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THIS DOCUMENT IS BEST QUALITY AVAILABLE. THE COPY FURNISHED TO DTIC CONTAINED A SIGNIFICANT NUMBER OF PAGES WHICH DO NOT REPRODUCE LEGIBLY. Technical Report Documentation Page 1. Report No. 2. Government Accession No. 3. Recipient's Catalog No

4. Title and Subtitle 5. Report Date February 1993 FAA Aviation Forecasts-Fiscal Years 1993-2004 6. Performing Organization Code FAA APO- 110 7. Author(s) 8. Performing Organization Report No FAA-APO-93-1

9. Performing Organization Name and Address 10. Work Unit No (TRAIS)d Department of Transportation Federal Aviation Administration Fisca Yr Grant20o4 Office of Aviation Policy, Plans, and Management Analysis 14. Sonsor Genc Cod Washington, DC 20591 12. Sponsoring Agency Name and Address 13. Type of Report and Period Covered National Aviation Department of Transportation Activity Forecasts Federal Aviation Administration Fiscal Years 1993-2004 Office of Aviation Policy, Plans, and Management Analysis 14. Sponsoring Agency Code Washington, DC 20591

15. Supplementary Notes

16. Abstract

This report contains the Fiscal Years 1993-2004 Federal Aviation Administration (FAA) forecasts of aviation activity at FAA facilities. These include airports with FAA control towers, air route traffic control centers, and flight service stations. Detailed forecasts were made for the major users of the National Aviation System: air carriers, air taxi/ commuters, military, and general aviation. The forecasts have been prepared to meet the budget and planning needs of the constituent units of the FAA and to provide information that can be used by state and local authorities, the aviation industry, and the general public.

The lethargy of both the U. S. and world economies during the past several years has caused the aviation industry to experience continuing financial losses. However, the outlook for the 12-year f oratio sr moderate economic growth, stable real fuel prices, and modest inflation. Based on these assumptions, aviation activity for fiscal year 2004 is forecast to increase by 24.6 percent at towered airports and 27.0 percent at air route traffic control centers. The general aviation active fleet and hours flown are forecast to increase by 7.0 and 18.1 percent, respectively, during the same time period. Scheduled domestic revenue passenger miles (RPMs) are forecast to increase 583 percent, scheduled international RPMs are forecast to increase by 115.3 percent, and regional /commuter RPMs are forecast to increase by 145.1 percent.

17. Key Words 18. Distribution Statement Air Carrier, Aviation Statistics, Commuter/Air Document is available to the public through the Taxi, Aviation Activity Forecasts, National Technical Information Service Federal Aviation Administration, General Springfield, Virginia 22151 Aviation, Military 19. Security Classif.(of this 120. Security Classff.(of this 21. No. of Pages 22. Price report) ipage)

Unclassified Unclassified Form DOT F 17'00.7 (8-72) Reproductio)n of comp leted page authorized For uale by the U.S. Goveemment Pnnung Office Supenmendenl of Documents. Mail Stop: SSOP. Washington. DC 20402-9328 ISBN 0-16-036114-1 PREFACE

I am pleased to submit to the aviation Briefly, the forecast predicts a community FAA Aviation Forecasts, Fiscal moderate recovery and continued Years 1993-2004. These forecasts are expansion of both the U.S. economy developed annually by Robert L. Bowles and U.S. aviation activity following and his staff in the Statistics and 2 years of large industry losses. Forecast Branch for use by the agency in Internationally, aviation is its planning and decision-making anticipated to grow more rapidly than processes. In addition, the forecasts in the United States, especially are used extensively within the aviation along the Pacific Rim and in Latin and transportation communities as the America. industry looks to and prepares for the future. Based on economic projections provided by the Office of Management This year's report consists of nine and Budget and by DRI/McGraw-Hill, chapters, discussing in detail three Evans Econometrics, and the WEFA major areas: (1) the economic environ- Group, we expect the U.S. economy (as ment, assumptions, and predictions that measured by real gross domestic are used to develop the forecasts; (2) product) to grow at an average historical data and forecasts of future annual rate of 2.6 percent between traffic demand and aircraft activity for 1992 and 2004, with higher increases each of the major nonmilitary user projected for many major foreign groups--commercial air carriers, countries and regions. Combining regional/commuter airlines, general information on economic projections aviation, and helicopters; and (3) (e.g., GDP growth and oil prices) and workload measures for FAA towers, industry assumptions (e.g., industry centers, and flight service stations, capacity and yield management) with The report concludes with a discussion of analyst expertise results in an our forecast accuracy and year-by-year anticipated average annual growth data for our individual forecasts of rate (as measured in revenue aviation activity. -A -e-o-- For NTIS CRA&I DTIC TAB Urannowlced 0u Jlistificatlri_ n_

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Iti to~Ior passenger miles) of 4.7 percent from 1992 projections and those of the various to 2004. Annual domestic growth is econometric forecasting services, expected to average 3.9 percent and Federal policy and programs may annual international growth is projected change. Such shifts could result in to be 6.6 percent. changes to the short-term economic outlook, altering the demand for In reading and using the information in aviation services. this book, it is important to recognize the limits of forecasting. That is, If in using this document you see forecasting is not an exact science. Its opportunities for improvement, I accuracy depends heavily on underlying would appreciate hearing from you. economic and political assumptions. You are encouraged to send your While there is basic agreement between comments to me at the Federal Avition the Administration's short-term economic Administration, 800 Independence Avenue, SW., Washington, DC 20591.

Dale E. McDaniel Acting Assistant Administrator for Policy, Planning, and International Aviation

* >~ ACKNOWLEDGMENTS

This document was prepared by the Statistics and Forecast Branch, under the leadership of Mr. Robert L. Bowles. The following individuals were responsible for individual subject areas:

Economic Environment: Thomas Henry Commercial Air Carriers: Jack Smith Regionals/Commuters: Charles Moles General Aviation: Forecasts - James Veatch Data - Patricia Beardsley and Shung Huang Helicopters: Mike Hartmann FAA Workload Measures: Forecasts - Forecast Team Staff Data - Nancy Trembley Terminal Area Forecasts: Thomas Henry Statistical Assistance: Virginia Price and Diane Green Text and Table Preparation - Prudance Morris-Dance

The guidance and critical reviews provided by the senior staff of the Office of Aviation Policy, Plans, and Management Analysis and the Acting Assistant Administrator for Policy, Planning, and International Aviation are gratefully acknowledged.

iii TABLE OF CONTENTS

Page

Preface ...... i Acknowledgments ...... iii Table of Contents ...... V List of Figures ...... ix List of Tables ...... xiii

Chapter I: EXECUTIVE SUMMARY Avation During the Early 1990's Down--But Not Out ...... - Review of 1992 ...... 1-3 Economic Forecasts ...... 1-4 A.iation Activity Forecasts ...... 1-6 FAA Workload Forecasts ...... 1-8

Chapter II: ECONOMIC ENVIRONMENT Review of 1992 ...... II-1 United States ...... II-1 World ...... 11-3 U. S. Economic Outlook ...... 11-3 Gross Domestic Product ...... 11-3 Consumer Price Index ...... 11-5 Oil and Gas Deflator ...... 11-5 World Economic Outlook ...... 11-5 Gross Domestic Product ...... 11-5 Consumer Price Index ...... I.-7 Europe ...... 11-7 Japan ...... 11-7 Latin America ...... 11-7 Dollar Exchange Rate ...... 11-8 Affirmation of Change ...... 11-8 Short-term Expectations ...... H.-8 Long-term Changes ...... II-10 Effects on Aviation ...... II-11 Summary ...... 11-12

Chapter III: COMMERCIAL AIR CARRIERS Review of 1992 ...... - Financial Results ...... - Scheduled Passenger Traffic and Capacity ...... 111-4 Domestic Passenger Traffic and Capacity ...... 111-5 International Passenger Traffic and Capacity ...... 111-7 Atlantic Routes ...... 111-7 Latin American Routes ...... III-11 Pacific Routes ...... 111-13 Nonscheduled Traffic and Capacity ...... 111-15 Air Cargo Traffic ...... II-15 Forecast Assumptions ...... 111-18 Jet Fuel Prices ...... 111-19

v Table of Contents (Continued)

Chapter III: COMMERCIAL AIR CARRIERS (Continued) Pqssenger Yields ...... 111-21 Domestic Passenger Yields ...... 111-21 International Passenger Yields ...... 111-23 Atlantic Routes ...... 111-25 Latin American Routes ...... 111-25 Pacific Routes ...... 111-26 Passenger Trip Length ...... 111-26 Domestic Passenger Trip Length ...... 111-26 International Passenger Trip Length ...... 111-28 Average Aircraft Size ...... 111-28 Domestic Routes Average Aircraft Size ...... 111-30 International Routes Average Aircraft Size ...... 111-30 Passenger Load Factor ...... 111-31 Domestic Passenger Load Factor ...... 111-31 International Passenger Load Factor ...... 111-33 Air Carrier Forecasts ...... 111-33 Revenue Passenger Miles ...... 111-34 Domestic Revenue Passenger Miles ...... 111-35 International Revenue Passenger Miles ...... 111-35 Atlantic Routes ...... 111-37 Latin American Routes ...... 111-37 Pacific Routes ...... 111-37 Passenger Enplanements ...... 111-38 Domestic Passenger Enplanements ...... 111-38 International Passenger Enplanements ...... 111-38 Air Carrier Fleet ...... 111-40 Airborne Hours ...... 111-43

Chapter IV: REGIONALS/COMMUTERS ...... Review of 1992 ...... IV-l Industry Summary ...... IV-l Revenue Passenger Enplanements ...... IV-l Revenue Passenger Miles ...... IV-3 Industry Composition ...... IV-3 Industry Consolidation ...... IV-3 Industry Concentration ...... IV-5 Forecast Assumptions ...... IV-8 Regional/Commuter Forecasts ...... IV-8 Revenue Passenger Miles ...... IV-8 Revenue Passenger Enplanements ...... IV-11 Regional/Commuter Fleet ...... IV-11

Chapter V: GENERAL AVIATION ...... Factors Affecting General Aviation ...... V-2 General Economic Growth ...... V-2 Ownership Cost Factors ...... V-2 Deregulation of the U.S. Commercial Airline Industry .... V-8 Factors Affecting Personal Use ...... V-8

vi Table of Contents (Continued)

Chapter V: GENERAL AVIATION (Continued) Review of 1992 ...... V-9 Fleet Composition and Aircraft Shipments ...... V-9 Hours Flown ...... V- Pilot Population ...... -I General Aviation Forecasts ...... V-10 Fleet Composition ...... V-JO Hours Flown ...... V-ll Pilot Population ...... V-I1

Chapter VI: HELICOPTERS ...... Review of 1992 ...... VI-] Shipments ...... VI- Fleet and Hours Flown ...... VI Helicopter Forecasts ...... V-I Fleec and Hours Flown ...... VI-2 Fuel Consumed ...... V-2 Helicopter Operator Economics ...... VI-2

Chapter VII: FAA WORKLOAD MEASURES ...... Review of 1992 ...... - FAA Tower Activity ...... ViI-l Instrument Operations ...... V11-4 Center Activity ...... V11-6 Flight Service Station Activity ...... VII-6 Contract Towers ...... VII-8 Forecast Assumptions ...... VII-9 Number of FAA Facilities ...... VII-9 External Factors ...... VI-9 Workload Eorecascs ...... VII-il FAA Tower Activity ...... I. VITI-I Instrument Operations ...... VI-I Center Activity ...... VII-13 Flight Service Station Activity ...... VII-16 Forecast ...... VII-16 Additional Flight Service Activity Data ......

