as expenses fell tenths of a percent from the 2018 level. further. The U.S. airline industry contained expenses by continuing to shift its focus from System nominal yields increased again in gaining market share to seeking returns on 2019. In domestic markets, expansion by ul- invested capital as well as benefitting from tra-low cost carriers such as Spirit and Alle- lower fuel prices. U.S. airlines are continu- giant, as well as by mainline carriers such as ally updating their successful strategies for United, was partially offset by the MAX capturing additional revenue streams such grounding, giving carriers some pricing as charging fees for services that used to be power in the solid demand environment. In- included in airfare (e.g. meal service), charg- ternational yield declined 0.8 percent as both ing for services that were not previously the Atlantic and Pacific regions declined but available (e.g. premium boarding and fare the Latin region posted a small gain. lock fees), as well as for maximizing fare rev- Despite rising labor costs and higher capac- enue with more sophisticated revenue man- ity, U.S. airlines remained solidly profitable in agement systems. At the same time, the FY 2019. Data for FY 2019 show that the U.S. airline industry has become nimbler in reporting passenger carriers had a combined adjusting capacity to seize opportunities or operating profit of $22.6 billion (compared to minimize losses, helping to raise yields for a $21.0 billion operating profit for FY 2018). the first time in four years. These efforts The network carriers1 reported combined op- combined with relatively low fuel prices se- erating profits of $9.9 billion while the low cured industry profitability in 2019 even as cost carriers2 reported combined operating new labor contracts lifted labor costs higher. profits of $4.6 billion as all carriers posted Demand for air travel in 2019 slowed slightly profits. after surging in 2018 as economic growth in The general aviation industry recorded a the U.S. moderated. In 2019, system traffic modest increase of 1.4 percent in deliveries as measured by revenue passenger miles of U.S. manufactured aircraft in 2019, with (RPMs) increased 4.3 percent while system pistons up by 6.5 percent and turbines, due

1 Network carriers are: Alaska Airlines, American 2 Low cost carriers are: Allegiant Air, Frontier Air- Airlines, Delta Air Lines, and United Air Lines. lines, JetBlue Airways, Southwest Airlines, Spirit Air Lines, Sun Country Airlines.

to a decline in turboprop segment, down by contract towers were up 2.9 percent com- 3.2 percent. As the higher priced turbojet de- pared to 2018. This marks the fifth consecu- liveries improved by 6.3 percent, U.S. billings tive years of positive growth starting 2015. increased by 20.5 percent to a record $14.0 Last time there were at least four consecutive billion. General aviation activity at FAA and years of growth was FY 1997-2000. Air car- contract tower airports had a 3.3 percent in- rier activity increased by 3.2 percent, while crease in 2019 as local activity rose 6.1 per- air taxi operations increased by 1.5 percent. cent and itinerant operations went up by 0.8 General aviation rose 3.3 percent and mili- percent. In local GA activity, this was the tary activity decreased 1.9 percent. Activity highest increase recorded in more than 20 at large and medium hubs rose by1.8 per- years. cent and 1.9 percent, while small hub airport activity was up 1.6 percent in 2019 compared Total operations in 2019 at the 520 FAA and to the prior year.

Glossary of Acronyms

Acronym Term . ANG FAA Office of NextGen ARP FAA Office of Airports ASMs Available Seat Miles AST FAA Office of Commercial Space Transportation ATO FAA Air Traffic Organization ATP Air Transport Pilot AUVSI Association for Unmanned Vehicle Systems International BVLOS Beyond Visual Line of Sight CAPS COA Application Processing System CBP Customs and Border Patrol CFR Code of Federal Regulations COAs Certification of Authorizations CORSIA Carbon Offsetting and Reduction Scheme for International Aviation CRS Commercial Resupply Services CY Calendar Year DARPA Defense Advanced Research Projects Agency DHS Department of Homeland Security DoD Department of Defense DoE Department of Energy DoI Department of Interior FAA Federal Aviation Administration FY Fiscal Year GA General Aviation GAMA General Aviation Manufacturers Association GC Grand Challenge GDP Gross Domestic Product ICAO International Civil Aviation Organization IFR Instrument Flight Rules IMF International Monetary Fund ISS International Space Station LAANC Low Altitude Authorization and Notification Capability LCC Low Cost Carriers LSA Light Sport Aircraft lUAS Large Unmanned Aircraft System(s) NAS National Airspace System NASA National Aeronautics and Space Administration NDAA National Defense Authorization Act NOTAM Notices to Airmen NPRM Notice of Public Proposed Rulemaking PCE Personal Consumption Expenditure PDARS Performance Data Analysis and Reporting Systems RAC Refiners’ Acquisition Cost RLV Reusable Launch Vehicle RP Remote Pilot RPA Remote Pilot Authorization RPMs Revenue Passenger Miles

RTMs Revenue Ton Miles sUAS Small Unmanned Aircraft System(s) SpaceX Space Exploration Technologies Corp. TRACON Terminal Radar Approach Control TRB Transportation Research Board TSA Transportation Security Administration UAM Urban Air Mobility UAS Unmanned Aircraft System(s) UASFM UAS facility maps USD United States Dollar VFR Visual Flight Rules

Acknowledgements

This document was prepared by the Forecasts and Performance Analysis Division (APO-100), Office of Aviation Policy and Plans, under the direction of Roger Schaufele and Michael Lukacs.

The following people may be contacted for further information:

Section Contact Name Phone Number

Economic Environment Jonathan Corning (202) 267-8388

Commercial Air Carriers • Passenger Jonathan Corning (202) 267-8388 • Fleet Akira Kondo (202) 267-3336

General Aviation

• Forecasts H. Anna Barlett (202) 267-4070 • Survey data H. Anna Barlett (202) 267-4070

FAA Workload Measures

• Forecasts Chia-Mei Liu (202) 267-3602 • Data Chia-Mei Liu (202) 267-3602

Commercial Space Thomas Marotta (202) 267-0427

LaVada Strickland (202) 267-3855

Unmanned Aircraft Systems Michael Lukacs (202) 267-9641

Dipasis Bhadra (202) 267-9027

W. Gavin Ekins (202) 267-4735

Programming Analysis Jared Teeter (202) 267-2813

APO Websites

• Forecasts and Statistical publications http://www.faa.gov/data_research/aviation_data_statistics/ • APO databases http://aspm.faa.gov

Email for APO staff First name.last [email protected]

FAA Aerospace Forecasts Fiscal Years 2020-2040

Economic Environment

In the near term, IHS Markit projects that proved financial conditions appear to be re- world economic growth will hold steady at straining the slowdown. Japan’s economic about its 2019 rate of 2.6 percent after falling growth is projected to slow sharply due to an markedly from 3.2 percent in 2018. Econo- increase in the consumption tax at the end of mies will require several years to return to 2019 but fiscal stimulus and rising employ- their long-run trend growth rates and in the ment should mitigate the effects over the meantime growth is projected at 2.5 percent coming years. In emerging markets, China’s in 2020 and 2.7 percent in 2021. Strong con- growth rate continues to gradually decelerate sumer spending continues to drive the U.S. through 6 percent, though braced by govern- economy and is expected to be sustained ment efforts, while other countries such as even as the effects of the recent fiscal stimu- Brazil and Russia feel the drag from China lus wear off. European growth suffered in and headwinds of falling commodity prices 2019 as Germany and Italy weakened con- and modest demand from advanced econo- siderably and political uncertainty impacted mies. India is expected to post growth rates confidence, but moderate growth in France, of about 5 percent in the near-term as high reduced uncertainty about Brexit, and im- debt levels and a need for structural reforms restrains activity.

China and India Led World Economic Growth in 2019

7.0 6.2 6.0 4.8 5.0

4.0

3.0 2.6 2.3 2.0 1.2 1.1 1.1 1.1 1.0 Annual Change Percent Annual

0.0 China India U.S. Eurozone Russia Brazil Japan World

Source: IHS Markit

IHS Markit forecasts world real GDP to grow and China, is projected to have the fastest at 2.7 percent a year between 2020 and growth followed by Africa and Middle East, 2040. Emerging markets, at 4.0 percent a Latin America, and Eastern Europe. Growth year, are forecast to grow above the global in the more mature economies (1.6 percent average but at lower rates than in the early a year) will be lower than the global trend 2000’s. Asia (excluding Japan), led by India with the fastest rates in the U.S. followed by

Europe. Growth in Japan is forecast to be deep structural issues associated with a very slow at 0.9 percent a year reflecting shrinking and aging population.

Asia and Middle East/N. Africa Lead Global Economic Growth (annual GDP percent growth 2020-2040)

China 4.3 Asia ex. China & Japan 3.4 M.E. & N. Africa 3.0 Latin America 2.8 World 2.7 Emerging Europe 2.4 U.S. 1.9 Eurozone 1.2 Japan 0.9

Source: IHS Markit, Dec 2019 World Forecast

The average crude oil price in 2019 was supply growth. The price of oil is projected down 6 percent from the year before to about to increase over the long run due to growing $60 per barrel, partially offsetting the in- global demand and higher costs of extrac- creases seen in 2017 and 2018. IHS Markit tion. IHS Markit forecasts U.S. refiner's ac- is projecting continued moderation in prices quisition cost of crude to cross the $100 per in 2020 and 2021 due to slowing global de- barrel mark just before the end of the fore- mand combined with modest non-OPEC cast in 2040.

U.S. Refiners' Acquistion Cost $120

$100

$80

$60

$40 $ Per Barrelof Oil $20

Fiscal Year Source: IHS Markit

U.S. Airlines

Domestic Market Mainline and regional carriers3 offer domes- creasing price discrimination4 through ancil- tic and international passenger service be- lary revenues and revenue management tween the U.S. and foreign destinations, alt- systems. hough regional carrier international service is confined to the border markets in Canada, Following the 2007-09 recession, the U.S. Mexico, and the Caribbean. airline industry underwent considerable re- structuring that has resulted in an unprece- The commercial air carrier industry in 2020 dented period of capacity discipline, espe- will respond to four trends already underway: cially in domestic markets. Since 2009, U.S. (1) selective capacity expansion; (2) steady domestic ASMs have increased at an aver- growth of seats per aircraft, whether through age rate of 2.6 percent per year while RPMs up-gauging or reconfiguring existing aircraft; have grown 3.2 percent per year. Although (3) increasing competitive pressure due to ul- those average rates of growth since the re- tra-low-cost carrier expansion; and (4) in- cession are modest, they conceal the fact

3 Mainline carriers are defined as those providing and whose routes serve mainly as feeders to the service primarily via aircraft with 90 or more mainline carriers. seats. Regionals are defined as those providing 4 Simply defined as the business strategy of sell- service primarily via aircraft with 89 or fewer seats ing largely similar products to different customers at different prices.

that growth has been picking up over the pe- The period of domestic capacity restraint riod (4.4 percent and 4.6 percent a year since since 2007 has not been shared equally be- 2014, respectively). ASM growth has risen tween the mainline carriers and their regional due to a variety of factors including upgaug- counterparts. In 2019, the mainline carrier ing, and the expansion of ultra-low-cost car- group provided 19.2 percent more capacity riers and the competitive response by major than in 2007 while carrying 22.8 percent carriers, driven in large part by low fuel more passengers. Capacity flown by the re- prices. Looking ahead to the near-term, the gional group has risen 5.1 percent over the acceleration of growth in ASM is likely to con- same 12-year period (with passengers car- tinue as some carriers have indicated plans ried up 2.1 percent). to open new routes and potential new en- trants have announced plans to begin oper- The regional market has continued to lose ations. As new service begins, competitors ground as the regionals compete for even may respond defensively by adding their own fewer contracts with the remaining dominant new routes, thus further boosting ASM carriers; this has meant paltry growth in en- growth. planements and yields.

U.S. Commercial Air Carriers Domestic Enplanements by Carrier Group 1,400

1,200 249 231 1,000 214 197 181 800 168 159 600 1,023 880 949 400 744 808 654 690 Enplanements (millions) 200

- 2019E 2020 2024 2028 2032 2036 2040 Fiscal Year Mainline Regional

U.S. Commercial Air Carriers Domestic Passenger Nominal Yield 25.00

20.00 20.0

¢) 18.8 17.6 15.00 16.5 16.4 15.1 15.4 14.1 14.2 14.5 13.6 12.5 10.00 11.6 11.6 Revenue Revenue Per Mile (

5.00

- 2019E 2020 2024 2028 2032 2036 2040 Fiscal Year Mainline Regionals

The regionals have less leverage with the the decade from 1997 to 2007. The trend mainline carriers than they have had in the has slowed more recently, however, as re- past as the mainline carriers have negotiated gional seats per aircraft rose 17 percent over contracts that are more favorable for their op- the ten years ending in 2019. erational and financial bottom lines. Further- more, the regional airlines are facing some Mainline carriers have also been increasing pilot shortages. Their labor costs are in- the seats per aircraft flown although the trend creasing as they raise wages to combat the has been accelerating – the reverse of re- pilot shortage while their capital costs have gionals' behavior. From 1997-2007, mainline increased in the short-term as they continue seats per aircraft expanded just one-half of to replace their 50 seat regional jets with one percent. Since 2009, this measure has more fuel-efficient 70 seat jets. The move to grown 10 percent. the larger aircraft will prove beneficial in the Another continuing trend is that of ancillary future, however, since their unit costs are revenues. Carriers generate ancillary reve- lower. nues by selling products and services be- Growing seats per aircraft has been a yond that of an airplane ticket to customers. longstanding trend for regionals that saw this This includes the un-bundling of services measure rise by more than 55 percent over previously included in the ticket price such as

checked bags, on-board meals and seat se- scale of deployment across its domestic net- lection, and by adding new services such as work as negative revenue impacts were boarding priority and internet access. After more than anticipated. posting record net profits in 2015, U.S. passenger carrier profits declined in the subse- The offering of Basic Economy fares has quent three years on rising fuel and labor been part of an effort by network carriers to costs, and flat yields. Nevertheless, profits protect market share in response to the rapid remain solid and supported by ancillary rev- growth low cost carriers (LCC) have enues and the implementation of increas- achieved in recent years. While mainline en- ingly sophisticated revenue management planements have increased almost 23 per- systems. These systems enable carriers to cent since 2007, and regionals' have risen 2 price fares optimally for each day and time of percent, low cost carrier enplanements have flight and minimize foregone revenue. Be- grown by 39 percent. RPMs over the same sides this method of price discrimination, air- period show a similar pattern with mainline lines are continuing to implement plans to RPMs up almost 27 percent, regional RPMs further segment their passengers into more up 11 percent and LCC RPMs fully 48 per- discreet cost categories based on comfort cent higher. amenities like seat pitch, leg room, and ac- U.S. commercial air carriers’ total number of cess to social media and power outlets. In domestic departures rose for the second 2015, Delta introduced “Basic Economy” year in a row in 2019, leaving them about 15 fares that provided customers with a main percent below the 2007 level. ASMs, RPMs cabin experience at lower cost in exchange and enplanements, however, all grew in for fewer options. By the end of 2017 these each of the past nine years; these trends un- fares were available in 100% of Delta’s do- derlie the expanding size of aircraft and mestic network. In February 2017, American higher load factors.5 In 2019, the domestic began offering its version, and had expanded load factor bumped up to 85.1 percent – a to the entire domestic network by Septem- new historic high. Load factor is forecast to ber. United deployed its version of Basic rise and peak around 86.8 percent in the fu- Economy fares across its domestic network ture due to the logistical difficulties inherent in May 2017, but quickly pulled back the in matching supply perfectly with demand.

5 Commercial air carriers encompass both mainline and regional carriers.

U.S. Commercial Air Carriers Domestic Market 7.0 87.0

6.0 86.5

5.0 86.0 4.0 85.5 3.0 Load Factor 85.0 2.0 Annual Annual Percent Change

1.0 84.5

0.0 84.0 2019E 2022 2025 2028 2031 2034 2037 2040 Fiscal Year ASMs RPMs Enplanements Load Factor (right axis)

System (the sum of domestic plus interna- U.S. mainline carrier enplanement growth in tional) capacity increased 3.4 percent to the combined domestic and international 1.236 trillion ASMs in 2019 while RPMs in- market was 4.3 percent in 2019 while re- creased 4.3 percent to 1.044 trillion. During gional carriers carried 3.5 percent more pas- the same period system-wide enplanements sengers. increased 4.1 percent to 916.7 million. In 2019, U.S. carriers continued to prioritize the In the domestic market, mainline enplane- domestic over the international market in ments increased for the ninth consecutive terms of allocating capacity as domestic ca- year, up 4.3 percent, marking the first time pacity increased 4.0 percent while interna- since 2000 that the industry recorded nine tional capacity was up just 2.1 percent. U.S. consecutive years of passenger growth in carriers' domestic capacity growth will ex- the domestic market. Mainline passengers in ceed their international capacity growth in international markets posted the tenth year 2020 but carriers will start expanding capac- of growth, up 4.1 percent. Domestic mainline ity in international markets faster than do- enplanement growth is forecast to remain mestic markets beginning in 2022 and this strong, increasing at 5.5 percent in 2020 be- trend is projected to continue through 2040 fore slowing as economic activity cools and as the domestic market continues to mature. averaging 2.0 percent annually over the forecast. After slowing during the early part of

the forecast, international mainline enplane- term trend. International mainline enplanements are expected to accelerate to an aver- ments are forecast to slow somewhat over age of 3.2 percent through the forecast hori- the next two years before picking up and re- zon. turning to growth of about 3.4 percent through the remainder of the forecast. With relatively robust demand, industry capacity growth was up 3.4 percent in 2019 af- System load factor rose by seven tenths of a ter a 4.4 percent increase in 2018. The in- percentage point while trip length increased creased passenger volume and traffic offset 2.2 miles (0.2 percent) in 2019, even as slow yield growth and along with higher an- seats per aircraft mile increased by 0.9 per- cillary revenues and relatively low fuel prices, cent; again reflecting the trend towards using U.S. carriers were solidly profitable in 2019. larger aircraft. Seats per aircraft mile sys- Domestic mainline capacity is expected to tem-wide increased to 157.5 seats (up 1.3 match the pattern of enplanements with seats per aircraft mile), the highest level strong 5.7 percent growth in 2020, followed since 1990. by more moderate growth at about the long

International Market Over most of the past decade, the interna- Growth of major global economies has be- tional market has been the growth segment gun to slow from the above-trend rates of re- for U.S. carriers when compared to the ma- cent years. Several moderating factors are ture U.S. domestic market. In 2015 and at work, including dampened credit growth, 2016, growth in the domestic market surged, reduced global trade, and political stresses. outpacing international markets. However, The European and Japanese economies are in 2017 enplanement growth in international generally seeing slow but positive growth, in markets exceeded that in domestic markets, part due to weak trade with Asia. In turn, this only to be reversed again in 2018 and 2019. has been driven by trade disputes as well as Domestic enplanement growth is expected to China's continuing gradual slowdown which outpace that of international markets for the has been managed by the government and next couple of years when longer term eco- is unlikely to decline sharply. Overall, global nomic trends begin to reassert themselves. conditions appear to be on a stable path but The average annual growth rate (FY 2020- one with growth rates that are closer to long- 2040) of the international market (comprised term trends than the higher rates of the re- of mainline and regional carriers) for en- cent past. Nevertheless, combined with planements is forecast to be 3.1 percent and, moderate oil prices, this presents a support- RPM and ASM are both forecast at 3.0 per- ive environment for air travel demand. cent.

U.S. Carriers - Enplanements 8.0 6.0 4.0 2.0 - (2.0) (4.0) (6.0) Annual Annual Growth Rate (%) (8.0)

Fiscal Year Domestic Market International Market

U.S. Carriers - RPMs 8.0 6.0 4.0 2.0 - (2.0) (4.0) (6.0)

Annual Annual Growth Rate (%) (8.0) (10.0)

Fiscal Year Domestic Market International Market

U.S. Carriers - ASMs 8.0 6.0 4.0 2.0 - (2.0) (4.0) (6.0) (8.0) Annual Annual Growth Rate (%) (10.0)

Fiscal Year

Domestic Market International Market

As of the preparation of this forecast, growth upturns in foreign economies but does not in- rates of international activity for U.S. carriers clude impacts from the novel coronavirus. in 2020 were expected to be solid at 2.7, 4.1, and 4.1 percent a year for enplanements, Following the early part of the forecast, de- RPMs, and ASMs, respectively. This perfor- mand growth picks up to average about 3.0 mance is predicated on strong U.S. eco- percent for each measure. Airlines will con- nomic fundamentals combined with nascent tinue to match capacity growth with traffic

growth and load factor is expected to stabilize around 82.9%. This surpasses the previous record high load factor seen in 2013.

U.S. Commercial Air Carriers International Market 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 Annual Annual Percent Change 0.5 0.0 2019E 2022 2025 2028 2031 2034 2037 2040 Fiscal Year

ASMs RPMs Enplanements

For U.S. carriers, Latin America remains the saw enplanements decline 0.9 percent from largest international destination despite the their 2018 levels, mainly due to a sharp slow- recent economic and political crises in Vene- down in travel between the U.S. and China zuela and Brazil. Enplanements in 2019 and India, markets that had recently posted grew an estimated 4.0 percent while RPMs very strong growth. Meanwhile, traffic increased 2.2 percent. Growth is projected (RPMs) increased by just 0.4 percent. Alt- to ease considerably in 2020 and 2021 as hough the region is forecast to have the high- U.S. carriers trim capacity expansion to sup- est economic growth of any region over the port yields. Enplanements and RPMs are next 20 years, led by China and India, U.S. forecast to increase 0.6 and 1.1 percent, re- carrier enplanements and RPMs for the Pa- spectively, in 2020. Over the twenty-year pe- cific region are forecast to grow a modest 2.2 riod 2020-2040, Latin America enplane- and 2.3 percent a year, respectively. Traffic ments are forecast to increase at an average growth is relatively moderate in part because rate of 3.8 percent a year while RPMs grow U.S. carriers continue to have a majority of 4.0 percent a year. their service in the region to Japan as opposed to faster growing countries. The Pacific region is the smallest in terms of enplanements despite the economic growth After contracting in 2015 and 2016, the At- and potential of air travel to the region's lantic region has accelerated steadily in re- emerging markets. In 2019, U.S. carriers cent years. By 2019, enplanements grew of

7.0 percent as and RPMs expanded by 7.7 than twice that of Europe. As a result, a percent. This growth has been supported by larger share of the forecast aviation demand U.S. demand as well as growth of Middle in the Atlantic region is linked to those two East and African markets, even as the Euro- areas, particularly in the second half of the pean economies slowed in 2019. While forecast period. Over the twenty-year period Western Europe is a mature area with mod- from 2020 to 2040, enplanements in the At- erate economic growth, the economically lantic region are forecast to grow at an aver- smaller Middle East and Africa areas are ex- age annual rate of 2.2 percent a year while panding rapidly with GDP growth rates more RPMs grow 2.5 percent a year.