Chapter VIII: FORECAST ACCURACY ...... The FAA Aviation Forecasting Process ...... VIII-2 Introduction ...... V.II-2 System Background ...... V11K-2 The FAA Forecasting Process ...... VIII-6 Forecast Evaluation ...... V.1I-6

Chapter IX: YEAR-BY-YEAR DATA FOR FAA AVIATION FORECASTS: FISCAL YEARS 1993 - 2004 ...... IX-I

Appendix A: Active U.S. Large Certificated Air Carriers FY 1992 A-I Appendix B: Carriers No Longer Included in Air Carrier Data Base B-1

vii Table of Contents (Continued)

Appendix C: U.S. Air Carriers Nonscheduled Traffic and Capacity ...... C-1 Appendix D: U.S. Air Carriers Cargo Revenue Ton Miles ...... 1-i Appendix E: Active U.S. Regionals/Commuters ...... E-1

Appendix F: General Aviation Aircraft Cost Indices ...... F- Appendix G: FAA Towered Airports ...... u-1 Appendix H: Contract Towers ...... H-I Appendix I: Terminal Control Areas and Airport Radar Service Areas ...... Ii Appendix J: Glossary of Terms ......

viii LIST OF FIGURES

Page

Economic Environment U.S. Short-Term Economic Forecasts ...... 12 U.S. Long-Term Economic Forecasts ...... 1-4 Gross Domestic Product by World Region ...... 11-6 Exchange Rate Trends and Forecasts...... l1-1

Commercial Air Carriers U.S. Air Carrier Revenue and Cost Trends ...... 111-2 Industry Profit/Loss by Quarter Fiscal Year 1991/1992 ...... lli-i Domestic Yield by Quarter Fiscal Year 1991/1992 (Current $) ...... 111-3 Majors Operating Profit/Loss Fiscal Year 1992 ...... 111-4 Majors Net Profit/Loss Fiscal Year 1992 ...... 111-4 Domestic RPMs and Enplanements Fiscal Year 1992 ...... 111-5 Domestic Load Factor Fiscal Year 1992 ...... 111-5 U.S. Air Carrier Domestic Traffic Trends ...... 111-6 International RPMs and Enplanements Fiscal Year 1992 ...... 111-7 International ASMs Fiscal Year 1992 ...... III-7 International Route Departures Fiscal Year 1992 ...... 111-7 Atlantic Route RPMs and Enplanements Fiscal Year ...... 111-8 Atlantic Route ASMs Fiscal Year 1992 ...... 111-8 U.S. Air Carrier International Traffic Trends ...... 111-9 U.S. Air Carrier Capacity and Traffic Trends International Operations - Atlantic Routes ...... III-10 Atlantic Route Departures Fiscal Year 1992 ...... III-11 Latin America--RPMs and Enplanements Fiscal Year 1992 ...... 111-11 Latin American Route ASMs Fiscal Year 1992 ...... Il U.S. Air Carrier Capacity and Traffic Trends International Operations - Latin America Routes ...... 111-12 Latin America Route Departures Fiscal Year 1992 ...... 111-13 Pacific Route RPMs and Enplanements Fiscal Year 1992 ...... 1-13 Pacific Route ASMs Fiscal Year 1992 ...... 1- U.S. Air Carrier Capacity and Traffic Trends International Operations - Pacific Routes ...... 1-14 Pacific Route Departures Fiscal Year 1992 ...... - 15 U.S. Commercial Air Carriers Nonscheduled Traffic ...... 111-16 U.S. Commercial Air Carriers Air Cargo Revenue Ton Miles ...... III-1i Domestic Jet Fuel Prices Fiscal Year 1991/1992 (Current $) ...... 1111-0 International Jet Fuel Prices Fiscal Year 1991/1992 (Current $) ...... 111- U.S. Commercial Air Carriers Jet Fuel Prices - Current and Real (FY-1992) Dollars ...... I11-20 U.S. Commercial Air Carriers Domestic Passenger Yield Current and Real (FY-1992) Dollars I11-2)

ix LIST OF FIGURES (Continued)

Commercial Air Carriers (Continued) Domestic Passenger Yields Fiscal Year 1991/1992 ...... 111-23 International Passenger Yields Fiscal Year 1991/1992 ...... 111-23 U.S. Commercial Air Carriers International Passenger Yield Current and Real (FY-1992) Dollars 111-24 Atlantic Route Passenger Yields Fiscal Year 1991/1992 ...... I. -25 Latin American Route Passenger Yields Fiscal Year 1991/1992 ...... 111-25 Pacific Route Passenger Yields Fiscal Year 1991/1992 ...... 111-26 U.S. Commercial Air Carriers Passenger Trip Length ...... 111-27 U.S. Commercial Air Carriers Seats Per Aircraft ...... 111-29 U.S. Commercial Air Carriers Passenger Load Factor ...... 111-32 Share of System RPMs ...... 111-34 U.S. Commercial Air Carriers Scheduled Revenue Passenger Miles ...... 111-36 Share of International RPMs ...... 111-37 Share of System Enplanements ...... TII-33 U.S. Commercial Air Carriers Scheduled Passenger Enplanements ...... 111-39 Share of International Enplanements ...... 111-40 Jet Aircraft Orders--U.S. Customers ...... 111-40 Jet Aircraft Dpliveries--U.S. Customers ...... 111-40 U.S. Commercial Air Carriers--Large Jet Aircraft ...... 111-41 Stage-2 Aircraft--U.S. Air Carrier Fleet ...... 111-42 U.S. Commercial Air Carriers--Airborne Hours ...... -44

Reg-ionals/Commuters U.S. Regionals/Commuters Traffic Trends ...... IV-2 U.S. Regionals/Commuters Forecast Assumptions ...... IV-9 U.S. Regionals/Commuters Scheduled Revenue Passenger Miles and Passenger Enplanements .... IV-1O U.S. Regionals/Commuters Passenger Aircraft ...... IV-12

General Aviation Historical Trend of General Aviation Fixed Wing Fleet and General Aviation Units Shipped versus Gross Domestic Product .... V-3 Single Engine Piston Aircraft Trends ...... V-4

Multi-Engine Piston Aircraft Trends ...... V-5 Turboprop Aircraft Trends ...... V-6 Turbojet Aircraft Trends ...... V-7 Active General Aviation Aircraft ...... V-12 General Aviation Hours Flown ...... V-13 Active Pilot Trends and Forecasts ...... V-14

Helicopters Active Rotorcraft ...... VI-3 Rotorcraft Hours Flown ...... VI-4

X LIST OF FIGURES (Continued)

FAA Workload Measures Commercial Tower Operations Fiscal Year 1992 ...... V]I- Towered Airport Operations Actual and 12-Month Moving Average ...... Vi-2 Noncommercial Tower Operations Fiscal Year 1992 ...... Vii- Commercial Instrument Operations Fiscal Year 1992 ...... VII-4 Noncommercial Instrument Operations Fiscal Year 1992 ...... VII-4 Instrument Operations Actual and 12-Month Moving Average ...... VII-5 Commercial Center Operations Fiscal Year 1992 ...... VIi-6 Noncommercial Center Operations Fiscal Year 1992 ...... VI-6 IFR Aircraft Handled Actual and 12-Month Moving Average ...... VII- Total Flight Services Actual and 12-Month Moving Average ...... VII-8 Percentage of Air Carrier Operations U.S. Majors-September 1992 ...... ViI-10 Aircraft Operations at Airports with FAA Traffic Control Service ...... VII-12 Instrument Operations at Airports with FAA Traffic Control Service ...... VII-1/4 IFR Aircraft Handled at FAA Air Route Traffic Control Centers ...... VII-15 Flight Services Orip;7ated at FAA Flight Service Stations ...... VII-17

Forecast Accuracy FAA Forecasting System ...... VIII-7

xi LIST OF TABLES

FAA Forecast Economic Assumptions Fiscal Years 1993 - 2004 1-5 Aviation Activity Forecasts Fi'7cal Years 1993 - 2004 ...... I-7 FAA Workload Measures Fiscal Years 1993 - 2004 ...... *.....1-9 Top 50 Regional/Commuter Airlines Ranked by Total Passenger Enplanements Fiscal Year 1992 ...... IV-4 Top 30 Corporate Structures ...... IV-5 Air Carrier/Commuter Airlines Code-Sharing Agreements ...... IV-6 FAA Instrument Operations Forecast Evaluation ...... VIII-3 FAA ARTCC Aircraft Handled Forecast Evaluation ...... VIII-4 FAA Aviation Forecast Variables and Data Sources ...... Vll-l

Economic Forecasts 1. U.S. Short-Term Economic Forecasts ...... IX-3 2. U.S. Long-Term Economic Forecasts OMB (1993-1998) and Consensus (1999-2004) ...... IX-4 3. Alternative U.S. Long-Term Economic Forecasts ...... IX-5 4. International GDP Forecasts ...... IX-6 5. International Exchange Rate Forecasts ...... IX-7

Air Carrier Forecasts 6. Baseline Air Carrier Forecast Assumptions Total System Operations ...... IX-8 7. Baseline Air Carrier Forecast Assumptions Domestic Operations ...... IX-9 8. Baseline Air Carrier Forecast Assumptions International Operations (Part 1) ...... IX-1O 9. Baseline Air Carrier Forecast Assumptions International Operations (Part 2) ...... IX-I1 10. United States Commercial Air Carriers and Regionals/Commuters Total Scheduled Passenger Traffic ...... IX-12 11. United States Commercial Air Carriers Scheduled Passenger Traffic ...... IX-13 12. United States Commercial Air Carriers Scheduled International Passenger Traffic ...... IX-14 13. United States Commercial Air Carriers Scheduled Passenger Capacity, Traffic and Load Factors ...... TX-15

xiii LIST OF TABLES (Continued)

tazt

Air Carrier Forecasts (Continued) 14. United States Commercial Air Carriers Scheduled Passenger Capacity, Traffic and Load Factors By International Travel Regions ...... IX-16 15. United States Commercial Air Carriers Large Jet Aircraft ...... IX-17 16. United States Commercial Air Carriers Total Airborne Hours ...... IX-I8 17. Total Jet Fuel and Aviation Gasoline Fuel Consumption United States Civil Aviation Aircraft ...... IX-19