Total Passengers To/From the U.S. American and Foreign Flag Carriers 600

500 60 53 400 90 47 80 300 41 71 36 62 32 182 32 53 156 200 44 45 134 115 Millions of Passengers 99 88 91 100 164 131 147 88 91 101 115 0 2019 2020 2024 2028 2032 2036 2040 Calendar Year Atlantic* L. America Pacific Canada Transborder Source: US Customs & Border Protection data processed and released by Department of Commerce; data also received from Transport Canada * Per past practice, the Mid-East region and Africa are included in the Atlantic category.

Total passengers (including Foreign Flag posted gains led by a 4.1 percent increase in carriers) between the United States and the the Atlantic region. rest of the world increased an estimated 3.2 percent to 252 million in 2019 as all regions

FAA projects total international passenger passengers in the Pacific region are forecast growth of 2.9 percent in 2020 as global eco- to more than double to 90 million by 2040. nomic growth remains modest with the high- From 2020 to 2040, passengers between the est passenger growth expected in the Atlan- United States and the Pacific region are fore- tic and Pacific regions. Moderate global eco- cast to grow 3.5 percent a year. nomic growth averaging 2.9 percent a year over the next 20 years (2020-2040) is the Both the Atlantic and Canada regions are foundation for the forecast growth of interna- more mature markets and are projected to tional passengers of 3.3 percent a year, as have somewhat slower growth than the Latin levels almost double from 252 million to 496 or Pacific regions. The Atlantic region is fore- million. cast to grow at an average rate of 3.0 percent a year as an increasing share of the passen- The Latin American region is the largest in- gers in this region come from the Middle East ternational market and is projected to grow at and Africa markets. Though sizable and the fastest rate (3.5 percent a year) of any comparable to Mexico in passenger traffic, region over the forecast period. Within the the Canadian transborder market is consid- region, Mexico and Dominican Republic are erably smaller than the Atlantic region. With the two largest markets and are expected to solid North American economic growth, Can- post average annual growth rates of 3.6 per- ada transborder passengers are forecast to cent and 4.4 percent, respectively. grow at an annual average of 3.2 percent a year over the next 20 years. Powered by economic growth and rising in- comes in China, India and South Korea, total

Cargo Air cargo traffic includes both domestic and cargo carriers comprised 80.3 percent of to- international freight/express and mail. The tal RTMs in 2019, with passenger carriers fly- demand for air cargo is a derived demand re- ing the remainder. Total RTMs flown by the sulting from economic activity. Cargo moves all-cargo carriers increased 2.3 percent in in the bellies of passenger aircraft and in 2019 while total RTMs flown by passenger dedicated all-cargo aircraft on both sched- carriers fell by 7.2 percent. uled and nonscheduled service. Cargo carriers face price competition from alternative U.S. carrier international air cargo traffic shipping modes such as trucks, container spans four regions consisting of Atlantic, ships, and rail cars, as well as from other air Latin, Pacific, and ‘Other International.’ carriers. Historically, air cargo activity tracks with U.S. air carriers flew 42.9 billion revenue ton GDP. Other factors that affect air cargo miles (RTMs) in 2019, up just 0.2 percent growth are fuel price volatility, movement of from 2018 with domestic cargo RTMs in- real yields, globalization and trade. creasing 2.8 percent to 16.2 billion while international RTMs contracted 1.3 percent to 26.6 billion. Air cargo RTMs flown by all-

The forecasts of revenue ton miles rely on percent in 2020 as the global trade slowdown several assumptions specific to the cargo in- impacts domestic activity. Between 2020 dustry. First, security restrictions on air and 2040, domestic cargo RTMs are forecast cargo transportation will remain in place. to increase at an average annual rate of 1.9 Second, most of the shift from air to ground percent. In 2019, all-cargo carriers carried transportation has occurred. Finally, long- 90.9 percent of domestic cargo RTMs. The term cargo activity depends heavily on eco- all-cargo share is forecast to grow modestly nomic growth. to 92.2 percent by 2040 based on increases in capacity for all-cargo carriers. The forecasts of RTMs derive from models that link cargo activity to GDP. Forecasts of International cargo RTMs fell 1.3 percent in domestic cargo RTMs use real U.S. GDP as 2019 after posting a 10.0 percent increase in the primary driver of activity. Projections of 2018. Trade disputes and slower economic international cargo RTMs depend on growth growth around the world have materially im- in world and regional GDP, adjusted for infla- pacted global trade. Growth in international tion. FAA forecasts the distribution of RTMs RTMs recover in 2020, growing at 6.2 per- between passenger and all-cargo carriers cent as foreign economies regain their foot- based on an analysis of historic trends in ing and some trade disputes are resolved. shares, changes in industry structure, and For the forecast period (2020-2040), interna- market assumptions. tional cargo RTMs are expected to increase an average of 4.2 percent a year based on After increasing by just 0.2 percent in 2019, projected growth in world GDP with the Other total RTMs are expected to recover and grow International region having the fastest growth 4.5 percent in 2020. Because of steady U.S. (5.0 percent), followed by the Pacific (4.7 and world economic growth in the long term, percent), Atlantic (3.1 percent), and Latin FAA projects total RTMs to increase at an av- America regions (1.3 percent). erage annual rate of 3.5 percent for the bal- ance of the forecast period (from 2020 to The share of international cargo RTMs flown 2040). by all-cargo carriers is forecast to increase from 73.8 percent in 2019 to 79.0 percent by Following a 2.8 percent increase in 2019, do- 2040. mestic cargo RTMs are projected to grow 1.9

General Aviation

The FAA uses estimates of fleet size, hours ments to the survey methodology. The ac- flown, and utilization rates from the General tive GA fleet was estimated to be 211,749 Aviation and Part 135 Activity Survey (GA aircraft in 2018 (0.0 percent change from Survey) as baseline figures to forecast the 2017), as increases in fixed wing piston, fixed GA fleet and activity. Since the survey is wing turbine, and experimental aircraft were conducted on a calendar year (CY) base and offset by declines in rotorcraft and other air- the records are collected by CY, the GA fore- craft (gliders and lighter than air). Total cast is done by CY. Forecasts of new aircraft hours flown were estimated to be 25.5 mil- deliveries, which use the data from General lion, up 1.2 percent from 2017. Increases in Aviation Manufacturers Association (GAMA), fixed wing piston and fixed wing turbine air- together with assumptions of retirement craft more than offset sharp declines in ro- rates, produce growth rates of the fleet by air- torcraft and experimental aircraft. craft categories, which are applied to the GA Survey fleet estimates. The forecasts are In 2019, deliveries of the general aviation air- carried out for “active aircraft,”6 not total aircraft manufactured in the U.S. increased craft. The FAA’s general aviation forecasts slightly to 1,771, 1.4 percent higher than in also rely on discussions with the industry ex- CY 2018. Deliveries of single-engine piston perts conducted at industry meetings, includ- aircraft were up 7.0 percent while multi-en- ing Transportation Research Board (TRB) gine piston deliveries were flat. Business jet meetings of Business Aviation and Civil Heli- deliveries were up by 6.3 percent, but turbo- copter Subcommittees conducted twice a year prop deliveries were down by 13.3 percent. in January and June. Overall piston deliveries were up 6.5 percent while turbine shipments were down by 3.2 The results of the 2018 GA Survey, the latest percent. Based on figures released by available, were consistent with the results of GAMA, they amounted to $14.0 billion in fac- surveys conducted since 2004 improve- tory net billings, a record for the U.S. industry.

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

General Aviation U.S. Manufactured Aircraft Shipments and Billings Shipments Billings ($B) 2,000 $16

$14

1,500 $12

$10

1,000 $8

500 $4

- $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Calendar Year

Source: GAMA Shipments Billings ($ Billion)

GAMA and industry experts reported the ro- 2019 and 2040, with the turbojet fleet in- torcraft deliveries declined in 2019 in both creasing 2.3 percent a year. The growth in piston and turbine segments. U.S. GDP and corporate profits are catalysts for the growth in the turbine fleet. Against these current conditions, the long- term outlook for general aviation, driven by The largest segment of the fleet, fixed wing turbine aircraft activity, remains stable. The piston aircraft, is predicted to shrink over the active general aviation fleet is projected to forecast period by 26,365 aircraft (an aver- decrease slightly from its current level, as the age annual rate of -1.0 percent). Unfavora- declines in the fixed-wing piston fleet remain ble pilot demographics, overall increasing just above the increases in the turbine, ex- cost of aircraft ownership, availability of perimental, and light sport fleets. The total much lower cost alternatives for recreational active general aviation fleet changes from an usage, coupled with new aircraft deliveries estimated 212,335 in 2019 to 210,380 air- not keeping pace with retirements of the ag- craft by 2040 (a small decline of 0.9 percent). ing fleet are the drivers of the decline.

The more expensive and sophisticated tur- On the other hand, the smallest category, bine-powered fleet (including rotorcraft) is light-sport-aircraft (created in 2005), is fore- projected to grow by 14,640 aircraft -- an av- cast to grow by 3.4 percent annually, adding erage rate of 1.8 percent a year between about 2,730 new aircraft by 2040, more than doubling its 2018 fleet size.

Active General Aviation Aircraft 250,000

200,000

150,000

100,000

50,000

0 2010 2020 2030 2040 Calendar Year

Fixed Wing Piston Fixed Wing Turbine Rotorcraft LSA Experimental and Other

Although the total active general aviation Countering this trend, hours flown by turbine fleet is projected to marginally decline, the aircraft (including rotorcraft) are forecast to number of general aviation hours flown is increase 2.2 percent yearly between 2019 forecast to increase an average of 0.7 per- and 2040. Jet aircraft are expected to ac- cent per year through 2040 from 25.5 million count for most of the increase, with hours in 2018 to 30.2 million, as the newer aircraft flown increasing at an average annual rate of fly more hours each year. Fixed wing piston 2.7 percent over the forecast period. The hours are forecast to decrease by 1.0 per- large increases in jet hours result mainly from cent, the same rate as the fleet decline. the increasing size of the business jet fleet.

General Aviation Hours Flown (in thousands) 35,000

30,000

25,000

20,000

15,000

10,000

5,000

0 2010 2020 2030 2040 Calendar Year

Fixed Wing Piston Fixed Wing Turbine Rotorcraft LSA Experimental and Other

Rotorcraft activity, which was not as heavily Lastly, the light sport aircraft category is fore- impacted by the previous economic down- casted to see an increase of 4.2 percent a turn as other aircraft and rebounded earlier, year in hours flown, primarily driven by faces the challenges brought by lower oil growth in the fleet. prices, a trend which has been continuing. The low oil prices impacted utilization rates The FAA also conducts a forecast of pilots by and new aircraft orders both directly through certification categories, using the data com- decreasing activity in oil exploration, and piled by the Administration’s Mike Monroney also through a slowdown in related economic Aeronautical Center. There were 664,565 activity. While significant use in other activi- active pilots certificated by FAA at the end of ties such as air medical, training, air taxi and 2019. The number of certificates in most pi- tours continues, the 2018 GA Survey lot categories continued to increase, with the showed a 5.0 percent decrease in the active exception of private, rotorcraft only and rec- fleet and a 12.0 percent decrease in hours reational certificates. The FAA has sus- flown. The fleet is projected to grow at a sim- pended the student pilot forecast for the third ilar rate to previous year’s forecast, although consecutive year. The number of student pi- starting from a lower base and at a slower lot certificates has been affected by a regu- pace in the piston segment. Rotorcraft hours latory change that went into effect in April are projected to grow by 2.1 percent annually 2016 and removed the expiration date on the over the forecast period. new student pilot certificates. The number of student pilots jumped from 128,501 at the end of 2016 to 149,121 by the end of 2017,

and to 197,665 at the end of 2019. The 2016 numbers, accompanied by a higher rate of rule change generates a cumulative increase increase in ATP certificates. The number of in the certificate numbers and breaks the link both commercial pilot and ATP certificates between student pilot and advanced certifi- have been increasing for the last three years, cate levels of private pilot or higher. There is to 100,863 and 164,947, respectively by the no sufficient data yet to perform a reliable end of 2019. forecast for the student pilots. The number of active general aviation pilots Commercial and air transport pilot (ATP) cer- (excluding students and ATPs) is projected tificates have been impacted by a legislative to decrease about 12,120 (down 0.2 percent change as well. The Airline Safety and Fed- yearly) between 2019 and 2040. The ATP eral Aviation Administration Extension Act of category is forecast to increase by 25,150 2010 mandated that all part 121 (scheduled (up 0.7 percent annually). The much smaller airline) flight crew members would hold an category of sport pilots are predicted to in- ATP certificate by August 2013. Airline pilots crease by 2.9 percent annually over the fore- holding a commercial pilot certificate and cast period. On the other hand, both private mostly serving at Second in Command posi- and commercial pilot certificates are pro- tions at the regional airlines could no longer jected to decrease at an average annual rate operate with only a commercial pilot certifi- of 0.6 and 0.1 percent, respectively until cate after that date, and the FAA data initially 2040. showed a faster decline in commercial pilot

Active Pilots by Type of Certificate 600,000

500,000

400,000

300,000

200,000

100,000

0 2009 2019 2029 2040 Calendar Year

Sport Pilot Private Pilot Commercial Pilot Airline Transport Pilot Rotorcraft only

FAA Operations

The growth in air travel demand and the busi- trends allow U.S. airlines to accommodate ness aviation fleet will drive growth in opera- more passengers without increasing the tions at FAA facilities over the forecast pe- number of flights. General aviation opera- riod. Activity at FAA and contract towers is tions (which accounted for 51.4 percent of forecast to increase at an average rate of 0.9 operations in 2019) are forecast to increase percent a year through 2040 from 53.3 mil- an average of 0.4 percent a year as in- lion in 2019 to close to 64.6 million in 2040. creases in turbine powered activity more Commercial operations7 at these facilities than offset declines in piston activity. are forecast to increase 1.6 percent a year, approximately four times faster than non- The growth in operations at towered airports commercial operations. The growth in com- is not uniform. Most of the activity at large 8 mercial operations is less than the growth in and medium hubs is commercial in nature, U.S. airline passengers (1.6 percent versus given that these are the airports where most 2.2 percent) over the forecast period due pri- of the passengers, about 88 percent in 2019, marily to larger aircraft (seats per aircraft in the system fly to. mile) and higher load factors. Both of these

FAA & Contract Tower Operations

70,000

60,000

50,000

40,000

30,000

20,000 Operations (000) 10,000

0 2010 2020 2030 2040 Fiscal Year Commercial Non Commercial

7 Sum of air carrier and commuter/air taxi cate- Medium hub is defined to have at least 0.25 per- gories. cent but less than 1 percent of total U.S. revenue 8 Large hub is defined to have 1 percent or more passenger enplanements in FY 2019. There are of total U.S. revenue passenger enplanements in 31 airports classified as medium hubs. FY 2019. There are 30 airports in this category.

Given the growth in airline demand and most cent a year between 2019 and 2040. Com- of that demand is at large and medium hubs, mercial operations accounted for approxi- activity at the large and medium hubs is fore- mately 60 percent of Tracon operations in cast to grow substantially faster than small 2019 and are projected to grow 1.5 percent towered airports including small FAA towers9 a year over the forecast period. General avi- and FAA contract towers10. The forecasted ation activity at these facilities is projected to annual growth is 1.7 percent at large hubs, grow only 0.25 percent a year over the fore- 1.6 at medium hubs, 0.5 percent at small cast. FAA towers and FAA contract towers between 2019 and 2040. The number of IFR aircraft handled is the measure of FAA En-Route Center activity. Among the 30 large hubs, the airports with Growth in airline traffic and business aviation the fastest annual growth forecast are those is expected to lead to increases in activity at located along the coastal sections of the En-Route centers. Over the forecast period, country where most large cities are located. aircraft handled at En-Route centers are Large cities have historically shown to gen- forecast to increase at an average rate of 1.5 erate robust economic activity, which in turn percent a year, with commercial activity drives up the airline demand. On the other growing at the rate of 1.7 percent annually. hand, the airports forecast to have slower an- Activity at En-Route centers is forecast to nual growth tend to be located in the middle grow faster than activity at towered airports of the country. and FAA Tracons because more of the activity at En-Route centers is from the faster FAA Tracon (Terminal Radar Approach Con- growing commercial sector and high-end 11 trol) Operations are forecast to grow (mainly turbine) general aviation flying.12 In slightly faster than at towered facilities. This 2019, the share of commercial IFR aircraft is in part a reflection of the different mix of handled at FAA En-Route centers is about activity at Tracons. Tracon operations are 82 percent, which is greater than the 60 per- forecast to increase an average of 1.1 percent share at Tracons or the 44 percent share at FAA and Contract Towers.

9 Small FAA towers are defined as towered air- 11 Tracon operations consist of itinerant Instru- ports that are neither large or medium hubs nor ment Flight Rules (IFR) and Visual Flight Rules FAA contract towers. (VFR) arrivals and departures at all airports in the 10 FAA contract towers are air traffic control tow- domain of the Tracon as well as IFR and VFR ers providing air traffic control services under overflights. contract with FAA, staffed by contracted air traffic 12 Much of the general aviation activity at tow- control specialists. ered airports, which is growing more slowly, is local in nature, and does not impact the centers.

U.S. Commercial Aircraft Fleet

The number of aircraft in the U.S. commer- 2040 as the fleet shrinks by 1.7 percent (41 cial fleet is forecast to increase from 7,628 in aircraft) between 2019 and 2040. Carriers 2019 to 9,421 in 2040, an average annual remove 50 seat regional jets and retire older growth rate of 1 percent a year. Increased small turboprop and piston aircraft, while demand for air travel and growth in air cargo adding 70-90 seat jets, especially the E-2 is expected to fuel increases in both the pas- family after 2020. By 2031 only a handful of senger and cargo fleets. 50 seat regional jets remain in the fleet. By 2040, the number of jets in the regional car- Between 2019 and 2040 the number of jets rier fleet totals 2,192, up from 1,846 in 2019. in the U.S. mainline carrier fleet is forecast to The turboprop/piston fleet is forecast to grow from 4,388 to 5,310, a net average of shrink by 71% from 515 in 2019 to 128 by 44 aircraft a year as carriers continue to re- 2040. These aircraft account for just 5.5 per- move older, less fuel efficient narrow body cent of the fleet in 2040, down from 21.8 per- aircraft. The narrow-body fleet (including E- cent in 2019. series aircraft as well as A220-series at Jet- Blue and A220-series at Delta) is projected The cargo carrier large jet aircraft fleet is to grow 35 aircraft a year as carriers replace forecast to increase from 879 aircraft in 2019 the 757 fleet and current technology 737 and to 1,791 aircraft in 2040 driven by the growth A320 family aircraft with the next generation in freight RTMs. The narrow-body cargo jet MAX and Neo families. The wide-body fleet fleet is projected to increase by 11 aircraft a grows by an average of 12 aircraft a year as year as 757’s and 737-800’s are converted carriers add 777-8/9, 787’s, A350’s to the from passenger use to cargo service. The fleet while retiring 767-300 and 777-200 air- wide body cargo fleet is forecast to increase craft. In total the U.S. passenger carrier 33 aircraft a year as new 747-800, 777-200, wide-body fleet increases by 1.8 percent and new and converted 767-300 aircraft are over the forecast period. added to the fleet, replacing older MD-11, A300/310, and 767-200 freighters. The regional carrier fleet is forecast to decline from 2,361 aircraft in 2019 to 2,320 in

U.S. Carrier Fleet 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2009 2019 2029 2040 Calendar Year

Mainline NB Mainline WB Cargo Jet Regionals

Commercial Space

The FAA’s Office of Commercial Space • Maintains an effective regulatory Transportation (AST) licenses and regulates framework for commercial space U.S. commercial space launch activities in- transportation activities,

cluding launch and reentry of vehicles and • Provides guidance to prospective operation of non-federal launch and reentry commercial operators on how to com- sites authorized by Executive Order 12465 ply with regulatory requirements for and Title 51 U.S. Code, Subtitle V, Chapter obtaining an authorization and oper- 509 (formerly the Commercial Space Launch ating safely, Act). Title 51 and the Executive Order also direct the U.S. Department of Transportation • Evaluates applications for licenses, to encourage, facilitate, and promote U.S. experimental permits, and safety ap- commercial launches. The FAA’s mission is provals for launch and reentry operations and related commercial space to license and regulate commercial launch transportation activities, and reentry operations and non-federal launch sites to protect public health and • Evaluates applications for licenses safety, the safety of property, and the na- for launch and reentry site operational security and foreign policy interests of tions, the United States. With its dual mission of regulating and facilitating the emerging com- • Monitors and enforces regulatory mercial space transportation industry, FAA compliance through safety inspec- faces unique challenges. tions of launches, reentries, sites, and other regulated commercial The FAA licenses launches or reentries car- space activities, ried out by U.S. persons inside or outside the • Provides U.S. Government oversight United States. The FAA does not license of investigations associated with the launches or reentries the U.S. Government mishap of an FAA authorized launch carries out for the Government (such as or reentry, those owned and operated by NASA or the Department of Defense). FAA does not li- • Facilitates the integration of commer- cense or grant permits for amateur-class cial space launch and reentry opera- rockets13. tions into the National Airspace Sys- tem (NAS) by coordinating airspace To accomplish its mission, the FAA performs use and regulatory oversight with air the following major functions: traffic management and Federal launch ranges,

13 Per 14 CFR Chapter 1, Part 1, section 1.1: Am- (200,000 pound-seconds) or less; and cannot ateur rocket means an unmanned rocket that is reach an altitude greater than 150 kilometers propelled by a motor or motors having a com- above the earth’s surface. bined total impulse of 889,600 Newton-seconds

Regulatory Safety Oversight Activities of • Coordinates research into the safety, FAA environmental, and operational implications of new technologies and the The business cycle from the time a firm first evolving commercial space transpor- contacts FAA until the last launch of a li- tation industry, censed operation can be several years. There are many activities performed by FAA • Conducts outreach to the commercial during this cycle. The most notable activities space transportation industry by are described here. hosting working groups and confer- ences, Pre-Application Consultation for Licenses, Experimental Permits and Safety Approvals • Collaborates with Government part- Prospective applicants seeking commercial ners, such as NASA, Defense Ad- space transportation licenses, experimental vanced Research Projects Agency (DARPA), and the U.S. Air Force to permits, or safety approvals are required by assure consistent approaches to reg- regulation to consult with FAA before sub- ulations, policy, and standards, and mitting their applications. During this period, FAA assists them in identifying potential • Conducts outreach to international obstacles to authorization issuance and de- counterparts to promote the U.S. reg- termining potential approaches to regulatory ulatory framework across the world. compliance. In addition, many new opera-

tors are seeking to incorporate new technol- In addition to AST headquarters offices in ogies, vehicle types, or operational models Washington, D.C., AST maintains staff with creating challenges for FAA in determining assigned duty locations near active launch the applicable regulations or approach to ranges to facilitate communication with regulatory compliance. space launch operators and to implement FAA’s regulatory responsibilities more effi- Licenses, Permits and Safety Approvals ciently. AST personnel are currently as- FAA authorizes commercial space transpor- signed to duty locations in close proximity to: tation activities via the issuance of licenses, Kennedy Space Center in Florida, Johnson permits, and safety approval. Though many Space Center in Texas, and Vandenberg Air licenses authorize multiple launches (for ma- Force Base and the Mojave Air and Space ture launch systems), the need remains for Port in California. FAA also directly supports FAA to also issue individual launch licenses NASA’s commercial space initiatives by for systems that are still maturing towards a providing on-site staff at both the Johnson high level of reliability. Furthermore, with the Space Center and Kennedy Space Center to dynamic commercial space transportation in- coordinate the FAA’s regulatory and en- dustry, FAA often evaluates launch and forcement activities with NASA’s develop- reentry systems and operations that are ment and operational requirements for com- evolving and changing, which may ultimately mercial space. require license modifications or issuance of new licenses.