Regionals/Commuters Forecasts 18. Baseline Regionals/Commuters Forecast Assumptions ...... IX-20 19. United States Regionals/Commuters Scheduled Passenger Traffic ...... IX-21 20. United States Regionals/Commuters Passenger Aircraft ...... IX-22

General Aviation Forecasts 21. Active General Aviation Aircraft ...... IX-23 22. Active General Aviation Aircraft by FAA Region ...... IX-24 23. General Aviation Hours Flown ...... IX-25 24. Active Pilots by Type of Certificate ...... IX-26 25. General Aviation Aircraft Fuel Consumption ...... IX-27 26. Active Rotorcraft Fleet and Hours Flown ...... IX-28

FAA Workload Forecasts 27. Total Aircraft Operations at Airports with FAA Traffic Control Service ...... IX-29 28. Itinerant Aircraft Operations at Airports with FAA Traffic Control Service ...... IX-30 29. Local Aircraft Operations at Airports with FAA Traffic Control Service ...... IX-31 30. Instrument Operations at Airports with FAA Traffic Control Service ...... IX-32 31. Non-IFR Instrument Operations ...... IX-33 32. IFR Aircraft Handled at FAA Air Route Traffic Control Centers ...... IX-34 33. IFR Departures and Overs at FAA Air Route Traffic Control Centers ...... IX-35 34. Total Flight Services at FAA Flight Service Stations ...... X-36

xiv LIST OF TABLES (Continued)

FAA Workload Forecasts (Continued) 35. Flight Plans Originated at FAA Flight Service Stations ...... IX-37 36. Aircraft Contacted at FAA Flight Service Stations ...... IX-38

Military Forecasts 37. Active U.S. Military Aircraft in the Continental United States ...... IX-39 38. Active U.S. Military Aircraft Hours Flown in the Continental United States ...... IX-40

xv a." U'-. CHAPTER I EXECUTIVE SUMMARY

AVIATION DURING Globally, economic growth has been only marginally better than ia the United THE EARLY 1990s States. World-wide real GDP increased at an annual rate of 0.7 percent during DOWN--BUT NOT OUT the last 3-year period, declining by 0.9 percent in 1991. Western Europe, Eastern Europe, and Japan experienced stubborn economic slowdowns. When the The early 1990s have not been kind to effects of the Gulf War and fluctuating the aviation industry. During the fuel prices are added to this economic first 3 years of the decade, the leth- environment, the U.S. (and world) argy of both the U.S. and the world aviation industry was virtually assured economies has presented the U.S. of relatively slow or negative growth. aviation industry with a series of challenges. U.S. commercial air carrier domestic passenger enplanements increased at an In the United States, economic growth annual rate of only 1.1 percent during averaged less than 0.5 percent annu- the last 3 years, while recording ally. The period included what, at losses totaling over $5.0 billion. first, was thought to be a mild and Worldwide traffic was not much better short-lived recession, which lingered and actually recorded its first traffic for three quarters instead of the decline in history in 1991. Finan- projected two and which saw a peak-to- cially, worldwide losses are expected trough decline in real gross domestic to total more than $10.0 billion during product (GDP) of 2.2 percent. the 1990-1992 time period.

The U.S. economy has now grown for six This combination of slow traffic growth consecutive quarters, but the slow pace and record financial losses has been of the rebound (2.0 percent annual detrimental to the financial viability rate) is unprecedented in postwar U.S. of a large number of U.S. commercial history. Historically, in the first air carriers. The industry witnessed year following a recession, growth in the liquidation of four airlines-- real GDP has averaged 5.4 percent. Eastern Air Lines, Pan American Prior to the current recovery, the Airways, Midway Airlines, and Braniff slowest economic recovery on record was International (for the third time). the 3.0 percent growth recorded in the Three carriers--America West, first year following the 1980 Continental, and Trans World Airlines- - recession. are now operating under Chapter 11 bankruptcy.

I-I The cast of players in the inter- due to the fact that regional/commuter national arena has changed considerably airlines have begun their own consoli- during the 1990s. The liquidation of dation/concentration phase, either Pan American and a retrenchment by merging with and/or purchasing the Trans World have allowed Delta, assets of financially failing carriers. followed by American and United, to become the dominant U.S. airlines on In addition, many regionals/commuters the North Atlantic. In much the same have integrated with the larger fashion, the liquidation of Eastern, scheduled air carriers, either through followed by Pan American some 10 months code-sharing agreements and/or through later, has allowed American to become acquisition in part or in total by the dominant U.S. carrier in Latin their larger partners. As evidenced by America. Only the Pacific markets the 1991 liquidations of Eastern, Pan appear to have retained some semblance American, and Midway, the demise of the of stability, with United and Northwest larger partner is likely to have sub- remaining the dominant U.S. carriers in stantial impacts on the surviving the area. smaller carrier. In this case, it caused the shut-down of three The increasing penetration of U.S. car- regional/commuter carriers--Eastern riers into foreign markets has created Express, Midway Commuter, and Pan Am a strong incentive for foreign flag Express. carrie.rs to gain a foothold in the large U.S. domestic market. In The general aviation industry continues addition, the current U.S. banking to be confronted by challenge, not the crisis has closed one of the prime least of which is the high price of sources of capital for many U.S. air- general aviation aircraft. A portion lines, particularly those carriers with of the price increases in general weak balance sheets. The combination aviation aircraft can be attributed to of these two factors has led several massive awards assessed against manu- foreign flag carriers to propose facturers in product liability law- acquiring equity stakes in U.S. air suits, which triggered extreme in- carriers, most notably British Airways creases in liability insurance pre- in USAir and Air Canada in Continental. miums. More recently, the imposition In addition, KLM has recently increased of a "luxury tax" has further dampened its equity stake in Northwest. These demand for general aviation aircraft. actions are viewed as the first steps in the race among the world's air The active general aviation fleet has carriers to establish themselves as remained fairly constant over the past very large multinational or "multi- several years, but the overall fleet mega" carriers, where the goal is to composition continues to change as the establish the most effective and far- more sophisticated turbine-powered reaching global air system possible. fleet share of the total fleet increases. General aviation pilots are The regional/commuter airline industry also becoming more sophisticated, with continues to be the fastest growing increasing numbers of them being in- sector of the aviation community, strument rated. With increased con- although the performance of individual gestion and delay developing at major carriers has varied widely. Over the air carrier airports as the commercial past several years, the number of industry expands, the demand for busi- airlines in operation has declined. In ness-related general aviation services 1981 the number of regionals/ commuters could expand greatly. in operation totaled 250. By 1992, the number of carriers had fallen to 140, Despite the overall general decline 19 fewer carriers than existed just that touched upon all segments of the 3 years earlier. Part of this loss is aviation industry during the last

1-2 several years, the worst appears to be REVIEW OF 1992 over and there are a number of encouraging signs which may presage a return to the growth patterns witnessed during In fiscal year 1992, the large U.S. air earlier growth periods. The U.S. economy astounded most experts by growing carriers increased their system capac- at an annual rate of 3.9 percent during ity (available seat miles) by 3.7 per- the fourth quarter of fiscal year 1992. cent, while demand (revenue passenger Thus, business-cycle forces are showing miles) increased by 6.2 percent. The signs of behaving in the manner that net result was an increase in the load they traditionally do in an economic factor to 63.8 percent, up from recuvery. Consumer confidence has 62.3 percent in 1991. risen significantly recently and consumers have started to spend again. Domestic capacity increased only The Department of Commerce's composite 0.9 percent in 1992, while domestic index of leading indicators jumped traffic was up 3.8 percent. In order 0.8 percent in November, following a to stimulate weak traffic demand, 0.5 percent increase in October. These particularly during the peak summer increases, in combination with recent travel period, U.S. airlines resorted gains in both employment and retail to deep-discounted promotional fares, sales, point to renewed business offering discounts of up to 50 percent. confidence and a healthier economy in Summer traffic did increase by almost 1993. 13.0 percent but yieldr &!so declined by 11.0 percent. The net effect was In the aviation industry itself, there that the industry lost nearly $92 mil- are also a number of positive indi- lion during what is normally its most cations of a sustained recovery. Two profitable quarter. Combined with of the three carriers currently earlier results, the industry reported operating under Chapter 11 indicate operating losses totaling almost that they will soon restructure and $2 billion in fiscal year 1992. emerge from bankruptcy. The reductions/delays in air carrier capital International traffic increased by acquisition plans, in combination with 13.0 percent in 1992, primarily the recently announced fare increases, result of recovering from depressed should significantly improve the future Gulf War traffic levels in 1991. North balance sheets of most U.S. carriers Atlantic traffic, the chief beneficiary and improve industry profits. of the post-Gulf War recovery, creased in- 22.5 percent in 1992. Pacific Indications of the existence of pent-up traffic also benefitted from the post- demand for air travel were demonstrated war recovery, but growth in that area last summer by the record number of was negated somewhat by the slowdown in passengers flown by U.S. airlines, Japan's economy. Nevertheless, Pacific albeit most of it flown at uneconomic traffic grew by 11.2 percent in 1992. fare levels. While these deep dis- Latin American traffic declined by counted fares were discontinued in 6.5 percent in 1992, largely the result early September, passenger demand has of the liquidation of Pan American continued to increase during the early Airways and the slow buildup of re- months of fiscal 1993. If consumer and placement service by United Airlines. business confidence both continue to Airline profits and losses have, over improve, U.S. airlines can build on the the past several years, been concen- improved performance that began during trated among relatively few carriers. the latter months of fiscal 1992. The future viability of individuai carriers, and possibly of the entire U.S. commercial airline industry, depends on the health of the U.S. economy. How-

1-3 ever, the recovery currently underway previous year. This lack of growth was in the U.S. economy may not be enough due, in part, to the liquidation of Pan to overcome the financially distressed American Airways and Midway Airlines in carriers continuing use of deep-dis- December 1991 (first quarter of fiscal counted fares to generate cash flow. 1992), which caused air carrier If price wars continue to occur, the activity to decline 0.8 percent in ranks of the losers could swell. 1992. However, general aviation operations decreased by 1.9 percent New commercial aircraft orders totaled during the same time period. only 431 (down 30.9 percent) in fiscal year 1992, while new aircraft deliv- On the other hand, air taxi/commuter eries totaled 820 (up 3.4 percent). operations were up 4.6 percent in 1992. Narrowbody aircraft orders (68.4 per- Military operations also increased in cent of the total) and deliveries 1992 (12.1 percent), but this large (74.9 percent) continue to outpace growth was largely the result of a those for widebody aircraft. This re- recovery from depressed Gulf War flects U.S. air carriers' continuing activity levels in 1991. The net reliance on increased schedule fre- effect of each user group's varying quency, rather than larger aircraft, to activity levels is that total oper- accommodate future passenger demand. ations at FAA air traffic control towers remained virtually unchanged at Contrary to the relatively slow growth 61.6 million in fiscal 1992. However, experienceu by the large U.S. air car- both instrument operations at FAA riers in 1992, the regional/commuter towered airports and the number of airline industry continued its rapid aircraft at the air route traffic expansion. In 1992, regional/commuter control centers reported increased airline passenger enplanements totaled activity counts in fiscal year 1992, up 42.8 million, while revenue passenger 1.1 and 0.8 percent, respectively. miles totaled 8.2 billion, up 10.6 and 17.1 percent, respectively, over 1991. In summary, the impact of depressed U.S. and world economies, the forces of In fiscal year 1992, there were deregulation, and fierce competition 889 general aviation aircraft ship- (both domestically and abroad) continue ments, 15.6 percent less than in 1991. to alter the structure of the com- The shipments consisted of 528 piston mercial aviation industry. In spite of aircraft (down 17.0 percent) and back-to-back disastrous years for 361 turbine-powered aircraft (down aviation, we expect activity at FAA 13.4 percent). Due to the greater facilities to resume slow to moderate average dollar value of the aircraft levels of growth as the U.S. economic being shipped, billings decreased only recovery gathers momentum. 0.9 percent from 1991 to just over $1.8 billion.