Inherent in the review process is the require-

ment to conduct policy reviews and payload reviews. When conducting a policy review,

FAA determines whether the proposed Safety Analyses launch, reentry, or site operation presents FAA conducts flight safety, system safety, any issues that would jeopardize public maximum probable loss, and explosive health and safety or the safety of property, safety analyses to support the evaluation and adversely affect U.S. national security or for- issuance of licenses and permits. FAA also eign policy interests, or be inconsistent with evaluates and analyzes the performance of international obligations of the United States. safety-critical space flight personnel to deter- If not otherwise exempt from review, FAA re- mine how they affect public safety risk. In the views a payload proposed for launch or near future, as commercial firms become reentry to determine whether the payload more involved with human space flight ac- would jeopardize public health and safety, tivity, AST and the FAA’s Office of Aero- the safety of property, U.S. national security space Medicine may evaluate, analyze, and or foreign policy interests, or the international determine the health risks to the space flight obligations of the United States. The policy participants (crew and space flight partici- or payload determination becomes part of pants) due to natural and flight-induced the licensing record on which FAA’s licensing launch and reentry environments, as well as determination is based. any hazardous ground operations directly associated with the flight. FAA also reviews and issues launch and reentry site operator licenses and license re- Inspections and Enforcement newals. FAA also reviews and evaluates FAA currently conducts as many as 400 pre- launch site license applications for launch flight/ reentry, flight/ reentry, and post-flight/ sites located in foreign countries but operat- reentry safety inspections per year. Inspec- ing with U.S.-licensed launch or reentry sys- tions often occur simultaneously at any of the tems. FAA coordinates range planning 11 licensed U.S. and international commer- among Federal, state, and local govern- cial space launch sites, as well as at 4 Fed- ments and with the commercial range opera- eral launch ranges and 3 exclusive-use tors or users. As part of the evaluation of ap- launch sites. The establishment of non-fed- plications for launch licenses, reentry li- eral launch sites requires additional inspec- censes, and site operator licenses, FAA also tions in areas such as ground safety that conducts environmental reviews consistent have traditionally been overseen by the U.S. with its responsibilities under the National Air Force at Federal ranges. At spaceports Environmental Policy Act. and launch sites with high launch rates (e.g., Cape Canaveral Air Force Station, Vanden- FAA anticipates issuing a growing number of berg Air Force Base, the Mid-Atlantic Re- safety approvals for space launch systems gional Spaceport, and Spaceport America), equipment, processes, technicians, training at least 80 percent of the inspections will be and other supporting activities. FAA reviews, conducted by locally-based field inspectors evaluates, and issues safety approvals to sup- in order to respond to a dynamic operational port the continued introduction of new safety tempo, minimize cost, and increase effi- systems, safety operations applications, and ciency. safety approval renewal applications. Mishap Investigations Mishap events have demonstrated that FAA needs to have the capacity to investigate at

least two space launch or reentry mishaps or within the purview of the FAA mission. Alt- accidents simultaneously anywhere in the hough it was a modest improvement, this world, and to lead/oversee as many as six in- change set the groundwork for FAA to imple- vestigations during a single year. FAA ment a more objective and transparent pro- should have the capabilities and resources to cess for projecting staffing requirements and safely perform the investigations lasting as also necessitated development of credible op- long as 16 weeks at remote sites with limited erations forecasts. Since 2014, FAA has infrastructure or facilities. FAA should have made several important improvements to its the capability and resources to efficiently re- operations forecast: view all applicant mishap plans and accident investigation procedures as part of the li- • In 2015, FAA began using planned launch and reentry data collected cense and permit evaluation process. from operators and prospective applicants as the starting point for its NAS Integration launch and reentry forecasts. This AST works in partnership with all FAA lines- change enabled FAA to simplify and of-business, notably the Air Traffic Organiza- improve its forecasting methodology tion (ATO) and Office of Airports (ARP) to by tying launch and reentry forecasts support the safe and efficient integration of directly to anticipated operations by commercial launch and reentry operations commercial space transportation firms into the NAS and its system of airports and air known to FAA, rather than to aggre- gate industry demand. traffic managed by the ATO. This includes an increased presence at the Air Traffic Con- • Because commercial spaceflight is a trol System Command Center to assist in the highly dynamic and rapidly evolving strategic and tactical planning of launch and industry, it was quickly determined reentry operations, as well as to provide sup- that operator-provided data alone port during these operations. Further, AST were not sufficient to reliably predict works with the ATO as FAA develops tech- future activity. Consequently, a pri- nologies to facilitate safe and efficient inte- mary pillar of FAA’s forecasting methodology is to take a conserva- gration of commercial launch and reentry op- tive view of industry growth in the erations into the NAS, including technologies near term. Therefore, in 2016, FAA to improve the integration of launch and began refining its forecasting method- reentry data into FAA air traffic control sys- ology by using observations about tems and technologies to improve the timely historical launch activity to establish and accurate development and distribution of better forecasting parameters for both new applicants and existing op- notices of aircraft hazard areas. erators.

Based on proprietary information available FAA’s Operations Forecast to FAA, a steady increase in launch and reentry activities is expected in the coming To improve its workforce planning process, years. There are several factors that magnify in 2014, FAA adopted an approach to esti- the challenges associated with predicting the mate its future staffing needs based on the number of launches and reentries to expect ratio of regulatory safety oversight staff to a in a given year. They include: forecast of launch and reentry operations

• the list of firms intending to launch or early use of these technologies can increase actually launch is dynamic, the probability of a mishap. A mishap can • the continued development of new drastically impact launch plans for one or technologies, more firms. Investigations and subsequent • launch rates for reusable launch vehi- “return to flight” for firms impacted by a mis- cles, hap can take months to years. • space tourism, • dynamic nature of flight test pro- Taking these factors into account, the follow- grams, and ing table and graph provide industry’s fore- • mishaps. cast through 2022, FAA’s forecast through 2021, and historical activity. The commercial For example, the number of firms actively space transportation industry continues to communicating with FAA increased from 14 evolve and innovate at such a rapid pace that in 2014 to 65 in 2019, an increase of more it is currently impractical to generate a credi- than 360 percent. New technologies [e.g., re- ble, conservative forecast beyond the end of usable launch vehicles (RLVs)] allow a faster fiscal year 2021. operational tempo, and at the same time,

Industry Fore- Fiscal Year FAA Forecast Actual cast

2015 37 22 – 25 14

2016 32 25 – 29 17

2017 78 17 – 26 22

2018 87 27 – 38 35

2019 89 33 – 44 32

2020 96 34 – 46

2021 168 40 – 56

2022 241 Notes:

1. FAA forecast entries represent the Low to High estimate.

2. Industry Forecast for 2015 follows COMSTAC methodology from 2014. Industry forecasts for all other years follow the same methodology.

It is important to note all FAA-authorized Additional Factors Affecting Forecast commercial space operations are included in Accuracy this forecast, regardless of where they oc- Commercial space transportation is a rapidly curred in the world. That is, not all launch evolving industry. The industry’s growth and reentry activity occurs at one location, for through technological innovation and the de- example, at Cape Canaveral, Florida. In the velopment of new markets increases the past year, FAA licensed launches and reen- challenges associated with forecasting com- tries throughout the National Airspace Sys- mercial space transportation operations. tem (NAS) and beyond, including multiple reentries in the Pacific Ocean and six li- New Commercial Launch Technologies and censed launches from New Zealand. This Operations are Emerging on an Accelerated forecast, however, does not include launch Basis activity not authorized by the FAA (e.g. U.S. The commercial space transportation indus- Department of Defense or NASA launches), try is exploring a variety of new technologies launch activity for other nations, and this and new approaches to space launch and forecast is not tied exclusively to satellite de- reentry. In late 2015, both Blue Origin and mand. Space Exploration Technologies Corp. (SpaceX) successfully demonstrated the re-

usability of their vertically launched rockets,

a development that could significantly reduce managed the Commercial Resupply Ser- the cost of operations and lead to an in- vices (CRS) program, which acquires trans- crease in the number of launch and reentry portation services from commercial providers operations per year. Other U.S. commercial to deliver cargo to and from the International entities are also pursuing the development of Space Station (ISS). NASA is also working reusable launch vehicles (RLVs). At the with commercial companies under its Com- same time, state and local governments are mercial Crew Transportation Capabilities joining with commercial firms to promote ad- contract to develop vehicles that will provide ditional launch and reentry sites, and some transportation for astronauts and interna- firms are seeking to establish launch sites for tional partners to and from the ISS. Testing their exclusive use. This added launch ca- of Commercial Crew vehicles developed by pacity sets the stage for simultaneous oper- SpaceX and Boeing has begun, and crewed ations and an increase in the number opera- operational launches licensed by the FAA tions per year. may begin in 2020. NASA is also seeking proposals from industry for a program called New Markets for Commercial Space Trans- Commercial Lunar Payload Services. The portation are Emerging commercial vehicles used by NASA for cargo The continuing development of commercial and crew transportation will have other com- space transportation technology has spurred mercial applications that increase the capa- new markets for commercial space transpor- bilities of the commercial space transporta- tation services. As private industry continues tion industry as a whole. to develop and test new vehicles capable of taking space flight participants on suborbital Looking further afield, there are several com- and orbital flights, companies and organiza- panies in the regulatory pipeline seeking au- tions are proposing to offer human space thority to land commercial vehicles on the flight training and several organizations have Moon, establish private-sector space sta- already begun to provide this service. States tions, service satellites on-orbit, and estab- and municipalities have sought to open new lish launch sites using non-traditional tech- spaceports to attract commercial space nologies like railguns and tube launchers. transportation and associated high-tech Extensive FAA resources will be needed to firms and create business hubs for research determine how these unprecedented com- and development. Since 2008, NASA has mercial space ventures will impact public safety and U.S. national interests.

Unmanned Aircraft Systems

Over the past few years, unmanned aircraft naires, overall market, and operational infor- systems (UAS) have been experiencing mation. Using these trends and insights from healthy growth in the United States and industry, the FAA has produced a number of around the world. A UAS consists of an un- forecasts. Forecasts reported in the sections manned aircraft platform and its associated below are driven primarily by the assump- elements—including communication links, tions of continuing evolution of the regulatory sensors, software and power supply—that environment, the commercial ingenuity of are required for safe and efficient operation manufacturers and operators, and underly- in the national airspace system (NAS). While ing. While continuing to enable the thriving introduction of UAS in the NAS has opened UAS industry, these efforts will continue the up numerous possibilities, it has brought op- safe integration of UAS into the NAS. erational challenges including safe integration into the NAS. Despite these challenges, the UAS sector holds enormous promise; po- Questionnaire of Recreational/Model tential uses include modelers experimenting Registrations with small UAS (sUAS) performing numerous functions such as aerial photography; Before presenting sUAS trends and forecast, recreational flying for personal uses; sUAS this section briefly reviews the results of a experimenting with package delivery on a proto-type questionnaire for recrea- commercial basis; delivery of medical sup- tional/model sUAS operations conducted plies; and provision of support for search and during September and October of 2019. The rescue missions following natural calamities. well-tested questionnaire asked individuals registered as recreational sUAS operators This section provides a broad landscape under Section 349 about their flight behavior covering recreational and commercial un- and activities, preferred method of communi- manned aircraft14 and their recent trends as cation from the FAA, and the UAS topics in gleaned from trends in registration, question- which they are most interested. The questionnaire was anonymous, voluntary, and

14 These are also called, interchangeably, hobby 44809 [see https://www.federalregister.gov/docu- and non-hobby UAS, respectively. On October 5, ments/2019/05/17/2019-10169/exception-for- 2018, the President signed the FAA Reauthoriza- limited-recreational-operations-of-unmanned-air- tion Act of 2018 (Pub. L. 115-254). Section 349 of craft for more details]. Recreational fliers, under that Act repealed the Special Rule for Model Air- Section 349, are referred to as recreational fliers craft (section 336 of Pub. L. 112-95; Feb. 14, or modeler community-based organizations in the 2012) and replaced it with the new conditions to last authorization [see operate recreational small unmanned aircraft https://www.faa.gov/uas/recreational_fliers/]. In without requirements for FAA certification or op- previous notes including other documents of the erating authority. The Exception for Limited Rec- Agency, these terms are often interchanged. reational Operations of Unmanned Aircraft established by section 349 is codified as 49 U.S.C.

41 conducted over the internet. Of those regis- most respondents fly fewer than seven times trants contacted to participate in the ques- per month, there are respondents who fly tionnaire, 15,482 individuals—about 6% of more often as well, with some reporting as registrants—completed the questionnaire. high as 300 flights per month.

Respondents reported that, on average, they fly approximately seven flights per month after adjusting for measurement error.15 While

Recreational respondents tend to fly about flight duration normally distributed around 16 minutes per flight, on average. After ad- the mean of 15.6 minutes [see graph be- justing for measurement error, we observe low].16

15 Analysis of responses suggest that individuals 30 minutes or more of flight time are removed who reported flying 30 minutes or more per flight from the sample. misconstrued the scope of the questions. To reduce the measurement error, respondents with

Respondents are estimated to fly, on aver- flying time per month, between 20-40 age, 94 minutes per month [see graph be- minutes, quite a few respondents tally far low]. While most of the respondents log less more active flying time as well.

Generalizing the sampled individuals to all respondents. Only 17% of respondents re- registrants, responses suggest that recrea- ported some type of social media, with tional sUAS operators log 1.5 million hours of YouTube and Facebook as the preferred flight time every month within the United platforms. Only 6% of respondents reported States. receiving information about the FAA from community organizations. In the write-in Turning our attention to communication pref- section of the questionnaire, 3.4% of re- erences, respondents overwhelmingly respondents reported preferring information by ceive communication from the FAA by email, physical mail or mobile devices, either by text with 74% of respondents reporting email or app. The vast majority of respondents, among the sources of FAA information. The FAA website was a distant second at 28% of

90%, reported finding information from the FAA helpful.

Overall, respondents were overwhelmingly nered interest from 25% respondents, on av- interested in new rules for recreational flyers erage. A complete distribution of the re- (73%). Operating in controlled airspace or in sponses on topics of their concerns is pro- prohibited altitude/airspaces were the next vided in the chart below. most interesting topics, at 37% and 43% respectively. The remainder of the options gar-

Trends in Recreational/Model Aircraft and Forecast

FAA’s online registration system for recrea- the temporary halt, registration pace contin- tional/model sUAS went into effect on Dec. ued beyond May, 2017. On October 5, 2018, 21, 2015. This required all UAS weighing the President signed the FAA Reauthoriza- more than 0.55 pounds (250 grams) and tion Act of 2018 that formalized new condi- fewer than 55 pounds (or 25 kilograms) to be tions for recreational use of drones. [See registered using the on-line system https://www.faa.gov/news/up- (https://www.faa.gov/uas/get- dates/?newsId=91844 for more details]. ting_started/registration/) or the existing (pa- per-driven) aircraft registry. Following a tem- With the continuing registration, almost porary halt in registration due to an order 990,000 recreational UAS owners had al- from the U.S. Court of Appeals in Washing- ready registered with the FAA by December, ton, D.C. in May, 2017, the registration re- 2019.17 On average, owner registration quirement for all model aircraft was rein- stood at around 9,000 per month during Jan- stated in December, 2017 with the National uary-December, 2019 with some expected Defense Authorization Act (NDAA). Despite peaks during the holiday seasons and sum- mer.

17 For our estimate and projections using registra- territories. Furthermore, we only use those regis- tion database, applying to recreational, non- trants who are “active”; those whose registrations model or commercial and remote pilots, we use have been canceled or withdrawn are not part of only those who are registered in the U.S. and the the data we report in this document.

The pace of registration seems to have sta- out the country with denser ownership map- bilized compared to last year in the same pe- ping closely against the population centers of riod; monthly owner registration during 2019 the country, as expected.18 stands at around the same level as in 2018.

Recreational registration, and thus ownership of sUAS, is distributed throughout the country. Using the data as available in De- cember 2019, a spatial distribution of ownership at a county level below demonstrates that sUAS continue to be distributed through-

18 Registration data contains location of registrant by zip code. Registrants are mapped to counties by their reported zip code.

Recreational

At present, the recreational ownership regis- NAS. Finally, the Agency has engaged out- tration does not correspond one-to-one with side consults to aid forecasting efforts for aircraft in the system, the primary focus of both the recreational and commercial UAS the Agency. Unlike their commercial non- fleet in this past year as well. We use all model counterparts, the registration rules for these resources to analyze and forecast both recreational operators do not require owners UAS types’ activities in the U.S. of recreational UAS to register each individual aircraft; only operators are registered. With around 990,000 recreational operators For each registration, therefore, one or more registered as of December 31, 2019, we es- aircraft are possibly owned, with a few ex- timate that there are around 1.32 million fleet ceptions for no equipment ownership as well. distinctly identified as recreational aircraft. Notwithstanding these challenges, there is Comparing with industry sales and otherdata noted above, we conclude that recreational information available, both from industry and academia, allowing us to understand aircraft ownership. Furthermore, under the sponsorship of the UAS Integration Research Plan, the Agency has launched various research activities to understand the possible magnitude of the sector as well as implications on likely aircraft that may be used for recreational flying and safety implications of the UAS fleet from gradual integration into the

aircraft is almost 34% higher than ownership the pace of falling prices diminishes and the registration19. early adopters begin to experience limits in their experiments, or as eagerness plateaus. A comparison of last year’s data (2018) with this year’s (2019) shows the annual growth Given the trend in registration and market de- rate to be approximately 6.4%. Such a velopments, we forecast that the recreational growth rate is expected due to the introduc- UAS market will saturate at around 1.5 mil- tion of drones as a recreational UAS, which lion units. However, there is still some up- is facilitated by falling equipment prices, im- side uncertainty due to further changes in proved technology such as built-in cameras technology including battery, facilitating reg- and higher capability sensors, and relatively ulatory environment, and the likely event of easy maneuvering. However, similar to all continued falling prices. This yields to some technologies including hobby items, (e.g., larger upside uncertainty in the forecast. In cell phones and video game consoles; and contrast, there is relatively less low-side un- prior to that, video cameras, and video play- certainty. Hence, we provide a forecast base ers), the trend in recreational UAS has been (i.e., likely) with high and low scenarios, pro- slowing and is likely to slow down further as vided in the table below.

Total Recreation/Model Fleet (Million sUAS Units) year Low Base High 2019 1.32 1.32 1.32 2020 1.36 1.38 1.42 2021 1.37 1.42 1.49 2022 1.38 1.45 1.54 2023 1.39 1.47 1.57 2024 1.39 1.48 1.59

Last year, we forecasted that the recreational sUAS in 2019, a growth rate exceeding 5.5% UAS sector would have around 1.314 million from the year before (2018). Actual data

19 This calculation involves taking into account re- time. Furthermore, with FAA regulations increas- tirement, redundancy, and loss of craft corre- ingly encouraging recreational drones to be reg- sponding to ownership registration. As craft be- istered, as opposed to ownership, registration comes sturdier and operators situationally aware, would soon come to represent equipment like we expect this rate to change dynamically over commercial counterpart.

came close to that projection with over 1.324 million aircraft already by the end of 2019. Thus, our forecast of recreational sUAS last Trends in Commercial/Non-Model Air- year undershot by less than 1% (or, -0.78%) craft and Forecast for 2019 (or 1.324 million actual aircraft vs Online registration for part 107 or commer- 1.314 million aircraft that we projected last cial sUAS went into effect on April 1, 2016. year). Unlike recreational/model ownership, rules for commercial registration require owners to The FAA uses the trend observed in registra- register each sUAS, thus creating a one-to- tions, particularly over the past year; expert one correspondence between registration opinions collected in TRB annual workshops; and aircraft. During the period of January- review of available industry forecast; mar- December, 2019, more than 108,000 com- ket/industry research; and a time-series mercial operators registered their equipment. model on registration trends fitted on monthly The pace of monthly registration, slightly data. Using these, we forecast that the rec- above 10,000, is still relatively high but lower reational UAS fleet will likely (i.e., base sce- than the same period in 2018. It appears that nario) attain its peak over the next 5 years, the pace of registration is slowing down in from the present 1.32 million units to around comparison to 2018, but it is still over 2.5 1.48 million units by 2024. The high scenario times higher than the pace at which commer- may reach as high as 1.59 million units with cial UAS owners registered their craft during low-side scenario yielding around 1.39 mil- the earlier period (i.e., April 2016 – Novem- lion units over the next 5 years. As evident, ber 2017). While the pace of recreational the growth rates underlying these numbers registration ownership has slowed down con- are fairly steady in the initial years, but fade siderably, the pace of registration remains faster in the last 2-3 years. The gradual sat- accelerated for their commercial counter- uration that is projected in 5 years and be- parts. By the end of 2019, there were more yond in the recreational UAS fleet parallels than 385,000 commercial UAS registered other consumer technology products and the since the registration opened. Agency’s projections from last year.

For each month the registration has been over people and at night without waivers and available, over 4,600 aircraft/month were remote identification https://www.feder- registered until November, 2017. This pace alregister.gov/documents/2019/12/31/2019- accelerated to 14,600 registered per month 28100/remote-identification-of-unmanned- during 2018. This past year (2019), average aircraft-systems for remote identification monthly registration stood at around 10,100. NPRM]. Furthermore, given the possibilities The commercial UAS sector is dynamic and for waivers, including enhancement of oper- appears to be at an inflexion point, demon- ational efficiencies under increasingly well- strating powerful stages of growth. Unlike defined concepts of operations (CONOPS) the recreational UAS sector, the FAA antici- — which ensures safety and transparent in- pates that the growth rate in this sector will formation flow across the community — remain high over the next few years. This is more and more commercial uses will be- primarily driven by the clarity that part 107 come likely, fueling even further growth. No- has provided to the industry; e.g., proposed tably, one such place for receiving all opera- new rule changes. [See https://www.feder- tional information, including registration, au- alregister.gov/documents/2019/02/13/2019- thorization, and logging accident reports, 00732/operation-of-small-unmanned-air- helps facilitate this growth further [https://faa- craft-systems-over-people for operations dronezone.faa.gov/#/].

As in the case of recreational UAS owner- Actual data came close to that projection with ship, commercial sUAS are distributed over 385,000 aircraft already registered by across the country. A spatial distribution of the end of 2019. Our forecast of commercial equipment registration, using data for De- sUAS last year thus overshot by 4% for 2019 cember 2019, demonstrates that commercial (or 385,450 actual aircraft vs 400,455 pro- sUAS are distributed throughout the country jected last year). Forecasting in a time of with denser activities mapping closely such monumental transition is indeed chal- against the economic or commercial activi- lenging, and the commercial UAS sector’s ties of the country. fast growth is a demonstration of that fact. Nevertheless, our forecast errors for both Last year, the FAA forecasted that the com- recreation and commercial appear to be mercial UAS sector would have around within the bounds of reasonableness. 400,000 sUAS in 2019, a growth rate exceeding 44% over the year before (2018).

Total non-Model Fleet (no. of '000 units) year Low Base High 2019 385 385 385 2020 467 507 594 2021 535 633 830 2022 567 731 1031 2023 586 786 1136 2024 598 828 1197

Given the trend observed in the registrations, sUAS aircraft: consumer grade and profes- information from survey conducted in 2018, sional grade. The consumer grade commer- review of available industry forecasts/work- cial sUAS have a wide range of prices, below shop and UAS Symposium, and internal re- US $10,000 with an average unit price of ap- search together with market/industry re- proximately $2,500. The professional grade search, the FAA forecasts that the commer- is typically priced above US $10,000 with an cial UAS fleet by 2024 will likely (i.e., base average unit price assumed to be around scenario) be more than twice as large as the $25,00021. For both consumer grade and current number of commercial UAS20. As the professional grade UAS, the average price is present base (i.e., the cumulative total) in- falling over time, particularly over the last few creases, the FAA anticipates the growth rate years. Currently, the consumer grade domi- of the sector will slow down over time. Nev- nates the commercial UAS sector with a mar- ertheless, the sector will be much larger than ket share approaching 94%. However, as what was understood only a few years ago. the sector matures and the industry begins to Given the accelerated registration over the consolidate, the share of consumer grade last year, the FAA now projects the commer- commercial UAS is likely to decline, though it cial sUAS sector will have around 828,000 will still be dominant. By 2024, FAA projects aircraft in 2024, the end of the 5-year period. this sub-sector will have approximately 85% of the overall commercial sUAS sector. In order to understand the growth trajectory of the sector better, this report divides the Starting from a low base of approximately commercial UAS sector into two types of 25,000 aircraft in 2019, the professional

20 Last year, the ratio of end-year of forecast to 21 Because of this wide range in prices between base year forecast was 3-times; i.e., we fore- types of sUAS in commercial activities, start-up casted end-year to be 3 times the base year’s cost for a business may vary somewhere be- (2018) numbers in 5-year. tween $2,500 and $25,000.

grade commercial sUAS sub-sector stands ness models will begin to develop, thus en- to expand rapidly over time, especially as hancing robust supply-side responses. newer and more sophisticated uses are iden- These responses, in turn, will pull demand tified, designed, and operationally planned forces (e.g., consumer responses to receiv- and flown. If, for example, professional ing commercial packages; routine blood de- grade sUAS meet feasibility criteria of oper- livery to hospitals, search-and-rescue opera- ations, safety, regulations, and satisfy eco- tions, just to name a few) that are somewhat nomics and business principles and enters latent and in the experimental stage at pre- into the logistics chain via small package de- sent. Unlike a developed sector such as pas- livery, the growth in this sector will likely be senger air transportation, it is impossible to phenomenal. This growth trajectory could be put a marker on “intrinsic demand” (or core even further enhanced by expanding opera- demand), primarily driven by economic and tions, e.g., the Low Altitude Authorization demographic factors underlying this sector. and Notification Capability (LAANC) sys- Nevertheless, in this year’s forecast the FAA tem22, which began authorization in May, makes a provisional attempt to provide a low 2018. LAANC is designed to allow consider- side for now, essentially capturing the intrin- able flexibility in sUAS operations and to fa- sic demand. In addition, we provide the likely cilitate sUAS use of the NAS. While most of or base scenario together with the enormous the near-term growth in commercial sUAS potential embodied in the high scenarios, will continue to come from consumer grade representing cumulative annual growth rates units (over 90%), the FAA anticipates a sig- of 17% and 35%, respectively. Average an- nificant part will come from professional nual growth rate corresponding to the low grade sUAS as well. scenario, on the other hand, is around 9%.

Unlike its recreational UAS counterpart, it is Commercial sUAS are presently used for nu- extremely difficult to put a floor on the growth merous purposes. As the sector grows, the of the commercial UAS sector due to its com- FAA anticipates there will be many more position (i.e., consumer vs professional uses for and much more use of commercial grades) and the varying business opportuni- sUAS as is increasingly evident, for example, ties and growth paths. As commercial UAS from the participants’ activities under the In- become operationally more efficient and tegration Pilot Program (IPP). FAA awarded safe, battery life expands, and regulatory 10 communities, among a pool of 149 appli- constraints are gradually relaxed, new busi- cants, [https://www.faa.gov/uas/pro-

22 Low Altitude Authorization and Notification Ca- Data Exchange such as temporary flight re- pability [https://www.faa.gov/uas/programs_part- strictions, Notice to Airmen (NOTAMS), and the nerships/uas_data_exchange/] or LAANC auto- UAS Facility Maps (UASFM). Approved requests mated the application/approval process for air- thus provide the FAA/ATO visibility into where space authorizations. Requests submitted via and when planned drone operations will take FAA approved UAS Service Suppliers (USS) are place. checked against airspace data in the FAA UAS

grams_partnerships/integration_pilot_pro- One way of identifying early trends in com- gram/lead_participants/] membership in the mercial sUAS use is to analyze the waiver IPP in May, 2018. IPP applications and pre- applications granted to sUAS operators. liminary data indicate that awardees over- Both the magnitude and relative composition whelmingly pursuing numerous private busi- of waiver types may indicate the direction of ness and public interest activities. the commercial sUAS sector as a whole. A breakdown of the waiver requests granted in December, 2019 is shown in the chart below

Beyond the daytime operation that is pres- https://www.federalregister.gov/docu- ently allowed under existing part 107 rules, ments/2019/02/13/2019-00732/operation-of- expanding applications further requires waiv- small-unmanned-aircraft-systems-over-peo- ers, to a large extent, for night operations as ple for current NPRM on operations of small distinct from daylight operations (over 1 in 5 unmanned aircraft over people in certain waivers); there are also limitations on alti- conditions, and operations of small UAS at tude, for which waiver requests are made at night without obtaining a waiver]. Analysis of a rate of 2.7%. Many of these waivers are these waiver applications allows us to under- combined, and thus total waivers (i.e., full + stand the industry trends, one of many met- partial) granted (over 3,500 in December rics essential for understanding and project- 2019) exceed 100%. The Agency issues ing the trajectory, course corrections, and these waivers to facilitate business activities growth trends of the sector. by sUAS while preparing for the next round of regulations that will routinely allow the present waiver requirements. [See

Almost 50% of airspace authorizations and classes were also requested and regularly waivers were approved for the controlled air- flown. spaces at the end of December, 2019. While over half were for class D airspace (i.e., smaller airports with control towers), other

Finally, LAANC has been routinely providing [https://faa.maps.arcgis.com/apps/webappvi auto-approval since its inception in May, ewer/in- 2018, and covers all airports presently. It has dex.html?id=9c2e4406710048e19806ebf6a provided, so far, over 148,000 auto-approv- 06754ad] that provide maximum allowed al- als for airspace access requests [see below]; titudes around airports where the FAA may over 100,000 more since this time last year, authorize part 107 UAS operations without while sending over 30,000 for further coordi- additional safety analysis. The UAS facility nation (an increase of over 23,000 from last maps are used to inform requests for part year). LAANC authorizations are facilitated 107 airspace authorizations and waivers in by the use of UAS facility maps (UASFM) controlled airspace.

Remote Pilot Forecast IACRA. A confirmation email is sent when an applicant has completed the necessary An important final metric in commercial TSA security background check. This email sUAS is the trend in remote pilot (RP) certifi- contains instructions for printing a copy of the cations. RPs are used primarily to facilitate temporary remote pilot certificate from commercial sUAS flights. As of December IACRA. A permanent remote pilot certificate 2019, 162,185 RP certifications have been is sent via mail once all other FAA-internal issued23. processing is complete. An RP certificate is Part 107 RP certifications require completing valid for two years and certificate holders a multi-step process beginning with obtaining must pass a recurrent knowledge test every an FAA tracking number via the creation of two years at a Knowledge Testing Center. It an Integrated Airman Certification and Rat- is required that RPs carry their certificate ing Application (IACRA) profile prior to regis- whenever flying a sUAS. tering for a knowledge test. Following this in- Certifications for part 61 operators, on the itial step, scheduling and passing the initial other hand, require that an applicant must aeronautical knowledge test at a Knowledge hold a pilot certificate issued under 14 CFR Testing Center is required. Provided that part 61, and must have completed a flight re- one has passed this test, the applicant is review within the previous 24 months. Since quired to fill out FAA Form 8710-13 in

23 In our accounting of RPs, we take pilots who plus current manned pilots who took online train- passed the initial knowledge test (or part 107) ing in lieu of the knowledge test (or part 61).

Part 61 airmen already have IACRA profiles newal. [See https://www.faa.gov/uas/com- established, they are required to complete, mercial_operators/become_a_drone_pilot/ like part 107 operators, FAA Form 8710-13 for more details]. in IACRA. Upon completion of this form, proof of current flight review, and proof of Following the process above, the FAA clas- online course completion, part 61 operators sifies RPs into two categories: are required to meet with FAA representa- • those who do not hold any pilot certif- tives at the FAA Flight Standards District Of- icate other than the part 107, or Re- fice (FSDO), or with an FAA-designated pilot mote Pilot only; and examiner (DPE), or an airman certification • those who hold a part 61 certificate representative (ACR) or an FAA-certificated and a part 107 certificate, or part 61 flight instructor (CFI) who issues the RP cer- and Remote Pilot. tificate to the part 61 operator. Like their part 107 counterparts, certificates for part 61 op- The chart below provides a distribution of erators are valid for 2 years and require re- these two types of RPs who presently have certificates.

Over 2/3 of the RPs are part 107 RPs only. at a county level is provided in the map be- Over 90% of those who took the exam low.24 passed and obtained RP certification. A cumulative density distribution of remote pilots

The RP forecast presented below are based Using these assumptions and combined with on three primary data sources: (a) trends in the base scenario of commercial sUAS fore- total RPs; (b) renewal trends; and (c) trends cast, the FAA project RPs in the graph below. in commercial sUAS registration and fore- Last year, the FAA projected RPs to be cast of fleet. Given the trends in registration around 167,500 by the end of 2019; which and our forecast of the commercial UAS fell short by 5,000. fleet, the FAA assumes that one RP is likely to handle 2.38 units of commercial sUAS.

24 Remote pilot data contains location by zip code. Remote pilots are mapped to counties by their reported zip code.

Given the actual numbers at the end of 2019, (DHS), Interior (DOI), Energy (DOE), and the FAA made the adjustments to RPs per Agriculture, as well as NASA, state govern- commercial sUAS (2.38), thus lowering it ments, local governments, and academia. In slightly from last year’s, 2.4. Despite this ad- order to calculate larger UAS (lUAS) in the justment, RPs are set to experience tremen- NAS, we employ multitudes of data from var- dous growth following the growth trends of ious sources: the Certificate of Authorization the commercial sUAS sector. Starting from (COA) Online system and its successor the base of 162,185 RPs in 2019, commer- CAPS or COA Application Processing Sys- cial activities may require almost 350,000 tem; MITRE’s Threaded Track infusing data RPs in 5 years, more than two-fold increase, from different sources (see https://www.mi- providing tremendous opportunities for tre.org/publications/technical-pa- growth in employment associated with com- pers/threaded-track-geospatial-data-fusion- mercial activities of UAS. Potential for RPs for-aircraft-flight-trajectories); FAA’s Perfor- may enhance even more if larger UAS are mance Data Analysis and Reporting Sys- used in commercial activities and urban air tems or PDARS (see mobility become a reality in the near future. https://www.faa.gov/about/office_org/head- quarters_offices/ato/service_units/sys- temops/perf_analysis/perf_tools/ for more details); and Notices to Airmen (NOTAM) Larger UAS (See https://notams.aim.faa.gov/#Applica- According to FAA rules, UAS weighing 55 tions). pounds or greater must be registered using the existing aircraft registration process (see Combining these data sources, MITRE esti- https://faadronezone.faa.gov/#/). At present, mates 206 lUAS operation in the NAS in many of these aircraft fly within the NAS by 2019. This is a 20% increase from the 172 federal agencies including the Departments lUAS operating in 2018. Most of the lUAS of Defense (DoD), Homeland Security introduced in 2019 are operated by government agencies, with the DoD claiming the

bulk of the aircraft. Military lUAS have begun than 55 lbs is the lower bound for the number to increase after several years of declining of commercial lUAS in operation. In 2017, operates in the NAS, suggesting the military five new exemptions for lUAS were granted fleet is expanding. The other source of lUAS while six new lUAS were registered under growth is from the increased use of lUAS in part 47, and 22 new exemptions were issued commercial applications. Most of the com- with 22 lUAS added to the register in the fol- mercial lUAS are operated in public-private lowing year. As such, the increase in the partnerships, but these pilot programs are number of exemptions heralds an increase in paving the way to widespread commercial the number of lUAS operating in the NAS. use of lUAS in the future. Exempts are expected to increase over the Since lUAS cannot operate under part 107, next couple of years. In 2019, 19 companies commercial operators must obtain an ex- were issued new FAA exemptions for com- emption under section 44807 [see mercial lUAS, the majority for agricultural https://www.faa.gov/uas/advanced_opera- purposes. For 2020, seven companies with tions/section_333/how_to_file_a_petition/ federal-agency sponsorship are expected to for more details]. With the exemption, com- seek exemptions for lUAS as well as several mercial operators are allowed to register other non-sponsored companies. This sug- their lUAS as aircraft under part 47 and op- gests an upward trend in the number of ex- erate them under part 91. As such, the num- emption and hints at increasing demand for ber of exemptions granted for UAS larger commercial lUAS.

Larger UAS (>55 lbs) forecast in the NAS Year Exemptions Larger UAS No. of Flights 2015 0 184 4,709 2016 0 172 6,785 2017 5 159 7,066 2018 22 172 7,223 2019 19 206 8,240 2020 21 243 9,720 2021 25 274 10,960 2022 34 309 12,360 2023 48 352 14,080

2024 67 407 16,280

Combining the baseline growth from the mil- and an expansion of military and civilian air- itary and civilian agencies and projections of craft. As commercial use accelerates and commercial exemptions under 44807, lUAS military investment stabilizes over the next are expected to increase by 37 aircraft in half decade, lUAS are projected to increase 2020 due to more commercial applications to 407 aircraft by 2024. However, the sunset of Section 44807 in September, 2023 could

60 drastically flatten and reduce number of lUAS after 2024 if an alternative is unavaila- ble.

Correspondingly, the number of lUAS flights likely for agricultural applications, operating is expected to increase from the estimated well below controlled airspace. 7,360 in 2019 to 16,280 by 2024, but a considerable number of the additional flights are

Urban Air Mobility broadly called Urban Air Mobility (or UAM). UAM is defined as “a safe and efficient sys- In Sept 2017, NASA launched a study to as- tem for air passenger and cargo transporta- sess the segment of autonomous vehicles tion within an urban area, inclusive of small

package delivery and other urban Un- the coming decade. Under some assump- manned Aircraft Systems (UAS) services, tions, a highly-automated “air metro” could which supports a mix of onboard/ground-pi- be profitable by 2028 and by 2030, it may re- loted and increasingly autonomous opera- sult in 750 million annual passenger trips in tions.” (See 15 metro areas or 137 thousand passenger https://www.nasa.gov/aero/nasa-embraces- trips/day/area. Under more conservative as- urban-air-mobility) UAM technology pre- sumptions, UAM market may yield $2.5 bil- sents considerable opportunity for economic lion in passenger transport market revenue growth over the coming decades. Markets with around 8.2 thousand passenger for UAM services, such as delivering pack- trips/day/area. While air ambulance model ages by drone or large cargo or unmanned may not be profitable, it may have high im- passenger shuttles, have a huge potential pact on public good [see both in the United States and globally. How- https://www.nasa.gov/uam-studies-reports/]. ever, UAM services are likely to face stiff competition from technological advances in Some others estimate the UAM passenger industries with close substitutes, such as industry to have 23,000 aircraft with 740 mil- ground transportation. In addition, the high lion enplanements per year at a price of 26 costs of urban infrastructure to facilitate around $30 per trip by 2030. However, these activities could slow down UAM adop- other studies have reported more conserva- tion. tive estimates, arguing the market penetration is likely limited to a handful of major met- Package or larger cargo delivery, on the ropolitan areas where geography and eco- other hand, is the UAM service that is most nomic conditions are conducive to UAM mar- likely to see economic growth in the next dec- ket development. As such, estimates by ade. By 2030 “last mile package delivery” KMPG only predict 60.4 million enplane- could be profitable at a price point of $4.20 ments by 2030 and a much smaller industry per delivery and may result in around 500 size.27 Similarly, Roland Berger estimates a million deliveries annually with a fleet of fleet of only 12,000 passenger UAS by 40,000.25 2030.28 However, given the current safety, technology, and urban environment chal- Airport shuttles and other fixed-route pas- lenges, even these projections may likely to senger services are the UAM passenger ser- be somewhat optimistic within the timeframe. vices most likely to gain economic traction in

25 Urban Air Mobility (UAM) Market Study, Nov. 27 Getting Mobility Off the Ground, 2019, KPMG. 2018, NASA. (See (See https://institutes.kpmg.us/manufacturing-in- https://www.nasa.gov/uamgc). stitute/articles/2019/getting-mobility-off-the- 26 Urban Air Mobility (UAM) Market Study, Nov. ground.html). 2018, NASA. (See 28 Urban Air Mobility: The rise of a new mode of https://www.nasa.gov/uamgc). transportation, Nov. 2018, Roland Berger. (See https://www.rolandberger.com/en/Publica- tions/Passenger-drones-ready-for-take-off.html).

Passenger services promise larger markets As the sector grows and new initiatives are for UAM services, but safety realities and undertaken, the Agency is keeping a keen technology may limit UAM’s wide penetration eye on understanding the exploratory trajec- into the passenger-services market. On the tory and growth trends in UAM. As more in- other hand, the UAM passenger industry is formation becomes available, the FAA will likely to be conspicuous due to an inflow of likely provide emerging trends and forecast venture capital and experimental services in the near future. exploring market potentials.

Forecast Uncertainties

The forecasts in this document are forecasts aviation activity might be a reasonable out- of aviation demand, driven by models built on come. In that case, it could be that the con- forecasts of economic activity. There are sequence to annual numbers is quite sub- many assumptions in both the economic dued. On the other hand, of course, a less forecasts and in the FAA models that could optimistic outcome could occur, resulting in affect the degree to which these forecasts longer term impacts to the industry. are realized. This year’s forecast is driven, at least in the short-term, by a number of fac- Although oil prices moved lower in 2019 from tors including the strength of the U.S. and the previous year, recent volatility reminds us global economies. Shifting international dy- there is still considerable uncertainty as to namics and impacts resulting from the U.S. the future direction of oil prices. The FAA’s administration’s economic policies could baseline forecast (derived from economic as- drive further changes. Also, as numerous in- sumptions in IHS Global Insight’s November cidents in the past few years remind us, ter- 2019 U.S. macro forecast and 30-Year Fo- rorism remains among the greatest world- cus released during August 2019) calls for oil wide risks to aviation growth. Any terrorist prices to decrease to $46 per barrel in 2021 incident aimed at aviation could have an im- and rise gradually thereafter. By 2030, oil mediate and significant impact on the de- prices are projected to exceed $80 per barrel mand for aviation services that could be and reach $104 per barrel by the end of the greater than its impact on overall economic forecast period in 2040. Some forecasters activity. are calling for a more gradual rebound in the price of oil. In October 2019, the World Bank The rapid spread of the novel coronavirus released its latest commodity price forecast. (COVID-19) that began in early 2020 now The forecast calls for oil prices to hold steady presents a new risk without clear historical at about $59 per barrel until 2021. After 2021 precedent. Although the FAA forecast is a prices rise gradually and reach $70 per bar- long-term trend forecast and does not focus rel by 2030. However, there are other oil on short-term perturbations, the great uncer- price forecasts that are considerably more tainty surrounding the impact of the virus aggressive than the FAA base forecast. The leaves open the possibility that it could affect latest Energy Information Administration values for 2020 and 2021. This uncertainty (EIA) Annual Energy Outlook released in arises from not being able to assess the January 2020, sees oil prices rising approxi- spread or intensity of the human conse- mately 4.0% per year between 2019 and quences, whether within the U.S. or abroad, 2040. By 2040, the spot price of oil ranges as well as the breadth and depth of possible from $138 per barrel (West Texas Intermedi- economic fallout. If the increase in infections ate) to $146 per barrel (Brent), considerably is brought under control relatively quickly, above the FAA base forecast of $104. Over producer supply chains suffer little damage, the long run, lower oil prices give consumers and worker output and productivity are only an impetus for additional spending, including slightly depressed, then a one-quarter de- air travel, and should enhance industry prof- cline followed by a one-quarter rebound in itability. In the case where oil prices turn out to be higher than the FAA forecast, we would