The active general aviation fleet is ECONOMIC FORECASTS estimated to have totaled 198,386 on January 1, 1992, an increase of 0.5 percent over the previous year's estimarcente Testhe aircr sfewans While the recession in 1991 was anti- estimated 29.9 million hours in fiscal cipated by most economists, the exact year 1992, down 2.0 percent from the timing and strength of the economic 1991 estimate, recovery has eluded most economists and economic forecasting services. This Air carrier operations at FAA air uncertainty, makes it extremely diffi- traffic control towers in fiscal year cult to predict the demand for aviation 1992 were virtually unchanged from the services with any degree of confidence.

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I-1-5 This year, however, there appears to be trend. This is due to the fact that basic agreement as to both the short- none of the economic models is suffi- and long-term economic outlooks. This ciently precise to predict interim basic agreement applies not only among business cycles. In addition, unanti- the three economic forecasting services cipated developments, such as the 1991 used by the FAA (DRI/McGraw-Hill, Evans Iraqi invasion of Kuwait and subsequent Econometrics, and The WEFA Group) but Gulf War, cannot be predicted at all. also between the Office of Management and Budget's economic assumptions and the consensus economic forecasts of the three forecasting services. AVIATION ACTIVITY

The economic forecasts anticipate that FORECASTS fiscal year 1993 will likely exhibit slow to moderate growth (2.4 percent), with somewhat stronger growth in both Domestic air carrier revenue passenger 1994 (3.0 percent) and 1995 (2.7 per- miles are forecast to increase at an cent). For the balance of the forecast annual rate of 3.9 percent between 1992 period (through 2004), the consensus is and 2004. The forecast assumes rela- that the U.S. economy will experience tively modest growth in 1993 (2.6 per- moderate economic growth of approxi- cent), followed by stronger growth in mately 2.6 percent annually. both 1994 (5.5 percent) and 1995 (5.0 percent) as the U.S. economic Worldwide economic growth is expected recovery gathers strength. Domestic Domese to exceed that of the United States, ecovery ars strengt to increase with real GDP growing by 2.7 percent in enplanements ari forecast and average 1993, 3.7 percent in 1994, and 1994, 4.5 percent in 1995, forecast. averaging 3.9 percent over the 12-year 3.5 percent over the 12-year is forecast period. Economic growth forecast to be greatest in the Far The forecasts assume that real pas- East/Pacific Basin countries (4.6 per- senger yields will increase slowly over cent annually), followed in turn by the forecast period (0.6 percent Latin America (4.5 percent annually), annually) as the industry continues to and Europe (3.2 percent annually). consolidate. However, real yields are

Inflation (as measured by the consumer forecast(5.6 percent to increasein current by dollars)2.4 percent in in price index) is projected to remain in 1993. The relatively large increase of the low to moderate range throughout yields in 1993 is largely the result that were the forecast period. This, of course, the 50 percent fare discounts disruptions in the th50pretfedicustatwe assucesassumes nono majorlaiistionmajor oin. tso prevalent during the summer of 1992. price and availability of oil. However, competitive forces are expected to continue to exert downward demand pesue ontfare lev ert next The projected growth of aviation pressure on fare levels over the next contained hereincontine iss herin consistentcosisent withith several years, the result being no in either 1994 these national short- and long-term increase in real yields table or 1995 economic growth forecasts. The or 1995. on page 1-5 summarizes the key economic assumptions used in developing the Air carrier aircraft operations are aviation demand forecasts that are dis- forecast to increase at an annual rate cussed in subsequent chapters and pre- of 2.2 percent during the 12-year fore- sented in tabular form in Chapter IX. cast period. The higher growth predicted for revenue passenger miles and however, that in passengerepnes ra e It should be stressed, passenger enplanements relative to any given yearanygienea theretereislielytobe is likely to be aircraft activity is the result of long-term some perturbation around the

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1-70 higher load factors, larger seating Regional/commuter airlines are also capacity for air carrier aircraft, and expected to continue the trend toward longer passenger trip lengths. purchase of small jet aircraft and larger, propeller-driven aircraft, thus International air carrier revenue pas- significantly increasing the average senger miles and passenger enplanements seating capacity of the aircraft, from are both forecast to increase at an an average 22.9 seats in 1992 to annual rate of 6.6 percent over the 35.7 seats in 2004. entire forecast period. These high growth rates are being driven by the The forecast projects increased busi- strong growth being projected for both ness use of general aviation. This is the Transpacific (7.4 percent annually reflected in the changing character of in RPMs) and Latin American (7.3 per- the general aviation fleet. The more cent) markets. The North Atlantic expensive and sophisticated turbine- market is projected to exhibit fairly powered part of the fixed wing fleet is rapid growth during the first half of expected to grow much faster than is the forecast period (6.2 percent), due the piston aircraft portion. In 1992, in part to the expected intense compe- there were an estimated 9,273 turbine- tition between North American and powered aircraft in the fixed wing European carriers. Demand is expected general aviation fleet--5.0 percent of to gradually tail off over the latter the total fixed wing fleet. By the half of the forecast period (4.7 per- year 2004, it is projected that there cent) as the North Atlantic market be- will be 13,000 turbine-powered air- gins to exhibit some signs of maturity, craft--6.7 percent of the total fixed wing fleet. Similarly, there were The air carrier forecasts assume that 3,822 turbine-powered aircraft in the the industry will respond positively to helicopter fleet in 1992--60.7 percent the economic recovery taking place both of the total rotorcraft fleet. By the within the U.S. and worldwide. In year 2004, it is projected that there addition, it is assumed that the indus- will be 6,800 turbine-powered air- try would embrace a rational pricing craft--79.1 percent of the total heli- policy, thus improving the industry's copter fleet. financial performance. The delivery of large numbers of new stage-3 aircraft The various FAA aviation traffic and is expected to result in increased activity forecasts are summarized industry productivity, also improving numerically in the table on page 1-7. the industry's financial performance. The forecast further assumes that U.S. air carriers will convert to an all stage-3 fleet (including retrofitted FAA WORKLOAD stage-2 aircraft) by the year 2003 (with exemptions). Present aircraft FORECASTS orders, options, and retrofit prospects support this assumption. The FAA forecasting process is a con- In 1993, the regional/commuter airlines tinuous one that requires that the are e:•pected to enplane 46.2 million FAA's Statistics and Forecast Branch to passengers (up 7.9 percent), 9.6 per- interact with various FAA offices and cent of all passenger traffic in sched- services, oler government agencies, uled domestic air service. By the year and aviation industry groups, including 2004, these carriers are expected to individual discussions with most major carry 89.9 million passengers (6.4 per- carriers and manufacturers. In cent growth annually) and to account addition, the process uses a number of for 12.2 percent of all domestic different economic and aviation data passenger enplanements.

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1-9 bases, the outputs of several econo- The workload at the air route traffic metric models and equations, and control centers is forecast to increase several other analytical techniques. at an average annual rate of 2.0 per- The FAA workload measures, which are cent during the 12-year forecast summarized numerically in the table on period. In 2004, FAA en route centers page 1-9, are the resultant forecasts are expected to handle 46.6 million IFR of this process. These forecasts are aircraft, up from 36.7 million in 1992. used by the agency for manpower staffing and facility planning. For each of the three workload measures, commercial aircraft activity is Following back-to-back depressed years, expected to increase at a significantly the demand for FAA operational services faster rate than is noncommercial air- is expected to increase moderately over craft activity. Forecast growth rates the 12-year forecast period. This for commercial and noncommercial activ- anticipated growth results not only ity over the 12-year period are as from the increased activity levels of follows: 2.4 versus 1.5 percent for FAA commercial aircraft, but from increased towered airports; 2.5 versus 1.5 per- activity levels of general aviation cent for instrument operations at FAA aircraft as well. As such, total air- towered airports; and 2.4 versus craft operations at FAA towered air- 1.1 percent for IFR aircraft handled at ports are forecast to increase to FAA air route traffic control centers. 76.6 million in the year 2004, an annual growth rate of 1.9 percent over In summary, aviation activity at FAA the 61.5 million operations recorded in facilities is expected to grow at a 1992. somewhat slower rate than the general economy (2.0 percent versus 2.6 per- The increased use of avionics by recent). Air transportation is expected gional/commuter airlines and general to continue to dominate all other aviation aircraft, combined with the transportation modes in both long dis- implementation of additional airport tance domestic intercity travel and in radar service areas, is expected to international passenger markets. Re- result in instrument operations at FAA gional/commuter aircraft activity and towered airports increasing at a some- the general aviation business sector what faster rate than total aircraft are expected to achieve somewhat operations. Instrument operations are greater growth than that forecast for forecast to increase from 45.6 million both the larger commercial air carriers in 1992 to 58.0 million in fiscal and the general aviation pleasure year 2004, a 2.0 percent annual growth sector. rate.

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ECONOMIC ENVIRONMENT

in order to pay off other high interest REVIEW OF 1992 personal or consumer debts such as credit cards and automobile loans.