expect lower spending on air travel by con- economy during the Great Recession consumers, higher costs for fuel to airlines and tinue to hamper economic policy makers. In reduced industry profitability. some of the major advanced economies, governments need to shore up their finances The baseline forecast incorporates additional and recent actions have many analysts con- infrastructure spending in 2020 and beyond. cerned that policy makers will not take the However, there is considerable uncertainty steps needed. There exists a non-trivial pos- as to the magnitude, timing, and nature of sibility that authorities will either act prema- these programs that ultimately determines turely or be excessively timid and late in tak- the impact on the future growth of the U.S. ing necessary steps to maintain a healthy economy. In addition, how the U.S. will en- global economy. The current forecasts as- gage with the rest of the global economy over sume strong passenger growth for travel be- the next several years continues to evolve. tween the United States and other world re- Under the right conditions, a period of sus- gions. Further slowing of worldwide eco- tained high and more inclusive growth along nomic activity could seriously inhibit the with increased financial stability could occur growth in global passenger demand. but there is also the possibility of an outcome that leads to greater global economic frag- The outlook for further consolidation via mer- mentation, slower growth, and increased fi- gers and acquisitions (M&A) appears to be nancial instability. rather limited. Based on FY 2019 data, the top 6 (American, Delta, United, Southwest The baseline forecast assumes that the plus Alaska/Virgin and JetBlue) accounted global economic slowdown that began in for almost 85% of the U.S. airline industry ca- 2019 will continue until 2021 as weakness in pacity and traffic. For many low cost carriers, Europe and a slowdown in China constrains the sheer size of merger transactions or the global growth. Thereafter, the baseline fore- amount of risk associated with a merger cast assumes that China and India will be makes further merger activity unlikely. For growth engines for emerging economies as the network carriers, it is unclear how regu- China successfully transitions the economy latory authorities will respond to any future from heavy reliance on manufacturing and proposed mergers. resource industries to one more oriented towards the services and technology sectors The forecast assumes the addition of sizable and India continues to implement reforms to numbers of large regional jets (70 to 90 make its economy more competitive. In the seats) into the fleet of regional carriers. How- United States, economic growth has slowed ever, network carrier consolidation and new from 2018’s level as the effects of the 2017 rules on pilot training have left regional carri- tax cuts on demand are beginning to wane, ers saddled with either excess capacity or a and at the same time demand has slowed in lack of pilots. Although air travel demand has Japan and in the European Union as these been strong, the bankruptcy filings of Repub- areas continue to be constrained by struc- lic Airways in 2016, Great Lakes Airlines in tural economic problems (high debt, slow 2018 and Trans States Airlines in 2020 population growth, weak public finances, for (planned) are reminders that financial pres- example) and political instability. Further- sures on regional operators have not abated. more, the actions taken to stabilize the global Network carriers continue to adjust the size and breadth of their networks and, in many

cases, are significantly reducing the num- operations at these airports to grow substan- bers of small regional jets. While these ac- tially faster than the overall national trend. As tions may provide some opportunities for well demand continues to grow and workload in- positioned regional carriers, the overall im- creases, congestion and delays could be- pact so far has been to reduce opportunities come critical limits to growth over the fore- for regional flying substantially. cast period. FAA’s forecasts of both demand and operations are unconstrained in that After suffering through a significant down- they assume that there will be sufficient infra- turn in 2009, partial recovery of business and structure to handle the projected levels of ac- corporate aviation continues. The future tivity. Should the infrastructure be inade- pace of the recovery in business and corpo- quate and result in even more congestion rate aviation is based largely upon the pro- and delays, it is likely that the forecasts of spects for economic growth and corporate both demand and operations would not be profits. Uncertainty in these leading indica- achieved. tors poses a risk to the forecast, but the risk is not limited to these factors. Other influ- Increasing concerns about aviation's envi- ences, such as potential environmental reg- ronmental impacts could potentially limit or ulations and taxes do not seem to be as delay the ability of the aviation sector to grow much of a concern in the short term, but over to meet national economic and mobility the long term, uncertainties about the direc- needs. Airspace modernization and airport tion of these influences may place downward expansion or new construction are often con- pressure on the forecast. tentious because of concerns over noise, air quality, water quality, and climate change. Not only is the volume of aircraft operating at Community concerns about aviation noise most large hubs expected to increase over have led to increasing levels of public de- the next 20 years, but the mix of aircraft is bate, political interest, and even litigation. changing for this same period. The expected Without effective measures to mitigate and increases in the numbers of larger regional abate aviation noise, the infrastructure pro- jets and business jets as well as the antici- jects and airspace redesign efforts needed to pated widespread deployment of UAS into achieve aviation growth may be delayed. the national airspace system will make the FAA’s job more challenging. This change in The environmental noise and emissions is- the mix of aircraft will most likely add to work- sues associated with overflight operations load above and beyond the increasing de- also present global challenges. In addition to mand for aviation services resulting from the providing economic benefits, technologies to growth in operations over the forecast pe- improve aircraft fuel efficiency and reduce riod. fuel consumption provide benefits in terms of reduced emissions; many technologies that While overall activity at FAA and contract improve fuel efficiency also result in reduced towers increased 2.9 percent in 2019, activity noise. The implementation of the Carbon at large and medium hub airports (61 in total) Offsetting and Reduction Scheme for Inter- increased 1.8 percent and 1.9 percent in national Aviation (CORSIA), a global market- 2019 and delays remained at historically high based measure for international carbon diox- levels at many U.S. airports. FAA forecasts ide emissions, will help ensure an approach

that is economically preferable to a patch- may depress growth. The continued deploy- work of State or Regional-level regulations ment of sustainable aviation fuels, (i.e., drop- around the world is used. Continued ad- in fuels that are compatible with today’s avi- vancements in technologies that result in im- ation infrastructure but are derived from bio- proved fuel efficiency, reduced fuel con- mass or waste resources), will also help to sumption, noise reduction and reduced emis- reduce emissions that affect air quality near sions are also required to ensure that access airports and address concerns about climate restrictions or operating limitations are not change. imposed on the in-service fleet, which in turn

Appendix A: Alternative Forecast Scenarios

Uncertainty exists in all industries, but espe- above trend in the near term, supported pri- cially in the commercial air travel industry. marily by consumer spending. Recent tax As volatility in the global environment has in- cuts and favorable financial conditions con- creased, the importance of scenarios for tribute to that spending but after 2020, slower planning purposes has increased. In order federal government spending and trade act to help stakeholders better prepare for the fu- as headwinds to GDP growth. Oil prices re- ture, the FAA provides alternative scenarios main moderate by historic standards and to our baseline forecasts of airline traffic and there are no external shocks. capacity. The FAA’s high case forecast uses IHS Mar- To create the baseline domestic forecast, kit’s optimistic forecast. The optimistic fore- economic assumptions from IHS Markit’s 10- cast sees stronger overall growth driven year and 30-year U.S. Macro Baselines were mainly by an increase in productivity in a low used. To develop the alternative scenarios, inflation environment. This results in assumptions from IHS Markit’s 30-year opti- stronger real wage growth and an improved mistic and pessimistic forecasts from their employment outlook, leading to increased August 2019 US Economy: The 30-Year Fo- consumer spending and housing and busi- cus were utilized. Inputs from these alterna- ness investment. Confidence is high and the tive scenarios were used to create a “high” stock market sees strong gains while the un- and “low” traffic, capacity, and yield forecast. employment rate remains slightly lower than in the baseline scenario. Technological im- International passengers and traffic are pri- provements lower the production costs of oil marily driven by country specific Gross Do- and, despite increased demand, the price of mestic Product (GDP) forecasts provided by oil is largely below that of the baseline. IHS Markit. Thus, the alternative scenarios In this scenario, real personal consumption use inputs based on ratios derived from IHS expenditure (PCE) per capita growth aver- Markit’s Major Trading Partner and Other Im- ages 0.3 percentage points faster per year portant Trading Partners optimistic and pes- than the baseline forecast and unemploy- simistic forecasts in order to create high and ment averages 0.2 points lower on a fiscal low cases. year basis than the baseline.29 Scenario Assumptions Conversely, FAA’s low case forecast uses The FAA’s domestic baseline forecast as- IHS Markit’s pessimistic scenario. In this sumes that economic growth remains slightly forecast, a broad loss in confidence and

29 Real PCE per capita and unemployment are used as input variables to the FAA’s base, high and low forecast of enplanements.

68 growing aversion to risk leads to declines in terest rates reflect concerns about the infla- a wide range of investment and consumer tionary outlook, given the Fed’s accommoda- spending categories. The economy slows tive monetary policy and accelerating infla- with GDP growth below one percent, but still tion. Inflation is fanned by higher commodity positive, for four years. GDP growth aver- prices and rising energy prices, wages, and ages 0.6 percentage points lower than in the import prices combine to push consumer baseline over the forecast horizon. price inflation above the baseline.

In addition to slower GDP growth in this sce- Oil prices rise faster than the baseline nario, productivity, the labor force and capital throughout the forecast and are $60 per bar- investments also grow more slowly than in rel higher by 2040. Real PCE per capita in the baseline. Personal income growth is this scenario grows 0.5 percentage points pressured leading to depressed consumer slower per year than in the baseline; and un- confidence and spending, with durable employment, on average, is 0.6 points higher goods consumption, particularly of housing on an annual basis than in the baseline. and motor vehicles, impacted the most. Fi- nancial conditions are tight and the higher in-

Real Personal Consumption Expenditure per Capita 3.5

3.0

2.5

2.0

1.5

1.0

0.5 Annual Change Percent Annual - 2019 2022 2025 2028 2031 2034 2037 2040 Fiscal Year Pessimistic Baseline Optimistic Source: IHS Markit

U.S. Population 390 380 370 360 350 340 330

Population ( millions) 320 310 300 2019 2020 2024 2028 2032 2036 2040 Fiscal Year Pessimistic Baseline Optimistic

Source: IHS Markit

U.S. Unemployment Rate 6.0

5.5

5.0

4.5

4.0 % Unemployed % 3.5

3.0 2019 2022 2025 2028 2031 2034 2037 2040 Fiscal Year Pessimistic Baseline Optimistic Source: IHS Markit

U.S. Refiners' Acquisition Cost 180 160 140 120 100 80 60

Price per Barrel($) 40 20 - 2019 2022 2025 2028 2031 2034 2037 2040 Fiscal Year Pessimistic Baseline Optimistic Source: IHS Markit

The price of energy is one of the drivers in goods prices causing the optimistic CPI to the growth of consumer prices over the fore- rise somewhat slower than the baseline. In cast period. In the optimistic case, slow the pessimistic case, energy prices, wages growth of energy prices and import prices and import prices all rise more rapidly com- counteracts faster growth of other consumer pared to the baseline.

Consumer Price Index - All Urban Consumers 220

200

180

160

140

120

Index Value (2019 = 100) 100

80 2019 2022 2025 2028 2031 2034 2037 2040 Fiscal Year Pessimistic Baseline Optimistic

Source: IHS Markit

Alternative Forecasts

Enplanements In the baseline forecast, system enplane- the baseline, totaling 1.6 billion, 144 million ments are forecast to grow at an average an- greater than in the baseline. nual rate of 2.1 percent a year over the forecast horizon of 2020-2040 (with domestic The pessimistic case is characterized by a and international passengers increasing at period of weakened personal income growth rates of 2.0 and 3.1 percent, respectively). and consumer confidence combined with a contraction in financial asset markets, lead- In the optimistic case, enplanements grow at ing to higher interest rates, and curtailed in- a quicker pace, averaging 2.5 percent per vestment and consumer spending. In this year (up 2.4 percent domestically and 3.6 scenario, enplanements grow an average of percent internationally). This scenario is 1.6 percent per year (domestic up 1.4 per- marked by a more favorable business envi- cent and international up 2.8 percent). In the ronment and lower fuel prices which make pessimistic case, system passengers in the price of flying more affordable to busi- 2040 are 12.6 percent below the baseline ness and leisure travelers. By the end of the case, totaling 1.3 billion, or 186 million fewer forecast period in 2040, system passengers than in the baseline. in the optimistic case are 9.8 percent above

System Enplanements 7.0 6.0 5.0 4.0 3.0 2.0 1.0 Annual Annual Percent Change - 2019 2022 2025 2028 2031 2034 2037 2040 Fiscal Year Pessimistic Baseline Optimistic

Revenue Passenger Miles In the baseline forecast, system RPMs grow growth averaging 2.9 percent per year (do- at an average annual rate of 2.5 percent a mestic and international RPMs up 2.7 and year over the forecast horizon (2020-2040), 3.5 percent, respectively). with domestic RPMs increasing 2.3 percent annually and international RPMs growing 3.0 In the pessimistic case, the combination of a percent annually. slower growing economy and higher energy prices result in RPM growth averaging 2.0 In the optimistic case, the faster growing percent annually with domestic markets economy coupled with lower energy prices growing 1.6 percent a year while interna- drives RPMs higher than the baseline, with tional traffic grows 2.7 percent annually.

System Revenue Passenger Miles 7.0

6.0

5.0

4.0

3.0

2.0

Annual Annual Percent Change 1.0

- 2019 2022 2025 2028 2031 2034 2037 2040 Fiscal Year

Pessimistic Baseline Optimistic

Available Seat Miles In the base case, system capacity is forecast In the optimistic case, capacity grows at a to increase an average of 2.4 percent annu- faster clip than in the baseline forecast, aver- ally over the forecast horizon with growth av- aging 2.8 percent annually system-wide (2.6 eraging 2.2 percent annually in domestic and 3.5 percent for domestic and interna- markets and 3.0 percent a year in international markets, respectively). Carriers in- tional markets. crease capacity compared to the baseline forecast to accommodate increased travel

demand brought about by a more favorable annually (domestic growth of 1.6 percent an- economic environment. nually and international up 2.7 percent annually). In the pessimistic case, demand for air travel is lower than in the baseline, thus system capacity grows at a slower pace of 1.9 percent

System Available Seat Miles 7.0 6.0 5.0 4.0 3.0 2.0 1.0 Annual Annual Percent Change - 2019 2022 2025 2028 2031 2034 2037 2040 Fiscal Year Pessimistic Baseline Optimistic

Load Factor System load factors over the 20-year fore- percent in the baseline and pessimistic sce- cast period are similar for all three forecast narios, and from 85.3 percent to 86.9 percent scenarios. System load factor rises from in the optimistic one. 84.6 percent in 2020 to 85.6 (optimistic), 85.5 (pessimistic), and 85.6 (baseline) percent in The international load factor is forecast to 2040. hold steady near 82.9 throughout the period in the optimistic scenario and rise slightly to In all three scenarios it is assumed that car- 83.0 percent in the baseline and pessimistic riers will keep load factors on the high side scenarios. This reflects in part the relative by actively managing capacity (seats) to growth in demand and capacity in the three more precisely meet demand (passengers). (Atlantic, Latin, and Pacific) international regions under each scenario. The domestic load factor increases over the forecast horizon from 85.3 percent to 86.8

Yield In the baseline forecast, nominal system due to advancements in technology, gains in yield increases 1.7 percent annually, rising productivity, and relatively favorable fuel from 13.81 cents in 2020 to 19.33 cents in prices. 2040. In domestic markets, yield in the baseline forecast rises from 13.89 cents in 2020 In the pessimistic case, nominal yields rise to 19.60 cents in 2040. International yield more rapidly than in the baseline, growing an rises from 13.61 cents in 2020 to 18.71 cents average of 2.9 percent annually, reaching in 2040. 24.70 cents by 2040 (26.16 cents domestically and 21.67 cents internationally). This System yield rises in the optimistic case at a scenario reflects higher general domestic in- slower rate than in the baseline, up 1.3 per- flation and higher energy prices than in the cent annually to 17.85 cents by 2040. Do- baseline, forcing carriers to increase fares in mestic yield increases to 17.80 cents while order to cover the higher costs of fuel, labor, international yield increases to 17.96 cents. and capital. The modest growth in yield in both cases is

25 2020-30 2020-35 2020-40 PERCENT AVERAGE ANNUAL GROWTH ANNUAL AVERAGE PERCENT FORECAST TABLE A-1 TABLE FISCAL YEARS 2019-2040 YEARS FISCAL 5 4.5 4.4 4.2 4.3 -7.2% 5.3% 2.4% 1.2% 1.1% FAA FORECAST ECONOMIC ASSUMPTIONS 7 53.0 64.0 83.5 93.6 104.2 -11.2% 3.8% 4.6% 3.9% 3.4% 037 40,877 44,247 48,266 52,246 56,213 2.1% 1.6% 1.7% 1.6% 1.6% 54 2.60 2.91 3.25 3.62 4.03 2.1% 2.3% 2.3% 2.2% 2.2% 3.73.7 4.5 3. 5.5 4.9 4.4 4.6 20.3% 4.2% 0.9% -0.2% 0.1% 3.7 3.3 4.1 4.2 4.0 4.2 -11.0% 4.2% 2.4% 1.3% 1.1% 59.759. 65.32.54 82.02. 2.61 110.5 136.5 3.08 169.4 3.68 9.3% 4.39 4.7% 5.28 5.4% 2.6% 5.0% 3.4% 4.9% 3.5% 3.5% 3.6% 2.54 2.59 2.82 3.10 3.39 3.72 1.7% 1.8% 1.8% 1.8% 1.8% 59.7 54.7 60.4 69.6 73.7 79.2 -8.4% 2.0% 2.4% 2.0% 1.9% 2019E 2020 2025 2030 2035 2040 2019-20 2020- 40,03740, 40,390 42,437 45,234 48,064 50,731 0.9% 1.0% 1.1% 1.2% 1.1% 40,037 41,257 46,741 51,145 55,518 60,037 3.0% 2.5% 2.2% 2.0% 1.9% Historical Scenario Pessimistic Baseline Pessimistic Baseline Pessimistic Baseline Optimistic Optimistic Optimistic Pessimistic Baseline Optimistic Variable Economic Assumptions Economic Consumption Personal Real Capita per Expenditure - Cost Acquisition Refiners BarrelAverage Per $ - Index Price Consumer All Urban, 1982-84 = 1.0 Rate Unemployment Civilian IHS MarkitSource: (2012 $) (%)

5% 4% 5% PERCENT AVERAGE ANNUAL GROWTH ANNUAL AVERAGE PERCENT FORECAST TABLE A-2 TABLE FISCAL YEARS 2019-2040 YEARS FISCAL

FAA FORECAST OF AVIATION ACTIVITY* 2019E 2020 2025 2030 2035 2040 2019-20 2020-25 2020-30 2020-35 2020-40 916.7916.7 940.9916.7 963.9 1,000.5 975.6 1,064.6 1,093.1 1,149.6 1,190.2 1,190.6 1,292.8 1,326.4 1,282.4 1,446.5 1,468.0 2.6% 1,612.2 5.1% 1.2% 6.4% 2.0% 1.5% 3.3% 2.1% 1.6% 2.9% 2.2% 1.6% 2.7% 2.1% 2.5% 13.7413.74 14.0213.74 13.81 15.85 13.84 15.08 18.23 14.75 16.57 21.13 15.85 17.90 24.70 16.80 19.33 2.1% 17.85 0.5% 2.5% 0.7% 1.8% 2.7% 1.3% 1.8% 2.8% 1.4% 1.7% 2.9% 1.3% 1.7% 1.3% 1,235.71,235.7 1,273.6 1,298.7 1,377.3 1,450.8 1,535.51,044.0 1,645.41,044.0 1,696.8 1,077.9 1,859.9 1,099.3 1,858.6 1,172.2 2,089.0 1,235.3 1,310.3 3.1% 1,405.2 1,450.3 5.1% 1,591.1 1.6% 1,589.8 2.2% 1,788.7 3.2% 1.9% 5.3% 2.4% 1.7% 1.9% 2.4% 2.4%9,369.9 2.0% 1.9% 9,369.9 9,536.4 2.5% 2. 9,740.6 2.0% 9,758.2 10,372.5 2.5% 10,323.7 11,252.5 10,915.9 2.0% 12,165.5 11,416.1 2. 13,069.0 1.8% 4.0% 0.5% 1.3% 0.8% 1.5% 0.9% 1.5% 0.9% 1. 7,845.37,845.3 8,034.97,845.3 8,212.5 8,480.8 8,303.5 8,977.8 9,247.4 9,668.5 10,040.4 9,985.6 10,797.5 10,852.3 11,092.0 12,109.6 12,243.3 2.4% 13,463.2 4.7% 5.8% 1.1% 1.8% 3.1% 1.4% 2.0% 2.7% 1.5% 2.0% 2.5% 1.5% 2.0% 2.4% 1,044.0 1,110.3 1,327.1 1,527.5 1,738.2 1,968.6 6.3% 3.6% 3.2% 3.0% 2.9% 1,235.7 1,311.6 1,558.1 1,788.5 2,031.9 2,299.2 6.1% 3.5% 3.1% 3.0% 2.8% 9,369.9 9,877.7 11,220.1 12,197.5 13,225.1 14,301.9 5.4% 2.6% 2.1% 2.0% 1.9% Historical Scenario Pessimistic Baseline Pessimistic Baseline Pessimistic Baseline

Baseline Pessimistic Baseline Optimistic Optimistic Pessimistic Optimistic Optimistic Baseline Optimistic Pessimistic Optimistic Variable * Includes domestic and international activity. international domestic and Includes * System Aviation Activity Aviation System Miles Seat Available Revenue Passenger Miles CarrierPsgr Departures (BIL) (BIL) (000s) (MIL) Flown Miles Carrier Psgr (MIL) Enplanements (cents) Nominal Passenger Yield Passenger Nominal

1.6% 1.7% 1.6% 1.5% 1.6% 1.6% 0.6% 0.7% 0.7% 2% 2.3% 2.3% 2.3% 1% 2.2% 2.2% 2.2% 2% 1.4% 1.4% 1.3% PERCENT AVERAGE ANNUAL GROWTH ANNUAL AVERAGE PERCENT 20 2020-25 2020-30 2020-35 2020-40 TABLE A-3 TABLE FORECAST FISCAL YEARS 2019-2040 YEARS FISCAL

FAA FORECAST OF DOMESTIC AVIATION ACTIVITY 2019E 2020 2025 2030 2035 2040 2019- 752.2813.3 806.3813.3 834.9 964.4813.3 857.7 1,086.9 881.9 869.4 1,221.6 945.2 952.6 1,026.0 1,367.4 1,049.0 1,140.9 1,029.2 1,159.1 7.2% 1265.3 1,097.0 1,271.1 1,397.6 3.6% 2.7% 5.5% 6.9% 3.0% 1.1% 2.0% 3.4% 2.8% 1.3% 2.0% 2.8% 2.7% 1.4% 2.0% 2.5% 1.4% 2.0% 2.4% 752.2 795.4 888.5 999.4 1,119.0 1,243.6 5.8% 2. 883.6 932.2 1,032.5 1,156.0 1,290.8 1,432.0 5.5% 2. 883.6 944.8 1,120.7 1,257.2 1,409.0 1,574.4 6.9% 3.5% 2.9% 2.7% 2.6% 13.8613.86 14.1913.86 13.89 16.35 13.92 15.21 19.20 14.76 16.77 22.31 15.82 18.13 26.16 16.75 19.60 2.4% 17.80 0.2% 2.9% 0.4% 1.8% 3.1% 1.2% 1.9% 3.1% 1.3% 1.8% 3.1% 1.2% 1.7% 1.2% 883.6 907.4 963.4752.2 1,049.9 774.3 1,146.2 828.9 1,236.0 907.6 2.7% 993.6 1.2% 1,073.3 2.9% 1.4% 6,256.86,256.8 6,391.86,256.8 6,567.7 6,642.8 6,657.3 7,122.1 7,104.6 7,733.3 7,825.7 7,624.2 8,514.3 8,590.7 8,081.2 9,381.0 9,368.5 2.2% 10,304.8 5.0% 6.4% 0.8% 1.6% 3.0% 1.1% 1.8% 2.5% 1.2% 1.8% 2.3% 1.2% 1.8% 2.2% 8,672.2 9,026.8 9,581.8 10,326.2 11,077.9 11,800.7 4.1% 1. 8,672.2 9,162.9 10,402.5 11,203.5 12,050.8 12,924.5 5.7% 2.6% 2.0% 1.8% 1.7% 8,672.2 8,824.4 8,973.7 9,405.4 9,870.5 10,227.6 1.8% 0.3% Historical Scenario Pessimistic Baseline Optimistic Pessimistic Baseline Optimistic Optimistic Baseline Baseline Optimistic Baseline Pessimistic Baseline Optimistic Optimistic

Pessimistic Pessimistic Pessimistic Variable Enplanements (MIL) Flown Miles Carrier Psgr (MIL) (BIL) (BIL) (000s) Nominal Passenger Yield Passenger Nominal (cents) Domestic Aviation Activity Aviation Domestic Miles Seat Available Revenue Passenger Miles CarrierPsgr Departures

9% 2.8% 2.7% 6% 2.6% 2.6% 5% 2.9% 2.8% 2.7% PERCENT AVERAGE ANNUAL GROWTH ANNUAL AVERAGE PERCENT 4.1% 2.7% 2.9% 3.0% 3.0% 4.2% 3.6% 3.8% 3.6% 3.5% 2.5% 2.3% 2.9% 2.8% 2.8% 2.7% 2.4% 2.9% 3.1% 3.1% 2.7% 3.1% 3.6% 3.6% 3.6% 3.4% 2.3% 2.7% 2.6% 2.5% 3.5% 2.4% 2.8% 2.8% 2.8% 3.6% 3.3% 3.6% 3.4% 3.3% 2.3% 2.1% 2.6% 2.8% 2.9% 2.5% 2.7% 3.4% 3.4% 3.3% 1.3% 1.5% 1.7% 2.1% 2.4% 1.4% 1.6% 1.7% 1.6% 1.6% 1.5% 1.5% 1.6% 1.4% 1.4% 4.1% 2.7% 2.9% 3.0% 3.0% 4.2% 3.6% 3.8% 3.6% 3.5% 4.0% 2. 4.0% 2.5% 2. 2.0% 2.0% 2. 545.1 601.2 185.4 196.9 214.6 21.67 18.71 17.96 657.0 724.8 622.6 516.5 2,716.4 2,874.7 3,158.4 1,268.4 1,377.4 1,188.4

472.0 516.7 161.5 167.3 181.2 18.56 17.36 16.90 569.1 623.0 550.6 456.7 2,416.3 2,501.4 2,728.7 1,087.6 1,174.3 1,045.4

405.8 440.5 140.5 141.3 152.0 926.3 994.0 16.04 16.08 15.91 489.4 531.3 485.6 402.7 918.4 2,142.8 2,159.8 2,338.1

FORECAST TABLE A-4 TABLE 346.8 362.7 118.7 119.4 123.6 790.7 817.5 14.63 14.77 14.71 418.3 437.5 414.0 343.2 784.5 1,838.0 1,855.7 1,935.2

FISCAL YEARS 2019-2040 YEARS FISCAL

303.8 304.0 106.1 106.2 106.3 713.8 714.8 13.60 13.61 13.63 366.5 366.7 366.2 303.6 712.0 1,643.0 1,644.9 1,646.2

291.8 291.8 103.4 103.4 103.4 697.7 697.7 13.42 13.42 13.42 352.0 352.0 352.0 291.8 697.7 1,588.5 1,588.5 1,588.5 2019E 2020 2025 2030 2035 2040 2019-20 2020-25 2020-30 2020-35 2020-40

FAA FORECAST OF INTERNATIONAL AVIATION ACTIVITY*

Historical Scenario Baseline Optimistic Pessimistic Baseline Optimistic Pessimistic Baseline Optimistic Baseline Optimistic Pessimistic Baseline Optimistic Baseline Optimistic Pessimistic

Pessimistic Pessimistic Variable (BIL) Enplanements (MIL) Psgr Carrier Miles Flown Miles Carrier Psgr (MIL)

(000s) Nominal Passenger Yield Passenger Nominal (cents) (BIL) Available Seat Miles Seat Available *Includes mainline and regional carriers. regional and mainline *Includes International Aviation International Aviation Activity Revenue Passenger Miles CarrierPsgr Departures

Appendix B: FAA Forecast Accuracy

Forecasts, by their nature, have a degree of prepared for the period examined were de- uncertainty incorporated in them. They in- veloped while the U.S. airline industry was volve not only statistical analyses and vari- going through upheaval, the FAA’s forecast ous scientific methods, but also judgment methodology remained consistent during this and reliance on industry knowledge and the time. For this reason, inclusion of prior peri- forecaster’s experience to incorporate indus- ods in an analysis of forecast variance might try trends not yet reflected in recent results. lead to inconclusive or inaccurate implica- The FAA’s annual Aerospace Forecast is no tions about the accuracy of FAA’s current exception. Given the volatile nature of the forecast methodology. U.S. airline industry, it is not surprising that each year’s forecast would contain a certain The table below contains the mean absolute degree of forecast variance. Therefore, FAA percent errors for the projected values ver- forecasters have tried to build forecast mod- sus the actual results for U.S. carriers’ sys- els that give a consistent and predictable pat- tem operations along with the projected val- tern of results. Analysts relying on the fore- ues versus actual results for U.S. GDP. casts produced by the models would then be Each metric has five values showing the rel- able to adjust for the predictable variance ative forecast variance by the number of from actual results. years in advance the preparation of the forecast took place. For example, the “3 Years” The table below presents an analysis of the column for ASMs shows that the mean abso- variance from historical results for a primary lute percent error was 4.7 percent for ASM forecast assumption along with five key fore- forecasts prepared 3 years in advance. For cast metrics during the FY 2010-2019 fore- the period under examination, preparation of cast period. Although many of the forecasts the forecasts for FY 2010 through FY 2019 occurred in FY 2009 through FY 2018. 30

30 It should be noted that the first forecasted year is FY 2010, and the third forecasted year is FY for each respective fiscal year is that very same 2012. year. Therefore, FY 2010’s first forecasted year

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

Mean Absolute Percent Error (Combined FY 2010 - FY 2019) Forecast (Forecast Variance from Actual) Variable Forecast Performed Years Prior to Actual 1 Year 2 Years 3 Years 4 Years 5 Years

U.S. Real GDP 1.0% 2.3% 4.6% 6.5% 8.1% ASMs 0.8% 1.9% 4.7% 8.2% 11.7% RPMs 0.8% 1.6% 4.0% 7.1% 9.9% Passenger Enplanements 0.6% 1.5% 4.2% 7.3% 9.9% Mainline Domestic Yield 2.3% 4.7% 7.1% 8.9% 10.1% Commercial Operations at FAA/Contract Towers 0.8% 2.7% 6.2% 10.0% 14.7% *Total - scheduled and nonscheduled commercial plus noncommercial

Presenting forecast variances from actual amount of the forecast variance for the traffic data in such a manner simplifies a review of variables is attributable to the forecast error longer-term trends. Typically, one would ex- in the exogenous variables. Second, all the pect the variances to increase as the forecast metrics examined have increasing variances year is moves away from the year the fore- as the forecast time horizon lengthens. cast is prepared. Presenting forecast vari- Third, the variance in the Commercial Oper- ances in this way allows an examination of ations at FAA/Contract Towers relative to changes in the relative variances by time ASM variance is stable for the 2 to 5 year out horizon, signaling when dramatic shifts in ac- horizon. This suggests that beyond a 2 year curacy occur. forecast horizon carriers are able to accommodate changes in capacity by means other Examination of the forecast variances re- than adjusting operations. Many carriers veals several items. First, the forecast vari- have been systematically reducing the num- ances for GDP, a key exogenous variable, ber of smaller regional jets in their fleets, re- are similar to the variances of the key traffic placing them with larger 70-90 seat aircraft. measures, Passenger Enplanements and This has allowed carriers to increase capac- RPMs. This suggests that a substantial ity without increasing flights.

Appendix C: Forecast Tables

FISCAL YEAR 2021

FISCAL YEAR 2020

TABLE 1 U.S. SHORT-TERM ECONOMIC FORECASTS FISCAL YEAR 2019

1.5% 0.9% 2.9% 1.8% 2.4% 1.6% 2.4% 1.4% 0.7% 1.7% 2.2% 2.6% 0.7% 0.4% 3.8% 2.1% 2.0% 2.0% 1.9% 1.8% 1.8% 1.7% 1.6% 1.5% 59.61 57.03 63.60252.8 58.60 253.3 54.42 255.1 52.67 256.3 54.38 257.8 50.60 258.9 44.94 260.4 43.65 261.3 44.29 261.8 46.61 262.9 264.3 266.0 -44.6% -16.2% 54.6% -27.9% -25.6% -12.2% 13.6% -25.1% -37.8% -11.0% 6.0% 22.7% 39,766 39,807 40,181 40,393 40,590 40,786 40,975 41,155 41,335 41,511 41,676 41,830 1ST. QTR.1ST. QTR. 2ND. QTR. 3RD QTR. 4TH. QTR. 1ST. QTR. 2ND. QTR. 3RD QTR. 4TH. QTR. 1ST. QTR. 2ND. QTR. 3RD QTR. 4TH. ECONOMIC VARIABLE Source: IHS MarkitSource: (Dollars per barrel) per (Dollars Year over year change Index Price Consumer (1982-84 equals 100) Annual Rate Adjusted Seasonally Real Personal Consumption Consumption Personal Real Capita per Expenditure (2012 $) Year over year change Cost Acquisition Average - Refiners'

4.6% 3.4% 74.61 56.69 39.12 48.16 63.72 59.71 53.02 64.02 83.51 93.65 -2.4% 104.20 -11.2% AVERAGE REFINERS' (Dollars per barrel) per (Dollars ACQUISITION COST 2.17 2.37 2.39 2.44 2.50 2.54 2.60 2.91 3.25 3.62 4.03 1.8% 2.2% 2.1% 2.3% INDEX (1982-84=1.00) CONSUMER PRICE PRICE CONSUMER 1.9% 1.6% 1.4% 1.7% 34,165 36,907 37,654 38,369 39,306 40,316 40,877 44,247 48,266 52,246 56,213 (2012 $) TABLE 2 CONSUMPTION REAL PERSONAL EXPENDITURE PER CAPITA PER EXPENDITURE U.S. LONG-TERM ECONOMIC FORECASTS 2.3% 1.9% 2.0% 2.0% 15,500 17,322 17,600 17,984 18,523 18,961 19,349 21,199 23,581 25,946 28,374 REAL GROSS (Billions 2012 $) DOMESTIC PRODUCT FISCAL YEAR Historical 2010 2015 2016 2017 2018 2019E Forecast 2020 2025 2030 2035 2040 Avg Annual Growth 2010-19 2020-40 2019-20 2020-30 Source: IHS MarkitSource:

2.7% 2.8% 2.5% 3.0% 64,293 74,354 76,380 78,969 81,501 83,598 85,719 98,396 WORLD 934 3.8% 4.2% 4.2% 5.0% 24,341 25,528 26,852 28,163 29,401 30,649 38,027 46,42955,18664,810 113,523 129,347 146,485 18, ZEALAND OTHER ASIA / / ASIA OTHER JAPAN / PACIFIC PACIFIC / JAPAN BASIN / CHINA / AUSTRALIA / NEW NEW / AUSTRALIA 2.8% 2.6% 1.2% 1.7% 5,174 5,164 5,259 5,329 5,365 5,427 6,026 6,995 8,155 9,487 4,613 MEXICO CARIBBEAN / LATIN AMERICA / / AMERICA LATIN GROSS DOMESTIC PRODUCT TABLE 3 (In Billions of 2015 U.S. Dollars) U.S. 2015 of Billions (In 1.9% 1.9% 1.3% 1.9% 23,157 23,678 24,319 24,825 25,148 25,467 27,824 30,621 33,599 36,756 21,273 AFRICA / / AFRICA EUROPE / EUROPE MIDDLE EAST 1.7% 1.7% 1.5% 2.1% 1,557 1,572 1,622 1,655 1,682 1,844 2,012 1,707 2,197 2,402 1,400 ANADA C INTERNATIONAL REGION GDP FORECASTS BY TRAVEL Source: IHS Markit website, GDP Components Tables (Interim Forecast, Monthly) Forecast, (Interim Components Tables GDP IHS MarkitSource: website, 2020-40 2020-30 2019-20 2010-19 Avg Annual Growth 2015 2016 2017 2018 2019E 2025 2030 CALENDAR YEAR CALENDAR 2035 2040 Forecast 2020 Historical 2010

7.3% 5.8% 5.1% 4.3% 7,473 CHINA 14,887 19,420 24,531 29,558 34,879 10,916 11,650 12,436 13,255 14,071 1.0% 0.3% 0.9% 0.9% 4,773 5,001 5,227 5,460 4,586 4,179 4,390 4,412 4,509 4,524 4,573 JAPAN 1.8% 0.6% 1.4% 1.4% UNITED SELECTED AREAS/COUNTRIESSELECTED

KINGDOM GROSS DOMESTIC PRODUCT TABLE 4 (In Billions of 2015 U.S. Dollars) U.S. 2015 of Billions (In 1.3% 0.9% 1.3% 1.2% EUROZONE 2.3% 2.0% 2.0% 2.0% 25,55328,46531,36134,441 13,512 14,397 15,298 16,201 3,341 3,596 3,861 4,134 23,353 12,697 3,142 18,74520,95121,29621,814 11,18722,427 11,66722,905 11,887 12,207 2,651 12,437 2,930 12,583 2,986 3,043 3,085 3,123 NORTH (NAFTA) AMERICA AMERICA INTERNATIONAL GDP FORECASTS – 2010-19 2019-20 2020-30 2020-40 Avg Annual Growth Monthly) Forecast, (Interim Components Tables GDP IHS MarkitSource: website, 2025 2030 2035 2040 2020 Forecast Historical 2010 2015 2016 2017 2018 2019E CALENDAR YEAR CALENDAR

001 786 890 928 955 3.2% 5.3% 2.5% 2.5% 1,044 1,789 1,591 1,405 1,099 1,235 1, TOTAL 292 545 472 406 304 347 231 261 265 271 281 2.6% 4.1% 2.9% 3.0% INTERNATIONAL INTERNATIONAL 1 752 999 795 889 555 629 663 684 720 5.8% 2.3% 2.3% 3.4% 1,244 1,119 DOMESTIC 917 964 712 787 820 841 880 5.1% 2.1% 2.1% 2.8% 1,468 1,326 1,190 1,065 TOTAL TABLE 5 77 90 93 97 103 197 167 141 106 119 100 2.7% 2.9% 3.1% 3.3% U.S. COMMERCIAL CARRIERS AIR INTERNATIONAL TOTAL SCHEDULED U.S. PASSENGER TRAFFIC 813 858 945 635 696 726 744 781 5.5% 2.0% 2.0% 2.8% 1,271 1,159 1,049 DOMESTIC REVENUE PASSENGER ENPLANEMENTS (Millions) ENPLANEMENTS PASSENGER REVENUE (Billions) MILES PASSENGER REVENUE Sum ofSum U.S. Regional and Mainline Carriers. Air 2019E 2019-20 2020-30 2020-40 Avg Annual Growth 2010-19 Source: Forms 41 and 298-C, U.S. Department of Transportation. of FormsSource: 41 Department 298-C, and U.S. 2040 2035 Forecast 2020 2025 2030 FISCAL YEAR Historical 2010 2015 2016 2017 2018 1

% LOAD FACTOR (BIL) RPMs SYSTEM (BIL) 2.8%5.1% 3.2% 2.4% 5.3% 2.4% 2.5% 2.5% ASMs 1 % LOAD FACTOR (BIL) RPMs INTERNATIONAL (BIL) 4.1%2.9% 4.1% 3.0% 2.9% 3.0% 2.5% 2.6% TABLE 6 ASMs % LOAD FACTOR U.S. COMMERCIAL CARRIERS AIR (BIL) RPMs DOMESTIC 932 795 85.3 366 304 82.9 1,299 1,099 84.6 679744783 555809 629850 663 81.7884 684 84.5 720 84.7 752 281 84.5 323 84.7 329 231 85.1 335 261 345 265 82.1 352 271 80.7 281 80.6 292 961 81.0 1,067 81.5 1,112 786 82.9 1,144 890 1,195 928 1,236 955 81.8 83.4 1,001 83.5 1,044 83.5 83.8 84.5 (BIL) 5.5%2.2% 5.8%2.2% 2.3% 2.3% 3.0% 3.4% 1,0331,1561,291 8891,432 999 1,119 86.1 1,244 86.5 86.7 86.8 418 489 569 347 657 406 472 545 82.9 82.9 82.9 1,451 83.0 1,645 1,860 1,235 2,089 1,405 1,591 85.1 1,789 85.4 85.5 85.6 ASMs SCHEDULED PASSENGER CAPACITY, TRAFFIC, AND LOAD FACTORS Sum ofSum U.S. Regional and Mainline Carriers. Air Source: Forms 41 and 298-C, U.S. Department of Transportation. of FormsSource: 41 Department 298-C, and U.S. 2019-20 2020-30 2020-40 Avg Annual Growth 2010-19 2030 2035 2040 Forecast 2020 2025 FISCAL YEAR 2010 2015 2016 2017 2018 2019E Historical 1

304 347 406 472 545 271 281 292 TOTAL TOTAL INTERNATIONAL 77 87 98 75 75 75 110 123 PACIFIC 97 90 94 96 112 139 172 211 LATIN AMERICA REVENUE PASSENGER MILES PASSENGER REVENUE 1 109107105 63106 83 87 59 71 73 231 261 265 ATLANTIC 77 90 93 97 TOTAL TOTAL TABLE 7 INTERNATIONAL 14 106 130 15171921 119 141 167 197 148 169 189 211 1313 100 103 112 121 PACIFIC U.S. COMMERCIAL CARRIERS AIR LATIN AMERICA REVENUE PASSENGER ENPLANEMENTS PASSENGER REVENUE 30 63 33374246 71 87 107 130 25252425 40 52 55 58 13 14 14 14 2628 60 62 1.4%6.9%2.3% 5.1%2.2% 0.7% 3.3% 0.3% 3.7% 2.2% 2.3% 2.2% 3.3% 2.6% 2.9% 3.1% 1.2% 7.4% 2.7% 4.7% 2.5% 1.2% 3.7% 2.7% 4.0% 2.4% 2.5% 2.3% 2.6% 4.1% 2.9% 3.0% (Mil) (Mil) (Mil) (Mil) (Bil) (Bil) (Bil) (Bil) TOTAL SCHEDULED U.S. INTERNATIONAL PASSENGER TRAFFIC ATLANTIC Sum ofSum U.S. Regional and Mainline Carriers. Air Source: Forms 41 and 298-C, U.S. Department of Transportation. of FormsSource: 41 Department 298-C, and U.S. Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 2020 2025 2030 2035 2040 Forecast Historical 2010 2015 2016 2017 2018 2019E FISCAL YEAR 1

259 298 357 422 496 158 207 220 232 244 252 5.3% 2.9% 3.3% 3.3% TOTAL 32 37 44 51 60 22 27 28 29 31 32 4.2% 2.5% 3.1% 3.2% U.S./CANADA U.S./CANADA TRANSBORDER 45 55 66 78 90 27 36 39 41 42 44 5.5% 3.1% 3.9% 3.5% PACIFIC TABLE 8 91 53 75 79 82 86 88 102 124 150 182 5.8% 2.9% 3.2% 3.5% LATIN AMERICA TOTAL PASSENGERS BY WORLD TRAVEL AREA (Millions) AREA TRAVEL WORLD BY PASSENGERS TOTAL U.S. CARRIERS AND FOREIGN FLAG 91 56 70 75 79 85 88 104 123 143 164 5.2% 3.1% 3.1% 3.0% ATLANTIC TOTAL PASSENGER TRAFFIC TO/FROM THE UNITED STATES Forecast 2020 Avg Annual Growth 2010-19 Commerce; of by Department released and US Customs processed Source: data Protection & Border from Canada. Transport also received data 2025 2030 2035 2040 2019-20 2020-30 2020-40 Historical 2010 2015 2016 2017 2018 2019E CALENDAR YEAR CALENDAR

(Miles) SYSTEM 1 (Miles) INTERNATIONAL INTERNATIONAL AVERAGE PASSENGER TRIP LENGTH TRIP PASSENGER AVERAGE (Miles) DOMESTIC SYSTEM TABLE 9 (Seats/Mile) (Seats/Mile) INTERNATIONAL INTERNATIONAL AVERAGE SEATS PER AIRCRAFT MILE AIRCRAFT PER SEATS AVERAGE 141.9145.0147.7150.3152.8 222.8 225.4 226.6 227.5 158.1 228.6 161.6 164.8 167.7 927.4 170.6 940.0 952.7 965.4 2,861.2 978.4 2,904.6 2,873.2 1,140.4 2,821.2 1,160.3 2,768.0 1,180.6 1,199.5 1,218.4 121.8131.5134.8137.8139.9 216.4141.2 214.8 214.8 217.2 139.7 219.1 149.0 221.6 151.5 154.3 874.8 156.2 902.7 157.5 913.2 918.9 2,988.0 921.9 2,892.6 924.9 2,833.8 1,104.2 2,798.6 1,131.0 2,820.1 1,132.2 2,821.4 1,135.6 1,136.7 1,138.9 SEATS PER AIRCRAFT MILE AND PASSENGER TRIP LENGTH DOMESTIC U.S. COMMERCIALASSUMPTIONS CARRIERS' FORECAST AIR (Seats/Mile) Sum ofSum U.S. Regional and Mainline Carriers. Air Forecast 2020 2025 2030 2035 2040 Transportation. of FormsSource: 41 Department 298-C, and U.S. Historical 2010 2015 2016 2017 2018 2019E 1 FISCAL YEAR

710 815 852 881 924 963 3.4% 5.2% 2.5% 2.5% 1,014 1,139 1,297 1,469 1,652 SYSTEM 230 259 262 269 279 290 301 344 403 469 541 2.6% 4.1% 2.9% 3.0% (Billions) INTERNATIONAL REVENUE PASSENGER MILES PASSENGER REVENUE 480 556 590 612 645 674 795 894 712 3.8% 5.7% 2.3% 2.2% 1,000 1,111 DOMESTIC 548 630 665 689 723 754 876 981 792 3.6% 5.1% 2.2% 2.2% 1,095 1,214 SYSTEM TABLE 10 75 87 90 93 96 100 116 137 163 103 192 U. S. MAINLINE CARRIERS AIR 3.3% 2.6% 2.9% 3.2% SCHEDULED PASSENGER TRAFFIC (Millions) INTERNATIONAL REVENUE PASSENGER ENPLANEMENTS PASSENGER REVENUE 473 543 575 595 627 654 760 844 932 690 3.7% 5.5% 2.0% 2.0% 1,023 DOMESTIC Historical 2010 2015 2016 2017 2018 2019E FISCAL YEAR Forecast 2025 2030 2035 2040 2020 Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 Source: Form 41, U.S. Department of Transportation. of Form Department Source: 41, U.S.