As the fiscal year ended, the major UNITED STATES economic concerns were the federal budget deficit, the creation of jobs, and the balance of trade. The budget In fiscal year 1992, the economy of the deficit was running at about $350 bil- United States was recovering from the lion a year in the fourth quarter of economic recession. Real gross the fiscal year. The number of unem- domestic product (GDP, the value of all ployed totaled 9.7 million (7.5 percent goods and services produced in the of the labor force of 129.0 million) nation) increased by 1.3 percent, and the trade deficit reached compared to a decrease of 1.3 percent $26.5 billion. in 1991. The rate of inflation abated further; the consumer price index The economy ended the fiscal year on a (CPI) increased by only 2.9 percent in distinctly positive note, with prelimi- 1992 compared to 3.7 percent in 1991. nary GDP growth indicated at a 3.9 percent annual average rate for the final Reflecting the effects of the Gulf War quarter. Output rose by $47 billion in and the roller-coaster effect on oil the final quarter of the fiscal year, prices, the oil and gas deflator fueled principally by consumer decreased by 5.6 percent in fiscal year spending, exports, and government pur- 1992 relative to an increase of chases. Consumer spending increased by 11.8 percent in the previous year. a healthy 3.7 percent or $29.9 billion and business inventories rose by While the economy appeared poised for $12.4 billion. Government purchases recovery at the end of fiscal year rose $7.6 billion, up 3.3 percent. 1992, consumer confidence had not yet Military spending increased by 6.7 per- been fully restored. During 1992, many cent. Exports rose by $12.8 billion. consumers reduced their personal debt These data suggested that a healthy and homeowners, encouraged by the low economic recovery had started. interest rates, refinanced their mortgages. Many of these "cashed out"

1I-I U.S. SHORT-TERM ECONOMIC FORECASTS REAL GROSS DOMESTIC PRODUCT

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OIL AND GAS DEFLATOR CONSUMER PRICE INDEX

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11-2 WORLD Budget (OMB). For the period from 1999 through 2004, the economic scenario used consensus growth rates of the Many of the world's economies remained economic variables, based on forecasts sluggish through most of 1992. The prepared by DRI/McGraw-Hill (DRI), combined world economy, measured by Evans Econometrics (Evans), and the GDP, increased by only 0.5 percent in WEFA Group. calendar year 1992. This represented a slow recovery from the negative growth The principal series used in the ndi- (0.9 percent) registered in 1991, which vidual aviation models to develop the marked the first decline in estimated FAA aviation forecasts are discussed in world GDP in the post-World War II era. the following pages. The data are presented in tabular form in Chapter In terms of the rate of growth, the IX, Tables 1 through 3. Pacific Basin and the Middle East regions ranked first and second, with large increases in GDP of 6.5 and 6.0 percent, respectively. However, GROSS DOMESTIC PRODUCT growth rates in Japan (1.9 percent growth in GDP), the United States (2.0 percent), United Germany (1.5 per- Gross domestic product is a significant cent), and the United Kingdom (negative indicator of business activity which, 1.0 percent) were not as robust. Esti- in turn, drives aviation activity. GDP mated GDP in the Centrally Planned is one of the key variables used by the Economies fell by 8.1 percent. FAA in developing projections of aviation activity. Europe's GDP increased approximately 1.1 percent in 1992, up from the The economic slowdown in the United 0.4 percent growth achieved in 1991, States appears to be over. Real GDP and inflation was generally stable in grew at an unexpectedly high 3.9 per- Europe. The consumer price index for cent annual average rate in the fourth the members of the European Community quarter of fiscal year 1992. Econo- rose only 4.6 percent in 1992, down mists are now forecasting a moderate from the 5.6 percent rate in 1991. recovery in 1993. Recently revised short-term growth projections ranged The rates of inflation varied among the between 2.6 percent and 3.1 percent key industrial countries of the world. growth in GDP in 1993 (see the figure In Japan, for example, inflation was on the previous page). Inere are only 1.8 percent in 1992. In United differences of opinion about the Germany it was 5.0 percent, reflecting immediate short-term outlook. In part, the higher interest rates prevailing in the differences reflect both the avail- the former East Germany. ability of leading indicators when the forecasts were being made and the underlying assumptions about the future U.S. ECONOMIC course of the economy. OUTLOOK The FAA forecast reflects a moderate 2.4 percent growth in real GDP for 1993 and an average of 2.6 percent annual The economic scenario used to develop growth in GDP through 1998. Long-term the FAA Aviation Forecasts for the GDP growth rates are shown graphically period 1993 through 1998 was provided on page 11-4. Over the entire forecast by the Executive Office of the period, GDP is expected to grow at an President, Office of Management and average annual rate of 2.6 percent.

11-3 U.S. LONG-TERM ECONOMIC FORECASTS' GROSS DOMESTIC PRODUCT (1987 DOLLARS)

A5 N N U 4- A L 3- p E A 21 C E N 1- T Co0 H A N - G E -2 88 88 9 92 94 98 98 W 02 04 FISCAL YEAR

CONSUMER PRICE INDEX OIL AND GAS DEFLATOR (1982-84$) (11982= 100)

N N N . . .- . . . .N

11-4 CONSUMER PRICE INDEX GROSS DOMESTIC PRODUCT

As shown on page 1l-4, consumer prices As shown in the graph on page 11-6, the in the United States are expected to combined real GDP for Europe, Africa, remain in the moderate range, in- and the Middle East, adjusted for price creasing at an average annual rate of changes, is expected to grow at an 4.0 percent during the forecast period, average annual rate of 3.2 percent Inflation is forecast to increase by during the forecast period. In the 3.1 percent in 1993 and 3.5 percent in short term, real GDP for these coun- 1994. (The CPI is used in our models tries will increase by 2.6 percent in to adjust airline fares and fuel costs 1993 and by 3.7 percent in 1994. relative to other goods and services.) Gross domestic product in United Germany is forecast to grow at 2.8 percent during the forecast period. Like OIL AND GAS DEFLATOR many other industrialized countries, Germany is recovering slowly from the economic recession. Some of the prob- As summarized on page 11-4, fuel prices lems facing United Germany and other in the United States are predicted to European economies will be discussed in increase at an annual rate of 4.6 per- the section on the Consumer Price cent over the entire forecast period, Index. just slightly above the rate of inflation (4.0 percent). The rate of Latin American economic growth is ex- increase in oil prices will be rela- pected to be considerable in the fore- tively low (1.2 to 4.0 percent) in the cast period. The combined GDP for earlier part of the forecast period. Latin America (including South America, In later years, higher price increases Central America, and Mexico), adjusted of 5.7 to 6.8 percent are anticipated. for price changes, is expected to grow at an average annual rate of 4.5 percent throughout the forecast period. In the short term, GDP in Latin America should increase by a moderate 3.5 to WORLD ECONOMIC 3.7 percent in 1993 and 1994. OUTLOOK The combined GDP for Japan, Australia, New Zealand, and the Pacific Basin countries, adjusted for price changes, The U.S. effective exchange rate index is expected to grow at an annual rate and other international data were of 4.6 percent throughout the forecast the short term, fDPshould derived from the WEFA Group's World period. In 4.0 percent in 1993, then Economic Outlook. In discussing recent increase by 4.9 percent in 1994. developments in the European Community, by a strong and exchange particularly inflation rates, we relied heavily on work done The Japanese economy is expected to by WEFA. expand at a rate of 3.8 percent during The principal series used in the indi- expectedthe 1992-2004 to expand period. by 2.9The percenteconomy inis 1.9 percent growth vidual aviation models to develop the 1993, compared with expected in 1992. FAA aviation international forecasts pages. are discussed in the following The data are presented in tabular form in Chapter IX, Tables 4 and 5.

11-5 GROSS DOMESTIC PRODUCT BY WORLD REGION WORLD EUROPE/MIDDLE EAST/AFRICA

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11-6 CONSUMER PRICE INDEX In France, the rate of inflation eased during 1992. The year-to-year rate of consumer price rise in August was Europe 2.7 percent. High unemployment and the relative weakness of the unions have led to a moderation of the wage rates, In general, consumer price inflation in wc it urn ontre to a to most major industrialized countries is decra in infltontheb need expected to remain relatively stable, maintain parity between the franc and Among the members of the European the German mark also helped to keep Community, for example, the consumer theG n mark. check. price index is expected to increase by inflation in 4.2 percent in 1993 and by 3.8 percent During the forecast period, inflation in 1994. These rates of increase are in France is expected to rise by an slightly lower than the rates of 5.2 annual average of 2.7 percent. In the and 4.6 percent experienced in 1991 and short term, inflation is expected to 1992, respectively. For the medium increase by only 2.4 percent in 1993 term (and, perhaps, for the long term) and by 2.7 percent in 1994 inflation is expected to decline--with an annual average growth of no more than 3.7 percent. Japan

Within* the European Community, recent developments in United Germany are of Reflecting the slack special interest. The monetary policy economy, inflation remainsin thestable. Japanese For specimple ntedest.b UTed Goetrmy causd implemented by United both July and August, the CPI increased Germany caused l s h n 2 0 p r e t f o h e e significant fluctuations in interest less than 2.0 percent from the level and exchange rates. In its attempts to control the increase in the money Consumer price inflation in Japan is supply, Gcrmany continued to export high interest rates to members of the expected to remain low, increasing by European Economic Community. In an average annual rate of 2.6 percent response to government pressure to during the forecast period. Inflation support the Exchange Rate Mechanism, is forecast to increase by 1.2 percent the Bundesbank cut interest rates in in 1993 and by 1.9 percent in 1994. mid-September, but the threat of inflation remains relatively high. Lain America

In the short term, inflation in United Germany is forecast to increase by Recession in the developed countries 4.4 percent in 1993 and 2.8 percent in had only minor spillover effects in the 1994. These rates compare quite developing countries. In Latin America favorably with the 5.0 percent rate and Asia, intra-regional trade growth experienced in 1992. During the 1992- and capital flows are diminishing the 2004 forecast period, inflation in reliance on the United States and United Germany is projected to increase Japan. at a moderate 2.7 percent. An important trend in the future may Consumer price inflation in the United involve shifts in labor costs among Kingdom is expected to remain moderate, different regions of the world. One increasing by an average annual rate of forecaster projected a change in 3.7 percent over the forecast period, foreign trade based on increases in Inflation is forecast to increase by Asian wage rates compared to those in 3.3 percent in 1993 and by 4.6 percent Latin America--especially Brazil and in 1994. Mexico. In the year 2000, Japan's

11-7 labor cost index for manufacturing would tend to travel less to foreign production workers is expected to be destinations. slightly higher than that of the United States. The index for Korea is expected to jump from 28 percent of U.S. costs to 87 percent. Over this AFFIRMATION OF same period, Brazil's labor cost is expected to increase from 19 percent of CHANGE the U.S. rate in 1990 to 53 percent in 2000. Mexico's cost index over the same period is expected to increase The election of a new President and from 12 to 34 percent of U.S. rates. changes in Congress assures the country As foreign labor rates approach those of immediate political change. The of U.S. workers, the U.S. economy impact of this change on the economy, should benefit. in general, and the aviation industry, in particular, depends on how the Administration and the legislative bodies address key short- and long-term DOLLAR EXCHANGE RATES economic and social issues.

The charts on page 11-9 show that the SHORT-TERM U.S. dollar effective exchange rate is EXPECTATIONS expected to decline slightly throughout the forecast period at an average annual rate of about 1.2 percent per year. Following a decline of 2.0 per- We s ou examine terecoomi cent in 1992, the U.S. effective ex- prospects for botthe short-term--the changean increase rate isof expected5.1 percent to reboundin 1993 withand nextterm- -1812 tomonths 18 months-and beyond.-and the longThe then resume a long-term decline in 1994 economy has begun to turn around, as and beyond. The projected decline in evidenced by the strong 3.9 percent the U.S. effective exchange rate will growth in GDP in the fourth quarter of make imports of foreign goods more expensive to U.S. buyers, possibly re- ducing imports. Both the Conference Board and the University of Michigan surveys reported The German mark is expected to gain in increased consumer confidence in the value relative to the U.S. dollar, last quarter of calendar year 1992. averaging 2.3 percent growth annually Orders for durable goods rose 3.9 per- over the 12-year forecast period, cent in October, the largest increase since July 1991, and sales of existing The Japanese yen is also expected to single family residences rose 9.1 per- gain in value relative to the U.S, cent. New applications for unemploy- dollar, averaging 1.6 percent over the ment benefits fell by 12,000 to 374,000 forecast period, during the week of November 14, the sixth decline in eight weeks. Auto- As these currencies gain in value mobile sales, single family housing relative to the U.S. dollar, foreign starts, and employment and unemployment travel to the United States becomes trends have all shown signs of economic relatively less expensive. Conversely, growth. travel by U.S. nationals to foreign Preliminary indications are that countries becomes more expensive and, Preliminaryaindications ar that other things being equal, Americans consumers have returned to the market

11-8 EXCHANGE RATE TRENDS AND FORECASTS

U.S. EFFECTIVE EXCHANGE RATE

N D 110 E ...... X 100 y 90 E A 80- R 70.

9 58 S0- 40- E U 030- A 2 - I 10- 0 0 0 80 82 84 86 88 90 92 94 96 98 00 02 04 CALENDAR YEAR

JAPANESE YEN GERMAN MARK

11 0.9

U 10 ...... S D0 0 .... .U S 0.7

L 8 D A 0 R L 0.6- 1 7 1 AL R 0.5- 0 0 I-R/ 0 0 E 4 5- R 0. A M A N 0.:3- N S UA E E R 02 2- K NI 0.1

O_ 0 CALENDAR YEAR CALENDAR YEAR

11-9 place in large numbers, prompting training and education, and $80 billion retail merchants to anticipate for other programs. It also called for significant increases in retail sales a 50-percent decrease in the budget during the holidays. Subsequent deficit by 1996. reports indicate that these expectations were justified as retail sales The proposals included spending cuts of increased substantially. $140 billion, primarily from defense and the bureaucracy, and tax increases Some economists doubted that the strong of $150 billion--$90 billion of which fourth quarter fiscal year growth would come from an increase in income signalled a robust recovery. They felt taxes. An additional $60 billion would that the results could be a one-time come from U.S. corporations who do occurrence based on such factors as new business abroad and foreign corpor- investments that resulted in large ations who do business in the United inventories, year-end spending by some States. The proposals also included an government agencies, purchases due to increase in the alternative minimum hurricanes Andrew and Iniki, and tax. additional exports resulting from the low value of the dollar. Similarly, Based on the programs outlined above, questions are being raised about the it appears that expenditures could, at permanency of the consumers' return to least in the short term, exceed the market place. revenues. Depending on economic conditions and budget deficit trends, other tax measures may follow. How LONG-TERM CHANGES these issues are balanced will be determined by the need for short-term economic stimulation relative to long- On the campaign trail, the Democratic term deficit control. nominee outlined a comprehensive program for economic growth. The In the long run, the Administration's proposals focused on policy issues such programs could have a significant as: impact on the economy. The Reagan tax cut package shaped the economy for much 1. Reinstatement of the investment of the 1980s. But the Reagan programs tax credit did not have much effect until 1983-- two yearq aft- he t 1- c'ffice. This 2. Cuts in the long term capital was similar to the Kennedy programs of gains tax rate the 1960s.

3. Investments in the infra- Under the scenario discussed, inflation structure would be expected to increase slightly, based on the stimulus of increased 4. Emphasis on jobs programs, spending generated by the additional education, and training dollars pumped into the economy.

5. Emphasis on health care Another possible effect of the proposed programs is an increase in the interest . Reduction in dependence on rate. This increase could come from a foreign sources of energy rise in the core inflation rate, the immediate effects of a possible economic stimulus package, and an antici- The plan called for a $220 billion patory factor from fears that the increase in spending: $80 billion for deficit would rise even further in public works, $60 billion for job later years.

II-10 EFFECTS ON AVIATION ment. It was met with strong opposition and it is in the process of being revised. What will the possible changes mean to aviation? In the short term, aviation Independent of the FAA, the U.S. Travel is expected to follow the path of the and Tourism Administration predicts an general economy. The aviation industry excellent year for growth in travel to would benefit from increased spending and from the United States. Overseas to rebuild the infrastructure to make visitors to the U.S. are expected to America more competitive. In the register an increase of 8.0 percent or aviation industry, there are many better from most of the popular candidates for infrastructure expendi- origination sites such as Japan, the tures: airports, terminals, runways, United Kingdom, and Germany. U.S. tarmac, roads, bridges, equipment, and citizens travelling abroad are expected manufacturing plants. There should to set a new record (16.7 million) in also be opportunities for education and 1993, up one million from the previous training, if the industry continues on year. With the ending of the Gulf War, a healthy growth path, and for the the subsiding of the fear of terrorism, development of a "high-tech short-haul and the restoring of consumer con- aircraft." fidence--at least in the American economy--U.S. citizens and other A permanent 10 percent investment tax nationals are travelling more. credit, if applied to all purchases over 80 percent of a company's 1992 One proposal would raise taxes paid by investment purchases, could more than foreign corporations doing business in double the increase of business equip- the United States. This ment purchases. In the national approximately $45 billion overcould a four-raise economy, purchases of machinery, year period, but it could be a possible computers, and other equipment disincentive to foreign carriers increased at an average annual rate of seeking to invest in the United States. i1 percent in 1992. The revenue could be raised tightening by the tax code to discourage The 10 percent investment tax credit the low transfer pricing methods used could add 500,000 to 900,000 jobs in by the majority of multinational com- 2 years and increase GDP by a full panies. However, this stance on the percentage point, depending on how much issue may impair U.S. airlines' ability of the new equipment is imported. Some to tap foreign sources of capital for of the jobs might be created in the much needed funds. Similarly, some manufacturing sector of the aviation economists are concerned that major industry; some might be generated shifts in free trade policies and through acquisition and upgrading of decisions could damage the cooperative equipment for providing services to the economic efforts being undertaken by aviation community. Any stimulus that some nations. This might not be a very might result from the proposed programs attractive outlook for the world air- may result in increased travel for line industry after two consecutive business purposes and/or tourism. years of recording significant losses.

Airline passenger fares and tourism are Proposed measures that include tax sensitive to exchange rate changes. credits for research and development The globalization of the industry also and increased spending on education and affects the financial and capital the infrastructure could have an esti- investment structures of the airlines, mated cost of $60 billion. Specific USAir and British Airways discussed one ideas being pursued include increasing such financial restructuring arrange- infrastructure spending by up to

II-Ii $20 billion a year. One proposal SUMMARY suggested that companies, including airlines and airframe manufacturers, spend at least 1.5 percent of their wage bill on training or pay an u the FAA's baseline economic equivalenequivalent amount into a government- oulkte cnmyi exced o t tamountinto as goveme.A thg rebound and to sustain a moderate rate sponsored training scheme. Although of growth averaging 2.6 percent many companies exceed this percentage currently, it will place an extra throughout the forecast period. In the burden on financially strapped short term-h-at least for 1993-ithe airlines, economy and the aviation industry will continue on their current courses, The prevailing view is that, despite uninfluenced by the change in the proposed increase in income taxes Administration. and the suggested cuts in government Under one possible proposea economic spending, the net effect of the U n ar io , w i b le fo cus onothe proposed economic changes will be scenario, with explicit focus on the mildly expansionary, putting $15- injection of $40 billion divided among 20 billion into the economy. These three programs ($15 billion public expenditures are expected to raise works, $15 billion health care transfer gross domestic product initially by payments, and $i0 billion jobs pro- between 0.25 percent and 0.5 percent. gram), the deficit would increase to $321 billion by the end of 1993. Economic growth during the last 4 years has been so low that even this small There would also be some increase in increase might be enough to give some inflation and in interest rates. Many global economic impetus. However, the of the ideas discussed during the United States (like Japan) will put campaign and reiterated at the Little economic growth close to the top of its Rock, Arkansas, summit represent long- agenda. The focus on capital spending, term programs and expected results. such as for infrastructure replenish- Their implementation also require the ment, could have important long-term cooperation of the U.S. Congress. benefits for the aviation industry if it accelerates work on modernizing air At this time, it is difficult to traffic control systems, building more estimae te nt fecs of the runways and terminals, and improving proposed programs of the new public transportation links. Apart Administration on aviation beyond 1993. from contributing to growth, this would However, all programs that will be ensure improved capacity when full expansionary and that will improve the andexpnsin i pasener infrastructure and increase produc- recovery andmex tivity should be beneficial to the traffic resume. aviation industry. Short-term policy changes are not expected to impact the baseline forecasts significantly.

COMMERCIAL AIR CARRIERS

In fiscal year 1992 there were 67 U.S. and presented in Chapter IX (Tables 27 commercial airlines (both scheduled and through 33). nonscheduled) reporting traffic and financial data to the Research and A list of domestic and international Special Programs Administration (RSPA), commercial passenger and cargo air car- Department of Transportation (DOT), on riers active in fiscal year 1992 is in Form 41. There were 48 passenger Appendix A. A listing of inactive airlines (operating aircraft with over commercial passenger and cargo air 60 seats) and 19 all-cargo carriers, carriers is found in Appendix B. While there are more carriers this year than last, it should be noted that additions are primarily in the nonscheduled and all-cargo segments of the industry. REVIEW OF 1992

Thirty-four of the airlines provided scheduled passenger service and constitute the data base (both domestic and international) for the air carrier FINANCIAL RESULTS forecasts discussed in this chapter. Thirty-one of the carriers provided scheduled domestic service (within the Fiscal year 1992 saw a continuation of 50 states, the District of Columbia, poor financial performance for the U.S. Puerto Rico, and the U.S. Virgin commercial airline industry. The U.S. Islands), while 16 of the carriers economy was sluggish throughout 1992, provided scheduled international and the recession took hold in foreign service. Of the 16 carriers providing economies to a greater extent than scheduled international service, nine expected. Excess capacity (relative to served Atlantic routes, eleven served demand) continued to be a major factor Latin American routes, and seven served in the aviation industry in 1992, Pacific routes. resulting in fare wars that included the peak travel period of the year. Air carrier traffic forecasts and as- The continued sluggishness of the U.S. sumptions discussed herein are economy exacerbated the capacity presented in Chapter IX (Tables 6 problems of the industry. Also, some through 17). FAA air carrier workload carriers had large expenses associated forecasts are discussed in Chapter VII with absorbing new routes.