% LOAD FACTOR (BIL) RPMs SYSTEM (BIL) ASMs % LOAD FACTOR (BIL) RPMs INTERNATIONAL (BIL) 4.1%2.9% 4.1%3.0% 2.9% 3.0% 0.0% 0.0% 0.0% 5.1% 2.4% 5.2% 2.4% 2.5% 2.5% 2.5% 2.6% 0.1% 3.1% 3.4% ASMs TABLE 11 % LOAD FACTOR U.S. MAINLINE CARRIERS AIR (BIL) RPMs DOMESTIC 581653692 480718 556756 590 82.7785 612 85.1 645 85.3 674 279 85.2 321 85.3 325 230 85.8 331 259 342 262 82.2 349 269 80.8 279 80.7 290 860 81.1 973 81.6 1,017 710 83.0 1,049 815 852 1,098 881 82.5 1,134 924 83.7 83.8 963 83.9 84.1 84.9 828917 712 795 86.0 86.7 363 415 301 344 83.0 83.0 1,192 1,332 1,014 1,139 85.1 85.6 (BIL) 2.2%2.2% 2.3% 2.2% 5.5% 5.7% 3.4% 3.8% 1,0261,144 8941,268 1,000 1,111 87.2 87.4 87.6 486 565 652 403 469 541 83.0 83.0 83.0 1,511 1,709 1,920 1,297 1,469 1,652 85.8 85.9 86.0 ASMs SCHEDULED PASSENGER CAPACITY, TRAFFIC, AND LOAD FACTORS FISCAL YEAR Historical 2010 2015 2016 2017 2018 2019E Forecast 2020 2025 2030 2035 2040 2020-30 2020-40 2019-20 Avg Annual Growth 2010-19 Source: Form 41, U.S. Department of Transportation. of Form Department Source: 41, U.S.

74.6 87.2 89.9 93.5 96.2 3.3% 2.6% 2.9% 3.2% 100.2 102.8 115.7 137.1 162.7 191.9 TOTAL 14.0 14.0 13.9 13.3 13.2 12.9 15.0 16.9 13.5 18.9 21.0 0.3% 2.2% 2.3% 2.2% PACIFIC 48.6 51.5 54.7 56.9 59.1 37.2 67.2 82.7 59.5 5.3% 0.6% 3.4% 3.8% 102.1 124.6 TABLE 12 LATIN AMERICA REVENUE PASSENGER ENPLANEMENTS (MIL) ENPLANEMENTS PASSENGER REVENUE U.S. MAINLINE CARRIERS AIR 24.6 24.4 24.8 26.0 27.9 24.5 33.4 37.4 41.7 46.3 29.8 1.4% 6.9% 2.3% 2.2% ATLANTIC SCHEDULED PASSENGER INTERNATIONAL ENPLANEMENTS FISCAL YEAR 2015 2016 2017 2018 2019E Historical 2010 2025 2030 2035 2040 Forecast 2020 Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 Source: Form 41, U.S. Department of Transportation. of Form Department Source: 41, U.S.

% LOAD FACTOR (BIL) RPMs INTERNATIONAL (BIL) 2.5%4.1% 2.6% 2.9% 4.1% 3.0% 2.9% 3.0% ASMs % LOAD FACTOR (BIL) RPMs PACIFIC (BIL) 2.9%2.4% 2.7% 2.5% 2.4% 2.3% 2.5% 2.3% ASMs % LOAD FACTOR TABLE 13 (BIL) RPMs LATIN AMERICA (BIL) 4.1%1.1% 4.7% 3.7% 1.1% 4.0% 3.7% 4.0% ASMs U.S. MAINLINE CARRIERS AIR BY INTERNATIONAL TRAVEL REGIONSBY INTERNATIONAL TRAVEL % LOAD FACTOR (BIL) RPMs ATLANTIC 131133 109134 107134 82.9 105138 80.0 106146 78.0 78 112 79.5 101 121 81.0 104 62 81 82.9 107 85 111 79.2 80.3 88 112 81.4 92 70 82.3 94 86 82.2 87 59 83.4 91 71 92 73 84.1 91 82.5 75 83.9 75 279 82.2 321 75 81.7 325 230 259 82.6 331 262 82.2 342 80.8 269 349 80.7 279 81.1 290 81.6 83.0 156179 130203 148228 82.9 169255 82.9 189 82.9 113 211 82.9 131 95 82.9 163 109 203 136 83.4 249 83.4 169 83.4 207 94 83.4 105 83.4 119 77 87 133 98 149 82.6 110 82.6 123 82.6 82.6 363 415 82.6 486 301 565 344 652 403 83.0 469 83.0 541 83.0 83.0 83.0 (BIL) 7.4%2.7% 7.4% 2.5% 2.7% 2.5% 1.2% 1.2% SCHEDULED PASSENGER CAPACITY, TRAFFIC, AND LOAD FACTORS ASMs Historical 2010 2015 2016 2017 2018 2019E FISCAL YEAR 2025 2030 2035 2040 Forecast 2020 2019-20 2020-30 2020-40 Avg Annual Growth 2010-19 Source: Form 41, U.S. Department of Transportation. of Form Department Source: 41, U.S.

SYSTEM (Seats/Mile) TOTAL TOTAL (Seats/Mile) PACIFIC (Seats/Mile) INTERNATIONAL INTERNATIONAL (Seats/Mile) TABLE 14 LATIN AMERICA AMERICA LATIN SEATS PER AIRCRAFT MILE SEATS AIRCRAFT PER ATLANTIC ATLANTIC (Seats/Mile) 166.7169.6172.0174.1 252.1176.2 254.6 257.1 259.6 178.6 262.1 181.1 183.6 186.1 270.6 188.6 274.4 278.1 281.9 226.9 285.6 229.4 230.4 231.1 181.4 232.0 184.6 187.2 189.6 191.9 152.0157.7159.9162.3 231.7164.2 237.0166.1 241.7 243.4 171.7 247.5 173.9 251.6 174.1 176.4 287.2 178.1 272.1 178.1 266.6 267.5 220.9 265.2 219.5 269.9 219.8 221.8 169.2 223.2 173.8 225.7 175.1 177.3 178.9 180.8 U.S. MAINLINE ASSUMPTIONS FORECAST CARRIER AIR DOMESTIC (Seats/Mile) Forecast 2020 2025 2030 2035 2040 Transportation. of Form Department Source: 41, U.S. 2010 2015 2016 2017 2018 2019E Historical FISCAL YEAR

(Miles) SYSTEM TOTAL TOTAL (Miles) (Miles) PACIFIC INTERNATIONAL INTERNATIONAL (Miles) LATIN AMERICA AMERICA LATIN TABLE 15 (Miles) ATLANTIC ATLANTIC AVERAGE PASSENGER LENGTH AVERAGE TRIP 1,0331,0461,0591,072 4,3521,086 4,440 4,502 4,538 1,590 4,561 1,622 1,642 1,656 5,721 1,664 5,776 5,816 2,933 5,842 2,976 5,854 2,938 1,280 2,880 1,301 2,821 1,322 1,341 1,360 1,0151,0231,0271,028 4,4331,029 4,3361,030 4,291 4,278 1,660 4,299 1,669 4,330 1,650 1,602 4,587 1,610 5,080 1,582 5,176 3,077 5,373 2,969 5,638 2,917 5,709 1,296 2,875 1,292 2,895 1,283 2,890 1,279 1,277 1,278 (Miles) DOMESTIC U.S. MAINLINE ASSUMPTIONS FORECAST CARRIER AIR Source: Form 41, U.S. Department of Transportation. of Form Department Source: 41, U.S. 2025 2030 2035 2040 Forecast 2020 Historical 2010 2015 2016 2017 2018 2019E FISCAL YEAR

(Cents) FY 2019 $ SYSTEM (Cents) CURRENT $ (Cents) FY 2019 $ INTERNATIONAL (Cents) CURRENT $ TABLE 16 REVENUE PER PASSENGER MILE MILE PASSENGER PER REVENUE PASSENGER YIELDS (Cents) FY 2019 $ DOMESTIC 1.3%0.2%1.9% -0.5%1.7% -1.8% -0.4% 0.5% -0.5% 1.4% 1.7% -1.2% 1.6% -0.6% -0.6% 1.0% -0.6% 0.6% 1.8% -0.7% 1.7% -1.5% -0.4% -0.5% 12.6214.7913.96 14.7613.91 15.8913.92 14.8614.12 12.84 14.51 14.16 14.17 12.88 14.12 15.02 12.90 15.21 13.58 13.71 13.47 12.69 13.46 14.59 13.84 13.62 13.47 14.85 13.60 15.67 13.82 14.50 13.92 14.19 14.07 13.92 14.1515.4917.09 13.8718.47 13.5619.98 13.36 13.66 12.99 14.82 12.62 16.14 13.38 17.42 12.97 18.78 12.61 14.00 12.25 15.29 11.86 16.79 13.72 18.14 13.39 19.58 13.13 12.75 12.37 (Cents) CURRENT $ U.S. MAINLINE ASSUMPTIONS FORECAST CARRIER AIR Historical 2010 2015 2016 2017 2018 2019E 2025 2030 2035 2040 Forecast 2020 FISCAL YEAR 2019-20 2020-30 2020-40 Avg Annual Growth 2010-19 Source: Form 41, U.S. Department of Transportation. of Form Department Source: 41, U.S.

(Cents) FY 2019 $ (Cents) TOTAL INTERNATIONAL TOTAL CURRENT $ (Cents) FY 2019 $ PACIFIC (Cents) CURRENT $ (Cents) FY 2019 $ TABLE 17 REVENUE PER PASSENGER MILE MILE PASSENGER PER REVENUE LATIN AMERICA (Cents) CURRENT $ (Cents) FY 2019 $ INTERNATIONAL PASSENGER YIELDS BY REGION ATLANTIC U.S. MAINLINE ASSUMPTIONS FORECAST CARRIER AIR 1.1%1.5%1.8% -0.7%1.7% -0.5% -0.5% 0.7% -0.5% 1.2% 1.5% -1.0% 1.4% -0.8% -0.8% -0.8% -0.8% 1.4% 1.8% -2.5% 1.7% -0.5% -0.5% 0.5% -0.5% 1.4% 1.7% -1.2% 1.6% -0.5% -0.6% -0.6% 14.2515.5416.97 13.9718.40 13.6319.95 13.29 14.36 12.96 15.42 12.64 16.62 14.08 17.74 13.52 18.89 13.01 11.80 12.49 12.84 11.97 14.04 11.57 15.25 11.26 16.56 10.99 13.66 10.74 14.82 10.50 16.14 13.39 17.42 12.99 18.78 12.63 12.27 11.90 12.7314.6413.83 14.9013.58 15.7214.38 14.72 13.3314.04 14.16 14.38 14.65 12.72 15.60 14.04 13.40 15.45 14.13 13.54 12.50 14.20 13.98 13.20 14.39 11.69 14.63 14.20 11.36 14.18 11.73 12.45 12.84 11.63 11.85 14.16 11.94 12.88 15.02 11.63 12.90 15.21 13.58 13.71 13.47 13.46 13.84 13.47 (Cents) CURRENT $ Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 Forecast 2020 2025 2030 2035 2040 Historical 2010 2015 2016 2017 2018 2019E Transportation. of Form Department Source: 41, U.S. FISCAL YEAR

100

(Cents) FY 2019 $ SYSTEM (Cents) CURRENT $ (Cents) FY 2019 $ INTERNATIONAL (Cents) CURRENT $ TABLE 18 JET FUEL PRICES (Cents) FY 2019 $ DOMESTIC 4.0%3.2% 1.7% 0.9% 4.0% 3.2% 1.7% 0.9% 4.0% 3.2% 1.7% 0.9% -0.7%-8.0% -2.4% -9.8% -0.6% -8.0% -2.4% -9.8% -0.7% -8.0% -2.4% -9.8% 189.22212.93280.36 185.41316.82 186.42352.46 219.16 191.20 222.80 215.16 222.60 283.29 187.34 320.13 188.36 356.13 221.45 190.10 225.12 213.93 224.92 281.67 186.27 318.30 187.29 354.10 220.18 223.83 223.63 219.19207.29146.17 256.45162.31 222.72206.63 155.61205.66 220.12 169.31 211.77 210.47 147.01 205.66 257.55 160.79 227.53 208.42 156.51 207.81 219.49 167.72 208.96 212.29 146.47 207.81 256.81 161.76 224.51 207.29 155.93 206.62 168.73 211.14 206.62 (Cents) CURRENT $ U.S. MAINLINE ASSUMPTIONS FORECAST CARRIER AIR Source: Form 41, U.S. Department of Transportation of Form Department Source: 41, U.S. 2019-20 2020-30 2010-19 2020-40 Avg Annual Growth 2025 2030 2035 2040 2020 Forecast FISCAL YEAR 2015 2016 2017 2018 2019E 2010 Historical

101

TOTAL INT'L. (Millions) TOTAL RTMS RTMS TOTAL DOMESTIC 1, 2, 3 TOTAL INT'L. (Millions) PASSENGER CARRIER RTMS CARRIER RTMS PASSENGER TABLE 19 DOMESTIC TOTAL U.S. COMMERCIAL CARRIERS AIR AIR CARGO REVENUE CARGO AIR TON MILES INT'L. (Millions) (Millions) ALL-CARGO CARRIER RTMS CARRIER RTMS ALL-CARGO 3.0%1.9%2.0% 2.3%1.9% 6.5% 5.3% 2.6% 4.6% 4.6% 4.0% -0.2% 3.6% 1.2% 1.2% 1.3% 1.1% 5.2% 3.9% 1.0% 3.1% 4.5% 3.5% 2.7% 2.8% 1.9% 1.9% 2.0% 1.9% 6.2% 4.9% 2.3% 4.2% 4.5% 3.9% 3.5% 11,30611,636 15,97111,998 16,35913,062 27,276 16,23614,182 27,995 17,58714,737 1,495 28,234 19,465 1,455 30,649 19,668 1,373 6,246 33,647 1,579 6,277 34,405 1,580 6,136 7,742 1,468 6,958 7,733 12,801 7,532 7,509 13,091 6,986 8,537 22,217 13,372 9,112 22,636 14,641 8,453 35,018 22,372 15,761 35,727 24,545 16,205 35,744 26,997 39,186 26,654 42,759 42,858 15,02016,133 20,95318,301 26,90820,113 35,973 35,05022,018 43,041 42,881 1,485 53,350 51,143 1,537 62,994 1,677 7,346 73,161 1,772 8,831 10,743 1,862 8,831 12,243 10,368 12,420 13,562 16,505 14,015 17,670 19,978 15,424 28,300 21,885 35,739 45,792 23,880 44,804 55,123 53,409 65,771 64,705 77,008 88,585 DOMESTIC Includes freight/express and mail revenue ton miles on mainline air carriers and regionals/commuters.Domestic figures from 2000 through 2002 exclude Airborne Express, Inc.; international figures for 2003 and beyond include new Domestic figures from 2003 and beyond include Airborne Express. Inc. FISCAL YEAR 1 2 reporting of contract service U.S. by carriers for foreign flag carriers.3 Historical 2010 2015 2016 2017 2018 2019E Forecast 2025 2030 2035 2040 2020 Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 Source: Form 41, U.S. Department of Transportation of Form Department Source: 41, U.S.

102

2.0% 6.2% 4.9% 4.2% TOTAL 28,300 35,739 45,792 55,123 64,705 26,654 26,997 22,217 22,636 22,372 24,545 1, 2 2.8% 7.1% 6.3% 5.0% 7,642 7,135 7,176 5,545 5,352 5,316 5,857 OTHER 10,374 14,119 17,312 20,352 MILLIONS) (MILLIONS) INTERNATIONAL 3.1% 6.7% 5.4% 4.7% 7,897 9,018 8,851 9,939 14,403 18,754 22,947 27,619 11,124 10,429 10,422 PACIFIC TABLE 20 1.3% 1.3% 1,644 1,867 2,031 2,143 1,640 -2.0% -1.4% 1,663 1,990 1,639 1,565 1,689 1,846 LATIN AMERICA U.S. COMMERCIAL CARRIERS AIR 1.0% 6.3% 3.4% 3.1% 9,318 7,894 7,426 6,786 6,627 6,639 7,061 7,554 11,052 12,833 14,591 ATLANTIC (MILLIONS) (MILLIONS) (MILLIONS) ( INTERNATIONAL AIR CARGO REVENUE CARGO INTERNATIONAL AIR TON MILES BY REGION Includes freight/express and mail revenue ton miles on mainline air carriers and regionals/commuters.Figures for 2003 and beyond include new reporting of contract service U.S. by carriers for foreign flag carriers. 2025 2030 2035 2040 Forecast 2020 Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 2019E FISCAL YEAR Historical 2010 2015 2016 2017 2018 1 2 Source: Form 41, U.S. Department of Transportation of Form Department Source: 41, U.S.

103

JETS 5,310 TOTAL TOTAL

0 JETS REGIONAL 651 71 3,722 JETS LARGE 517541553 4,057 4,219 4,328 98 98 60 4,155 4,317 4,388 516527607 4,222702 4,250805 4,406 60 4,828 60 5,310 52 4,282 16 4,310 4,458 4,844 1.6%2.2% 0.4% 1.2% -1.4% -99.9% 0.4% 1.1% -6.7% -2.4% 0.0% -2.4% TOTAL 43 522 3, 3127 523 517 3,844 3,976 99 97 3,943 4,073 -100.0% 0.6% 1.9% -1.9% 1.8% 9 00 0 0 0 0 0 0 0000 0 0 0 0 0 0 N/A N/AN/AN/A N/A N/A N/A LARGE WIDEBODY ENGINE ENGINE 4 TABLE 21 2 ENGINE2 3 2.1%0.2% 1.8% 1.0% 1.6% 2.2% 3,129 470 3,6783,775 541 553 3,3213,4593,540 492 490 517 3,7063,7233,799 516 4,126 527 4,505 607 702 805 -1.8% -6.7% TOTAL PASSENGER JET AIRCRAFT U.S. MAINLINE CARRIERS AIR N/A 8 1 00 0 0 221 0 0 0 0000 0 0 0 0 0 0 N/AN/A N/A N/A N/A N/A LARGE NARROWBODY 2.1% -100.0% 0.2% 1.0% 3,120 3,678 3,775 3,319 3,457 3,539 3,706 3,723 3,799 4,126 4,505 -1.8% 2 ENGINE2 ENGINE 3 ENGINE 4 CALENDAR YEAR CALENDAR Historical 2010 2018 2019E 2015 2016 2017 Forecast 2020 2025 2030 2035 2040 Avg Annual Growth 2010-19 2020-30 2020-40 2019-20

104

TOTAL TOTAL LARGE WIDEBODY 2 ENGINE2 ENGINE 3 ENGINE 4 252256261 309226 328228 360 156 392 149 419 149 72 120 77 120 85 100 537 112 554 594 612 789 651 810 855 838 879 237266346 440398 547457 729 118 920 113 1,223 112 111 103 17 123 122 669 114 783 94 963 906 1,137 1,049 1,334 1,309 1,535 1,791 3.9%3.9%3.3% 5.0% 5.2% 5.2% -1.7% -0.5% -9.2% -0.9% 0.9% -0.8% 2.8% 3.7% 3.5% 3.1% 3.7% 3.5% -2.6% 5.2% -5.5% 1.6% 1.6% 0.4% TOTAL TABLE 22 2 2 2 2 2 2 CARGO JET AIRCRAFT CARGO N/A N/A U.S. MAINLINE CARRIERS AIR 6000 2 0 0 0 N/AN/A N/A N/A LARGE NARROWBODY 153228235 104243 22 213 19 216 31 16 11 10 288 265 200 97 562 850 224258 346 11 398 457 3.9% -22.9%4.4% 3.6% 3.7% 10.0% 2 ENGINE2 ENGINE 3 ENGINE 4 CALENDAR YEAR CALENDAR Historical 2010 2016 2017 2018 2019E 2015 Forecast 2020 2025 2030 2035 2040 Avg Annual Growth 2010-19 2020-30 2020-40 2019-20

105

TOTAL FUEL CONSUMED TOTAL 221196206 223206 198232 208231 20,009 208 20,955 234 21,345 233 22,285 23,728 23,754 230218211 232206 220205 213 24,673 208 26,325 207 28,460 30,623 32,758 GENERAL GENERAL AVIATION VIATION GASOLINE A 2 2 2 2 2 2 2 2 2 2 2 AIR CARRIER TOTAL 435 19,786 TABLE 23 GENERAL GENERAL AVIATION (Millions of Gallons) of (Millions TOTAL 1, 2 U.S. AVIATION AIRCRAFT CIVIL JET FUEL JET INT'L. U.S. AIR CARRIERS 2.2%4.4%1.2% 1.2%1.2% 3.1% 1.8% 1.9% 4.0% 1.9% 1.4% 3.0% 1.4% 2.9% 2.0% 1.9% 1.7% 3.9% 1.5% 0.0% 1.4% 0.0% 0.0% 0.5% 0.0% -0.8% -0.9% 0.5% -0.6% -0.8% -0.9% -0.6% 1.9% 3.9% 1.4% 1.4% 12,83413,441 6,54113,868 6,46714,553 19,374 6,66814,598 19,699 7,121 1,383 20,535 7,043 1,437 21,674 20,757 1,541 21,641 21,136 1,820 22,076 1,879 23,494 23,521 16,06917,117 7,88418,186 8,77719,195 23,953 9,711 25,894 10,667 2,152 27,896 29,862 2,354 26,105 2,519 2,689 28,248 30,416 32,551 15,247 7,260 22,507 1,934 24,441 12,036 6,315 18,351 1, DOMESTIC TOTAL JET FUEL AND AVIATION GASOLINE FUEL CONSUMPTION Includes both passenger (mainline and regional air carrier) and cargo carriers. Forecast assumes 1.0% available in annual improvement seat gallon per miles for U.S. Commercial Carrier Air 2015 2016 2017 2018 2019E 2025 2030 2035 2040 Forecast 2020 FISCAL YEAR Historical 2010 Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 1 2 Source: Air carrier jet fuel, Form 41, U.S. Department of Transportation; all others, FAA Transportation; estimates. APO others, of all Form Department 41, U.S. fuel, jet Air carrier Source:

106

-1.8% -0.4% -0.5% 2018 $ (Cents) 1.9% 1.7% 11.5312.61 11.29 11.04 16.24 10.26 (Cents) CURRENT $

0.4% 0.2% TOTAL TOTAL (Miles)

INT'L. INT'L. (Miles) (Miles) DOMESTIC AVERAGE PASSENGER TRIP LENGTH TRIP PASSENGER AVERAGE MILE** PASSENGER PER REVENUE TABLE 24 72.7 525 731 529 15.02 10.57 TOTAL TOTAL (Seats/Mile) INT'L (Seats/Mile) U.S. ASSUMPTIONS FORECAST CARRIER REGIONAL 56.159.961.563.0 53.263.8 62.664.3 68.9 70.8 56.0 70.8 60.0 70.8 61.8 63.2 464 64.0 475 64.4 481 482 503 487 695 492 723 465 718 480 680 487 685 487 15.74 491 10.93 496 11.31 11.30 18.41 11.32 11.74 11.50 12.04 11.79 11.53 11.50 64.9 71.1 65.0 494 688 498 67.570.072.6 72.6 74.1 75.6 67.6 70.1 504 515 703 717 508 519 13.90 10.87 75.4 77.1 75.4 535 746 539 0.8%0.8% 0.4% 0.4% 0.8% 0.7% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 1.5%1.0% 3.2% 0.4% 1.6% 0.9% 0.7% 0.4% 3.5% 0.4% 0.7% -3.4% -5.1% AVERAGE SEATS PER AIRCRAFT MILE AIRCRAFT PER SEATS AVERAGE DOMESTIC (Seats/Mile) 2020-30 2020-40 2019-20 Historical 2010 Avg Annual Growth 2010-19 2015 2016 2017 2018 2019E FISCAL YEAR Source: Form 41 and 298C, U.S. Department of Transportation. of FormSource: 41 Department 298C, and U.S. ** Reporting carriers. 2040 Forecast 2020 2025 2030 2035

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2.4% 2.4% 5.9% 0.6% TOTAL 76,377 74,870 75,527 74,183 77,181 80,709 85,450 95,990 2.4% 2.4% 5.9% 5.7% 1,347 2,116 2,564 2,468 2,295 2,211 2,341 2,629 INTERNATIONAL REVENUE PASSENGER MILES PASSENGER REVENUE 2.4% 2.4% 5.9% 0.5% 75,030 72,754 72,964 71,715 74,886 78,499 83,110 93,361 105,564118,971133,046 2,973 3,351 3,747 108,537 122,321 136,793 DOMESTIC 164 156 155 152 157 163 172 189 209 231 254 2.0% 2.0% 5.4% -0.1% TOTAL TABLE 25 (In Millions) (In U.S. CARRIERS REGIONAL 3 3 4 3 3 3 3 4 4 5 5 2.0% 2.0% 5.4% 2.1% SCHEDULED PASSENGER TRAFFIC INTERNATIONAL REVENUE PASSENGERS REVENUE 162 153 152 149 154 159 168 185 205 227 249 2.0% 2.0% 5.4% -0.2% DOMESTIC FISCAL YEAR Historical 2010 2015 2016 2017 2018 2019E Forecast 2020 2025 2030 2035 2040 2020-40 2020-30 2019-20 Avg Annual Growth 2010-19 Source: Form 41 and 298C, U.S. Department of Transportation. of FormSource: 41 Department 298C, and U.S.