III-1 U.S. AIR CARRIER REVENUE AND COST TRENDS, OPERATING REVENUES AND EXPENSES

24 - ______

B 22- -- EXPENSES -*-REVENUES L 20- L I 18- 0 N S 16- o 14- F D 12- 0 L10- L A 8- R S 6-

79 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR BY QUARTER

PASSENGER YIELDS JET FUEL PRICES

16 140

1- DOMESTIC -k-INTERNATIONAL 130- DOMESTIC -4-ITENTOA

14- 120-

C 110 c 13- E E N N T 100- T 12- S S p go- p iI E EBO-

10 A R L 70 p L Mg 0 N 60

7 :ON

6 1 1 1 1 1 - .1 3 1J 79 80 1 32 8384 8586 87 8889 909192 7980 91 82 838455868 7 889 90 91 92 FISCAL YEAR BY QUARTER FISCAL YEAR BY QUARTER

111-2 Again, as in 1991, the losses were not confined to the financially weaker carriers. Most major airlines suffered substantial losses in 1992, leading to DOMESTICYIELDBYQUARTER an industry operating loss of over FISCAL YEAR 1091192 (CURRENT $) $1.9 billion. This follows on the heels of 1991, when the industry lost $3.3 billion, the largest single-year loss in industry history. Three major IA . . carriers, Continental Airlines, AmericaNT West Airlines, and Trans World Airlines 10 entered or remained in Chapter 11 8 during 1992. , bankruptcy L E While experiencing a smaller loss for 11 the year, compared to fiscal year 1991, 400/1/1 1/91 2/1 39 1 4/1., V92 2/02 3/92 the industry showed weakness by having all four quarters in the negative, for both operating and net losses. Most believe that the increase in domestic RPMs (up 3.8 percent) in 1992

INDUSTRY PROFIT/LOSS BY QUARTER was due almost entirely to the deep FISCAL YEAR 1991/1992 discount fares. Passenger yields (as measured by revenue received per * passenger mile) decreased by L 2.6 percent in current dollars and L0 5.6 percent in constant dollars. 0I 0 The international air travel sector, F ----.------.- a f t e r r e c o r d i n g a d e c r e a s e i n t r a f f i c L0 ------...... ----... -.---...... in 1991 (when it declined 1.4 percent)

A 3NerP/L.. OPERPIL increased 13.7 percent. International I yields decreased marginally

4/90 Vol 2/91 3/91 4/91 V/2 2/02 3/92 (1.1 percent) in real terms, and increased 2.0 percent in current dollars.

One major effect of the fare wars was U.S. airlines posted a net loss of lower yields, especially domestically. almost $2.3 billion in fiscal year Usually, financial gains made in the 1992, a considerable improvement from peak summer travel season offset losses the $4.7 billion net loss in 1991. in other seasons. In 1992, however, the deep discount fares offered in the Only three major airlines showed an summer did r-t cover the high expenses operating prcit in fiscal year 1992, of the industry, so that losses were and only one, Southwest, earned a net experienced even in the traditionally profit. profitable third quarter.

111-3 As shown in the following two graphs, industry profitability. However, the Delta and United Airlines, two carriers current forecast does not offer hope of who generally enjoy solid financial significant financial improvement in results, experienced the worst losses, fiscal year 1993. Should poor growth Between them, they had an operating conditions persist, and the expected loss of $1.34 billion and a net loss of economic turnaround be weak, additional $1.02 billion. This represents carriers could be forced into 69 percent of major carrier operating bankruptcy or liquidation. loss and 45 percent of major carrier net loss in fiscal year 1992.

SCHEDULED PASSENGER MAJORS OPERATING PROFIT/LOSS TRAFFIC AND CAPACITY FISCAL YEAR 1992

M 232.5 - - ...... Scheduled system (domestic and inter- L W national) passenger traffic on U.S. commercial airlines increased in 1992, N _200o ;&Z. reversing 1991's decline. The increase 400 ------. 6 in passenger demand in 1992 was largely 0 •...... the result of two factors: the effects L of domestic fare wars and inter- S-,0 .. .national travel rebounding from the -,00 P? depressed levels of 1991, so negatively affected by the Gulf War.

In 1992, the system demand for air travel (as measured in revenue passenger miles [RPMs]) increased 6.2 percent. This increase follows 1991's decline in RPMs (the first in 10 years). MAJORS NET PROFIT/LOSS FISCAL YEAR 1992 Available seat miles (ASMs) increased 2-o only 3.7 percent, resulting in a system load factor of 63.8 percent, the 0 highest level in recent history. The 0 N modest capacity growth was due in large S20:'oo. .7 0.; -161part to the continued effects of the -286.9 liquidation of carriers like Eastern o "400 -3...4 and Pan American. Few of these A000----- .. carriers' aircraft (largely stage-2)

.-.0.1 were put into service by surviving -goo airlines. Also, carriers in bankruptcy AA HP CO OL FM Nw WN 7W UA US operated lower capacity levels than they did before bankruptcy.

As was the case last year, if the industry is to return to profitability within the near future, it is imperative that the industry establish rational pricing policies whose goal is to ensure both short- and long-term

111-4 Domestic Passenger Traffic and Capacity DOMESTIC RPMs AND ENPLANEMENTS FISCAL YEAR 102 Domestic RPMs increased by 3.8 percent in fiscal year 1992 to 346.3 million. This growth, while encouraging, continues the sluggish development of M M EMPLANEMENTS traffic demand within the United States that began in 1988. Domestic passenger enplanements (428.8 million) increased - by 3.7 percent in fiscal year 1992. ! ...... y ..-. ... -...... Real yields declined by 5.9 percent in A 1992. This was unexpected at the start -10-. 0 N 0 J F M A M J J A 8 of the year, as many felt that yields had to be improved, not reduced. The decline in 1992 was the largest Domestic capacity increased by only decrease in real yield since 1986, when 0.9 percent in fiscal year 1992. This real yield dropped some 10 percent. modest growth improved the load factor While the decreases in yield during the to the best level since 1979. However, 1980s seemed driven primarily by cost an underlying weakness can still be improvements of the industry, the 1992 seen in the industry, since the yearly drop seemed driven primarily by fare load factor was the result of extremely wars prompted by financial weakness of high load factors in the summer months, carriers, as well as a lack of industry coupled with moderate load factors over consensus over fare structure. the balance of the year.

The yield decline was most severe, comparing percentage decline from the previous year, during the summer of DOMESTICLOAD FACTOR 1992. In the fourth" quarter of the ~FISCAL YEAR 1992 fiscal year, yield was down some 11.5 percent from 1991 (without 100 adjustment for inflation). While it is unusual to have deep discount fares L s. promoted during peak seasons, the A 62.. in 1992 was unusual, with the 0 60 situation F recession dragging out and unemployment A threatening both the professional 0 employee and the production worker. 30 Before the deep discount fares were announced, reports in the press noted o that advance bookings for the summer 0 N D J F M A M J J A 8 season were extremely poor and leisure travel seemed to be depressed even more than anticipated.

By all traffic measures, the results of pecnaeoRPsaridbthtreIndustry concentration, in terms of the increased in 1992. the deep discounting were successful. largest carriers, and Delta increased The July and August domestic RPMs (up American, United, 13.0 percent) and load factors their share of RPMs to 54.7 percent in (74.6 percent) were extremely high. 1992, up from 52.3 percent in fiscal year 1991. The share for these three carriers is expected to increase

111-5 U.S. AIR CARRIER DOMESTIC TRAFFIC TRENDS AVAILABLE SEAT MILES AIRCRAFT DEPARTURES

86 -660

ACTUAL -*- 12-MTH MOVING AVO. 625 - ACTUAL 12-MTH MOVING Ala s0 T 600 H aU 0 876 - 146 S L 860 L D 040 S 826 N 0 S F 600 0 F35- 475 A S AR 450- M 30 T U 425- R E 400 376

20------.... 360 79 80 81 82 83 84 85 86 87888990 9192 7980 81 82 83 8485 8687888990 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

REVENUE PASSENGER MILES PASSENGER ENPLANEMENTS

40 60s

ACTUAL ":'- 12-MTH MOVING G0 I -- ACTUAL -1- 12-MTN MOVING AV(G.

36 35- M 45-

L B1 L1 40- L 30 0 L N I S O 35- N 0 S 25 F O p F A 30- S R 2 0 S p - E M N 26- * G E 16 S20R s20-

10 u...... •...... Is ...... ,•...... 79 80 81 82 83 84 85 86 87 88 89 90 91 92 79 80 81 82 83 84 a5 86 87 88 89 90g9o 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

111-6 further, and as of September 1992 their share stood at 56.2 percent. INTERNATIONAL ASM* FISCAL YEAR 1992

International Passenger Traffic andTra~ C~o(s~nacityc ndci• o ......

International traffic and capacity V ...... rebounded significantly in fiscal year 1992, with RPMs increasing 13.0 percent and ASMs increasing 12.8 percent. Load

factor increased one tenth of a percent -s N 0 . UJA' . A . A / came to 67.1 percent. These increases on top of 1991's low levels, which were depressed primarily due to the effects and not generally available in of the Gulf War. international markets.

INTERNATIONAL RPM* AND ENPLANEMENTS FISCAL YEAR 1992 INTERNATIONAL ROUTE DEPARTURES FISCAL YEAR 1992

SENPL AI O U ...... A ...... ft a V

U S0

NDJ FMAM J J A8 A

O1N D' IF M A U J J A S

The international load factor of 67.1 percent is the second highest load From 1991 to 1992, traffic and capacity factor ever achieved in the inter- increased at about the same rate, so national sector, lower by 2 points than that load factor remained at about the that achieved in 1990. same level, slightly over 67 percent.

In fiscal year 1992, increases in traffic were greatest from February Atlantic Routes through April, reflecting the rebound from the months most depressed by the Transatlantic traffic demand rebounded Gulf War in fiscal year 1991. The sharply in 1992, with RPMs, ASMs, and fourth quarter was negatively affected enplanements up between 21 and by the domestic fare wars, with many 24 percent over the depressed levels of travelers switching from international 1991. In reviewing monthly changes, to domestic destinations, to take the months of February and March 1992 advantage of deep discount fares not showed extraordinary increases, with usually available in the peak season

111-7 February 1992 up about 120 percent over 1991. But the same months in 1991 were those most adversely affected by the ATLANTIC ROUTE ASM# Gulf War. FISCAL YEAR 1992

ATLANTIC ROUTE RPM* AND ENPLANEMENTS .

FISCAL YEAH 1992 to-

P so ...... % 19 ' ......