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% LOAD FACTOR (MIL) RPMs TOTAL (MIL) ASMs % LOAD FACTOR (MIL) RPMs INTERNATIONAL TABLE 26 5.2%5.6%2.3% 5.7%2.3% 5.9% 2.4% 0.4% 2.4% 0.2% 0.1% 0.1% 0.1% 5.6% 2.3% 0.6% 2.3% 5.9% 2.4% 2.4% (MIL) ASMs U.S. CARRIERS REGIONAL % LOAD FACTOR (MIL) RPMs DOMESTIC SCHEDULED PASSENGER CAPACITY, TRAFFIC, AND LOAD FACTORS 0.0% 0.5% 5.6%2.3%2.3% 5.9% 2.4% 2.4% (MIL) ASMs 98,46190,68191,158 75,03090,938 72,75493,924 72,964 76.298,259 71,715 80.2 74,886 80.0 78,499 1,857 78.9 2,819 79.7 3,519 79.9 1,347 3,380 2,116 3,023 2,564 2,933 72.5 2,468 75.0 2,295 72.8 100,318 2,211 73.0 93,500 75.9 76,377 94,677 75.4 94,317 74,870 96,947 75,527 76.1 101,192 74,183 80.1 77,181 79.8 80,709 78.7 79.6 79.8 103,793115,736 83,110130,373 93,361146,604 105,564163,703 80.1 118,971 80.7 133,046 81.0 81.2 3,098 81.3 3,455 3,892 2,341 4,376 2,629 4,887 2,973 3,351 75.5 3,747 76.1 76.4 106,891 76.6 119,191 76.7 134,265 85,450 150,980 95,990 108,537 168,590 122,321 79.9 136,793 80.5 80.8 81.0 81.1 YEAR Historical 2010 2015 2016 2017 2018 2019E Forecast 2020 2025 2030 2035 2040 Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 Source: Form 41 and 298C, U.S. Department of Transportation. of FormSource: 41 Department 298C, and U.S.

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2,613 TOTAL JET TOTAL FLEET NON JET NON TOTAL JET OVER 40 SEATS 596774 1,91585 1,848 2,001 1,974 2,192 1,915 2,075 402 2,277 314 221 1,915 128 1,848 2,001 2,317 2,192 2,162 2,222 2,320 PROP 10 44 1,876 1,920 486 1,876 2,362 11 39 1,846 1,885 515 1,846 2,361 14 54 1,795 1,849 522 1,798 2,320 26 65 1,644 1,709 542 1,644 2,186 59 40 1,637 1,677 557 1,637 2,194 32 57 1,628 1,685 516 1,628 2,144 -9.1%-5.0% 12.8% 4.3% 1.6% -0.2% 1.9% 0.0% -5.7% -4.3% 1.6% -0.2% 0.0% -0.9% TOTAL -26.3% -9.8% 0.7% 0.3% -5.5% 0.6% -1.1% -10.9% 3.3% 0.8% 0.9% -6.5% 0.8% -0.1% REGIONAL AIRCRAFT REGIONAL TABLE 27 0 0 3 0 0 0 JET N/A N/A N/A N/A 31 TO 40 SEATS PASSENGER AIRCRAFT 86 0 0 8 6 U.S. CARRIERS REGIONAL PROP -9.1% -5.0% -10.9% 6 3 0 3 N/A N/A N/A SEATS 20 TO 30 6 2 1 0 1 SEATS 10 TO 19 34 269194116 52 37 22 14 10 347 67 18 10 374 72 19 11 360 77 20 11 367 65 19 26 390 55 13 59 346 68 13 32 440 92 82 144 28 172 99 1,728 1,827 857 1,756 -1.8% -2.7% -15.0% -24.9% -7.3%-5.7% -6.9% -5.8% -11.0% -11.4% 9 SEATS LESS THAN Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 2025 2030 2035 2040 Forecast 2020 2019E 2018 2017 2016 2015 2010 Historical AS OF 1 JANUARY

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TOTAL TOTAL TURBINES TOTAL TOTAL PISTONS FLEET TOTAL GENERAL AVIATION OTHER AIRCRAFT** LIGHT SPORT SPORT LIGHT EXPERI- EXPERI- MENTAL** TOTAL TURBINE ROTORCRAFT TABLE 28 514 10,102 24,784 6,528 5,684 223,370 159,007 27,367 PISTON TOTAL JET TURBO TURBINE ACTIVE GENERAL AVIATION AND GENERAL AIRCRAFT TAXI ACTIVE AIR PROP TURBO FIXED WING FIXED TOTAL PISTON MULTI- ENGINE SINGLE 139,519 15,900 155,419 9,369 11,484 20,853 3,588 6, ENGINE 127,887129,652 13,254 141,141129,833 12,986 142,638130,179 13,083 9,712 142,916 13,440 12,861 9,779 23,152 143,040 13,751 9,949 23,530 3,286 14,217 9,925 24,166 3,344 14,596 7,220 24,521 3,270 10,506 7,233 3,082 10,577 7,241 27,922 10,511 6,907 27,585 9,989 26,921 2,369 2,478 27,531 4,941 2,551 4,986 210,031 2,554 4,692 211,794 144,427 211,757 145,982 30,372 4,114 146,186 30,763 211,749 31,407 146,122 31,428 128,495122,245 12,750 141,245115,710 12,485 134,730109,600 12,195 9,995 10,230 127,905 15,495104,335 11,900 17,760 25,490 10,795 121,500 11,635 27,990 19,970 11,530 3,175 115,970 30,765 3,405 22,035 12,595 7,165 33,565 3,665 24,000 7,820 10,340 36,595 3,940 11,225 8,540 27,970 4,215 12,205 9,305 29,365 10,080 13,245 30,805 14,295 2,845 32,245 3,545 33,475 4,490 4,185 4,545 212,380 4,810 4,575 211,400 5,430 144,420 4,595 210,440 138,135 32,655 4,615 209,960 131,570 35,810 210,380 125,440 39,305 120,185 42,870 46,675 AS DEC. OF 31 Historical* 2010 2015 2016 2017 2018 2019E 129,535 12,800 142,335 9,965 15,035 25,000 3,130 7,035 10,165 27,725 2,700 4,410 212,335 145,465 32,035 Forecast 2020 2025 2030 2035 2040 Avg Annual Growth 2010-192019-202020-302020-40 -0.8% -0.8% -2.4% -1.0% -0.4% -1.0% -1.0% -0.4% -0.8% -0.5% 0.7% -1.0% 0.3% -1.0% 3.0% 0.8% 3.1% 1.2% 2.0% 2.6% 2.0% 2.2% -1.5% 1.9% 1.4% 0.9% 1.8% 1.4% 1.8% 0.1% 1.4% 1.8% 1.7% 1.7% 1.3% 1.7% 0.9% 1.6% 1.0% -9.3% 0.9% 5.4% -2.8% 3.9% 3.3% 1.8% -0.6% 0.2% 0.0% 0.1% -1.0% -0.1% 0.0% 1.8% -0.7% -0.9% 1.9% -0.9% 1.9% 1.8% * Source: 2001-2010, 2012-2018, FAA General Aviation and Air Taxi Activity (and Avionics) Surveys. Avionics) (and Activity Taxi Air and Aviation General FAA 2012-2018, 2001-2010, Source: * **Experimental Light-sport category that was previously shown under Sport AircraftNote: is An active moved under Experimental aircraft Aircraft is one that category, has a current starting registration in 2012. and was flown at least one hour during the calendar year.

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TOTAL TOTAL TURBINES TOTAL TOTAL PISTONS FLEET TOTAL GENERAL AVIATION OTHER AIRCRAFT** LIGHT SPORT SPORT LIGHT EXPERI- EXPERI- MENTAL** TOTAL TURBINE ROTORCRAFT TABLE 29 (In Thousands) (In PISTON TOTAL JET TURBO TURBINE PROP 375 5,700 794 2,611 3,405 1,226 311 181 24,802 14,773 8,311 TURBO ACTIVE GENERAL AVIATION AND GENERAL HOURS TAXI ACTIVE AIR FLOWN FIXED WING FIXED TOTAL PISTON MULTI- ENGINE 9,7709,626 1,550 1,551 11,321 11,177 3,344 7,592 3,652 10,936 8,331 11,983 923 1,012 3,362 3,670 4,285 4,682 1,598 1,707 424 496 159 160 28,723 30,205 12,244 12,189 14,298 15,652 11,84610,881 1,65110,209 1,598 13,497 1,567 12,479 2,807 5,019 11,776 2,956 7,827 5,945 3,129 8,901 6,824 641 9,953 738 2,457 831 3,098 2,756 3,494 3,058 1,242 3,889 1,363 1,480 223 292 357 153 156 26,039 157 26,684 14,138 27,612 13,218 10,284 12,608 11,657 13,011 11,21711,865 1,60812,047 1,683 12,82512,092 1,536 13,548 2,53812,030 1,694 3,837 13,583 2,708 1,670 6,375 3,847 13,785 2,625 6,554 4,065 13,700 2,736 798 6,690 4,592 2,774 780 2,496 7,328 4,810 782 3,294 2,348 7,584 601 3,128 2,538 1,295 621 3,320 2,322 1,224 2,922 2,394 1,241 191 3,015 1,153 187 1,195 209 162 187 193 24,142 209 168 24,834 131 13,623 25,212 150 14,328 8,871 25,506 14,366 8,902 25,853 14,386 9,228 14,321 9,650 9,978 12,161 1,818 13,979 2,325 3, SINGLE ENGINE * Source: 2001-2010, 2012-2018, FAA General Aviation and Air Taxi Activity (and Avionics) Surveys. Avionics) (and Activity Taxi Air and Aviation General FAA 2012-2018, 2001-2010, Source: * **Experimental Light-sport category that was previously shown under SportNote: Aircraft An active is moved under aircraft Experimental is Aircraft one that has category, a current registration starting in 2012. and was flown at least one hour during the calendar year. Avg Annual Growth 2010-192019-202020-302020-40 -0.1% -1.5% -0.9% -1.5% -1.1% -0.2% -1.0% -0.5% -1.5% 2.0% -0.3% -1.4% 1.2% 4.0% -0.9% 1.1% 4.4% 3.2% 1.3% 3.1% 3.2% -2.7% 2.6% 2.4% 3.2% -1.0% 2.2% 2.6% -1.3% 2.6% 2.3% 2.2% -0.3% 2.7% 2.0% 2.3% 3.9% 2.1% -4.3% 1.8% 1.6% -2.1% 6.5% 4.8% 0.5% 4.1% 2.1% 0.3% -0.3% 0.7% 0.2% 0.6% 2.1% 0.7% -1.3% -1.1% 3.1% -0.7% 2.4% 2.1% 2025 2030 2035 2040 Forecast 2020 2015 2016 2017 2018 2019E AS DEC. OF 31 Historical* 2010

112

1 RATED PILOTS INSTRUMENT INSTRUMENT PILOTS STUDENT STUDENT TOTAL LESS ONLY GLIDER ONLY CRAFT ROTOR- 730 15,566 19,460 467,310 304,329 AIRLINE TRANSPORT TABLE 30 COMMERCIAL PRIVATE PILOT SPORT 907050 9,405 10,615 150,700 11,680 144,500 140,600 100,100 99,300 98,600 176,900 183,400 15,700 190,100 17,000 20,300 18,300 20,450 473,195 20,600 475,335 479,930 329,200 335,300 341,200 125110 6,740 8,110 161,700 157,900 100,950 100,800 166,900 171,100 14,100 14,500 19,350 20,050 469,865 472,570 316,300 322,700 175153144 5,889127 6,097 162,313 6,246 162,455 6,467 163,695 96,081 161,105 98,161 99,880 157,894 100,863 159,825 15,518 162,145 164,947 15,355 17,991 15,033 18,139 14,248 455,861 18,370 19,143 460,185 465,513 302,572 466,900 306,652 311,017 314,168 212190 3,682 5,482 202,020 170,718 123,705 101,164 142,198 154, 15,377 21,275 508,469 318,001 TIONAL RECREA- ACTIVE PILOTS BY TYPE OF CERTIFICATE, EXCLUDING STUDENT PILOTS* Starting with April 2016, there is no expiration date on the new student pilot certificates. This generates a cumulative increase in the student pilot Instrument rated pilots should not be added to other categories in deriving total. ** Source: FAA U.S. Civil Airmen Statistics. Civil Airmen FAA U.S. Source: ** Avg Annual Growth 2010-192019-202020-302020-40 -5.5% -1.6% 6.5% -3.2% 4.2% -4.5% -2.5% 3.4% 2.8% 0.4% -0.7% -2.2% -0.7% 0.1% -0.1% -0.1% 1.7% 1.2% 0.6% -0.8% 0.7% -1.0% -1.2% 1.1% 1.3% 1.1% 0.5% -0.9% 0.3% 0.6% 0.1% -0.1% 0.1% 0.7% 0.4% 0.4% 2020 2025 2030 2035 2040 Forecast 2017 2018 2019 2016 AS DEC. OF 31 Historical** 2010 * numbers and breaks the link between student pilot and private pilot or higher level certificates. the student certificates Since there is unter no the sufficient new rule, student pilot1 data forecast yet to forecast is suspended and excluded from this table. Note: active An pilot is a person with a pilot certificate a and valid medical certificate. 2015

113

TOTAL JET FUEL JET TOTAL FUEL CONSUMED 230218211 1,934206 2,152205 2,354 2,164 2,519 2,370 2,689 2,565 2,725 2,894 221196206 1,435206 1,383232 1,437 1,656 231 1,541 1,578 1,820 1,643 1,879 1,747 2,052 2,111 AVGAS 1 2 2 2 3 1 1 1 1 1 1 LIGHT SPORT** EXPERI- EXPERI- / OTHER MENTAL** 137 22 132135 20 21 TURBINE 9 9 9 ROTORCRAFT TABLE 31 PISTON (In Millions of Gallons) of Millions (In TURBO JET TURBINE PROP TURBO GENERAL AVIATION AIRCRAFT FUEL CONSUMPTION AVIATION AIRCRAFT GENERAL FIXED WING FIXED MULTI- ENGINE PISTON 149137127 48119 46115 44 239 44 248 44 259 1,558 270 1,755 287 1,936 2,079 11 2,225 12 13 149 14 160 171 24 177 26 27 29 133 54 187 1,123 11 125 22 128137138 40152 42152 41 191 50 207 49 198 1,063 234 1,117 236 1,204 10 1,455 10 1,509 10 128 113 139 15 17 16 1.5% -1.1% 2.6% 3.3% -2.1% 0.9% -0.3% -2.6% 0.5% 3.0% 2.7% -1.5%-1.6%-1.3% -1.5% -0.8% -0.5% 1.2% 0.8% 0.9% 3.3% 2.2% 1.8% 3.2% 2.5% 2.3% 1.6% 1.5% 1.3% 4.2% 1.5% 1.4% 6.7% 4.4% 3.7% -0.8% -0.9% -0.6% 2.9% 2.0% 1.7% 2.5% 1.7% 1.5% SINGLE ENGINE *Source: FAA APO Estimates. **Experimental Light-sport category that was previously shown under SportNote: Aircraft Detail is moved may not under Experimental add to total Aircraft because category, of independent starting rounding. in 2012. 2019-20 2020-30 2020-40 Avg Annual Growth 2010-19 Forecast 2020 2025 2030 2035 2040 Historical* 2010 2015 2016 2017 2018 2019E CALENDAR YEAR CALENDAR

114

CONTRACT FAA NUMBER OF TOWERS TOTAL TOTAL LOCAL MILITARY ITINERANT TOTAL TABLE 32 (In Thousands) (In LOCAL GENERAL AVIATION GENERAL ITINERANT WITH FAA AND CONTRACT TRAFFIC CONTROL SERVICE TOTAL COMBINED AIRCRAFT OPERATIONS AT AIRPORTS AIR TAXI/ COMMUTER AIR 2.8%4.2%2.4% -2.9%2.2% 2.6% -2.4% -0.5% -0.7% 1.2% 0.3% 1.3% 0.3% 3.7% 0.3% 0.3% 0.3% 2.4% 0.3% 0.3% 0.3% 0.0% 0.0% -1.5% 0.0% 0.1% -0.5% 0.0% 0.0% 0.1% 0.4% 0.0% 0.0% 2.9% 0.7% 0.8% 16,86919,39821,389 7,42323,638 5,55725,995 5,840 14,412 6,143 14,594 6,462 14,780 13,600 14,970 13,824 28,013 15,166 14,055 28,418 14,293 28,835 1,350 14,539 29,264 1,350 29,705 1,350 1,136 1,350 1,136 1,350 1,136 2,486 1,136 2,486 54,790 1,136 2,486 55,858 2,486 58,550 2,486 264 61,531 264 64,648 264 256 264 256 264 256 256 256 12,65813,75514,417 9,41015,047 7,89515,686 7,580 14,86416,192 7,180 13,887 7,126 13,905 11,716 7,234 13,839 11,691 26,580 14,130 11,633 25,579 14,245 11,732 25,538 1,309 12,354 25,571 1,292 13,109 26,485 1,317 1,298 27,354 1,326 1,203 1,319 1,145 2,607 1,349 1,200 2,495 51,255 1,155 2,462 49,724 1,134 2,526 49,997 2,474 264 50,325 2,483 264 51,770 264 244 53,264 264 252 264 252 264 253 254 256 CARRIER Source: FAA Air Traffic Activity. Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 2025 2030 2035 2040 Forecast 2020 FISCAL YEAR 2015 2016 2017 2018 2019E Historical 2010

115

TOTAL OVERFLIGHT MILITARY GENERAL GENERAL AVIATION TABLE 33 (In Thousands) (In AIR TAXI/ COMMUTER TOTAL TRACON OPERATIONS 611 7,095 10,399 1,966 4,100 37,171 2.7%4.2%2.4%2.2% -3.0% 3.4% -3.2% -1.1% 0.1% 0.9% 0.2% 0.2% -0.6% 0.0% 0.0% 0.0% -2.9% 3.1% 0.7% 0.1% 1.0% 2.8% 0.7% 1.0% 16,68019,18321,15923,391 6,82825,728 4,658 4,908 5,177 11,055 5,460 11,179 11,306 1,947 11,436 1,947 11,568 1,947 1,947 3,821 1,946 3,869 4,114 40,331 4,389 40,835 4,676 43,434 46,339 49,379 12,57613, 8,667 10,839 2,054 4,851 38,987 14,29214,90915,51916,014 6,893 6,513 6,495 6,600 10,289 10,490 10,805 1,979 10,960 1,928 1,954 1,946 4,260 4,244 4,115 37,713 3,706 38,085 38,888 39,227 AIR CARRIER Avg Annual Growth 2010-19 2019-20 2020-30 2020-40 Forecast 2020 2025 2030 2035 2040 Source: FAA Air Traffic Activity. Historical 2010 2015 FISCAL YEAR 2017 2018 2019E 2016

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TOTAL MILITARY 0.5%0.5% 0.0% 0.0% 1.2% 1.4% IFR AIRCRAFT HANDLED IFR GENERAL GENERAL AVIATION TABLE 34 (In Thousands) (In IFR AIRCRAFT HANDLED AIRCRAFT IFR 1.6%3.6%1.3% 1.6% -0.4% -0.2% -6.4% -7.3% 0.9% 2.6% 30,96533,11634,10434,665 6,55035,729 7,00735,781 7,301 7,428 2,982 7,406 1,795 6,309 1,826 1,765 40,498 1,735 41,918 1,645 43,231 43,858 44,870 43,734 37,05938,48942,34046,687 6,29851,236 6,450 6,610 6,778 1,525 6,955 1,525 1,525 1,525 44,882 1,525 46,464 50,475 54,990 59,716 COMMERCIAL AT FAA EN ROUTE TRAFFIC CONTROL CENTERS 2015 2016 2017 2018 2019E Historical 2010 FISCAL YEAR Forecast 2020 2025 2030 2035 2040 2019-20 2020-30 2020-40 Avg Annual Growth 2010-19 Source: FAA Air Traffic Activity

117