C 6 RPM@ I ENPLANEMENTS -01 so

...... N a ...... M A J J

00 ...... 04 MA......

y 2o0...... the fact that new routes were added

0 K - J F M A M J J A 8 that involved interior U.S. points, overflying the traditional East Coast gateways to Europe. From 1981 to 1988 the average trip length remained The real yield in the Atlantic market stable, fluctuating from 3,005 miles in decreased 2.5 percent, with nominal 1981 to 3,163 miles in 1988. Since yield up 0.4 percent from 1991. The then, trip length has increased rapidly same conditions that occurred in the as new U.S. routes began service and as domestic market, namely carrier short-haul intra-Germany trips were financial weakness and heavy price dropped as a result of Pan American's discounting, also affected the sale of routes to Lufthansa. international markets, driving fares lower. However, percentage reductions Some of the problem with understanding were not as steep in international the level of enplanements is due to the markets as in domestic, and the deepest fact that Pan American's previous discounts of the peak third quarter intra-German service was counted in the applied only to domestic markets. Atlantic market entity as defined by the Research and Special Projects The traffic increase in 1992 was aided Administration. In November 1990, Pan somewhat by a weaker U.S. dollar, American completed the sale and trans- coupled with stronger European fer of its intra-Germany routes to currencies, especially the German mark. Lufthansa. While the short-haul intra- This factor is further discussed in Germany service (an average of Chapter II. Whereas these currency 259 miles in fiscal year 1990) ac- changes had a negative effect on U.S. counted for only a small percentage of travelers, they stimulated travel to total Atlantic route passenger miles the United States by Europeans. (1.1 percent in fiscal year 1990), it accounted for a substantial percentage The number of passengers enplaned on of total Atlantic route passenger en- the Atlantic routes in fiscal year 1992 planements (13.7 percent in fiscal year totaled 14.8 million, an increase from 1990). 1991's 12.2 million, but lower than the peak of 16.1 million in 1990. It is The trend toward smaller aircraft size important to bear in mind that on the continued in 1992, with the average Atlantic route especially, there has flight having 12 fewer seats on it, been greater growth in the RPMs than dropping from 257.7 in 1991 to 245.2 in enplanements in recent years, due to 1992. Departures decreased in the

111-8 U.S. AIR CARRIER INTERNATIONAL TRAFFIC TRENDS AVAILABLE SEAT MILES AIRCRAFT DEPARTURES

22 , 48 -

7 -ACTUAL -46- 12-MTH MOVING AVG. ACTUAL -'12-MTH MOVIN~ 20- ______T 40- H 18 0

L 1A L N I D

N 14-1 S 3 0 s 0F 0 12 025 E A P S 10 A T 20 U 8 R E

Sj 5 4-. 10 1.. 79 80 81 82 837846 86 87 88 89 90 91 92 798081828384 85 86 87 88 89 90 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

REVENUE PASSENGER MILES PASSENGER ENPLANEMENTS

18" r 6.'85 1- I

-ACTUAL -*- 12-MT.MOVINAV. -- ACTUAL 12-MT MOVING AG. 18 m M

B 14- L I I 4.6 L 0 1 12- N I S 4- N 00 0 S 10- F 3.5 O p F 8 A 3 RA S 3- R S p E M N 2.5 •as G E R 2- S 4b 1.5

.2------79 80 81 82 83 84 85 86 87 88 89 90 91 92 79 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

111-9 U.S. AIR CARRIER CAPACITY AND TRAFFIC TRENDS INTERNATIONAL OPERATIONS - ATLANTIC ROUTES

AVAILABLE SEAT MILES AIRCRAFT DEPARTURES

9 13

A-CTUAL 12-IH MovING ). 12 ACTUAL 12-MTH MOViNG NG. 8 T 0 8~ U I L NA 10

8 9 1 o 0 FS 6 F 6

4 A A MT 83 E 2- 4

I ------~u 31 - in n mi- 79 80 81 82 83 84 86 8768S 89 90 91 92 79 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

REVENUE PASSENGER MILES PASSENGER ENPLANEMENTI

8 2.2

-~ACTUAL -- 12-M4TH MOVING Af0. 2 -ACTUAL -- 12-MTH MOVING .

M LI L L 0 1S 1.4 - 0I N 0 3 4- F 1.2- 0 p F A 3 R - P E UN 0.8- E R0.4

C 0.2

79680881 2 8384 868687 68 8990 9192 7990 81 8283 8486 8687 88 8990 9192 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

111-10 first 4 months of fiscal year 1992, While 1991 appeared to be relatively when compared to 1991. Increases were unaffected by either the U.S. economic the pattern after January, however, as recession or the Middle East conflict, the market rebounded from 1991 levels, the decline in 1992 appears to be a which were depressed by the effects of result of changed service patterns in the Gulf War. Load factor in 1992 was the market area. In particular, many 68.9 percent, down somewhat from Pan American routes were taken over by 69.5 percent in 1991. United, and this appears to have resulted in a temporary drop in capacity and traffic.

ATLANTIC ROUTE DEPARTURES FISCAL YEAR 1992 Likewise, in 1991 the market area seemed to have been a favored 3 L destination during the Gulf War, with H ...... many discretionary travelers perhaps "43 substituting a vacation in the E 10". Caribbean or Mexico for a P European vacation. This "favor" was lost in 1992 as other markets returned to S-Inormal. Aa1-20- A -so- 0 N D J F M A M J J A 8 LATIN AMERICAN ROUTE ASMS FISCAL YEAR 1992

• 20- C ...... S 15- Latin American Routes . . .

Traffic demand to Latin America (des- E " . 0 -,. tinations in South America, Central S -Is- America, Mexico, and the Caribbean) declined in 1992. RPMs were down y -20-

6.5 percent, capacity was unchanged, A- 3-. and load factor decreased 4 points to 0 N 0 J F M A M J J A 8 58.3 percent.

LATIN AMERICA--RPM. AND ENPLANEMENTS FISCAL YEAR 1992 Monthly changes in capacity and traffic illustrate the slow startup of United % 20- in the markets they took over from

C i5 ...... ______...__ ___ N = RPm$ =ENPNEMENTS Pan American. Pan American was A N 10: operating in the market area until E 5 November 1991. In the following two Rf months, departures, traffic, and V.capacity were down considerably. U -United did not begin reporting service - .... until February 1992, and capacity was below previous year levels until April

"0 N 0 . F M A M 1 A 1992.

Another factor in the market area was a significant increase in fares in 1992. Real yield increased 9.3 percent while

1II-II U.S. AIR CARRIER CAPACITY AND TRAFFIC TRENDS INTERNATIONAL OPERATIONS - LATIN AMERICAN ROUTES AVAILABLE SEAT MILES AIRCRAFT DEPARTURES

3.2 17

- ACTUAL 12-MTH MOVIN 1.8 -- ACTUAL 0- 2-M MOVING RIO.

T 18 2.8- H 0 U 14 9I 2.6 S L A 1 L 2.4 N 1 0 a 8 12 N 2.2- F 11 O 2 FE 10 A 1.8 P Ag M8 R' i~e T 1.6U 8-

1.4 - jE 4a S

79 80 81 82 83 84 86 86 87 a8 89 90 91 92 79 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

REVENUE PASSENGER MILES PASSENGER ENPLANEMENTS

2.2 1.7

ACTUAL - i2-MTH MOVING AIG. 1.8 - ACTUAL -- i2-MTH MOVING RO. 2 -F 1.8 M 1.8 L 1.4 I 8 LI1 1.3 0 1 L 1.6 L N IS 1.2 N 1.4 0 1.1 S F 0 1.2 p 1 F A S 0.9 R S p 1 E N 0,8

0.7 0.8 RE S 0.6- 0.6-0.60.6

0.6

0.4 i n i nmudn ium 0.4 ...... I 79 80 81 82 83 84 86a88 87 88 89 90 91 92 79 80 81 82 83 84 86 86 07 88 8990 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

111-12 nominal yields increased 12.5 percent. The increase in real yields was the highest observed in any of the IFCIC ROUTE RPM. AND ENPLANEMENTS international entities for the period FISCALYEAR 1992 from 1969 to the present. This 0_-____ increase in yield is largely due to the C ._-_"- -- I_ absence of Pan American, which had been AN offering deep discount fares in the

o .

LATIN AMERICA ROUTE DEPRTUREM FISCAL YEAR 1992 o 10 N. . 1 . . A M. J

C ...... -...... ---...... A " ...... ------fac to r in re se.2 po nt. 68.6 percent. This load factor is L Afor about the the last 6Dyear abu teaverage fo h at6years, V and it appears that the high load 0 -10 ...... U factor has become a permanent part of -- ... this market. In the 6 years ending in .. o- ...... 1983 the load factor averaged only

"H" 0 IF M A M . . A a 60.6 percent. The market has become a highly discounted market in the recent past, and needs a high load factor to be profitable. (29.4 billion) Latin American ASMs showed virtually no change in fiscal year 1992. Load factor decreased PACIFIC ROUTE ASMs 4 points to 58.3 percent. FISCAL YEAR 1992

Pacific Routes 28 H ...... I...... A 20 N Passenger traffic to Pacific desti- 0 nations increased for the eleventh consecutive year in 1992. Over this 11- V 10. year period, RPMs and passenger en- I planements have more than quadrupled, U each increasing at an average annual rate of 14 percent. 0 N D J1 F MA U JA A Demand to Pacific destinations remained strong in 1992, with RPMs and enplanements both increasing approximately 11 percent. The increase came despite only moderate growth in the Japanese economy. It was aided by a 0.8 percent decrease in real yield (nominal 2.2 percent increase).

Capacity on the transpacific routes increased only 8.0 percent in 1992 and

111-13 U.S. AIR CARRIER CAPACITY AND TRAFFIC TRENDS INTERNATIONAL OPERATIONS - PACIFIC ROUTES AVAILABLE SEAT MILES AIRCRAFT DEPARTURES

7.6 ACTUAL-- 12-MTH MOVING 01O. [ - ACTUAL-• 12-T1 HMOVING A/0G- 7T I S 8U 7

L A L 6.8 N I DO 06 S N S 4. 0 F 4 O A ,8P 4- SA 3.8 R M 3 T •U 3- 2.8 R E 2-S

1.6

79 80 81 82 83 84 85 86 87 88 89 90 91 92 79 80 81 82 83 84 8s 86 87 88 89 90 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

REVENUE PASSENGER MILES PASSENGER ENPLANEMENTS

6.6 1.6

a ACTUAL -A'- 12-MTH MOVING A/0. 16 -ACTUAL 4-12-MTN MOVING Af.WO 1,6 5.5 •M

B 6 L ! i LI- 1.4

L 4.6 0 1.2- L N ! S o 4 N 01 a 3.6 F 0 P 0.8 F 3 A R p 2.6- 0.e M N * 2G

1.6 S

0.8 i~inin0.nin

79 s0o 1 82 83 84 6 86 87 88 89 90 91 92 79 80 81 82 63 84 86 86 87 88 89 90 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

111-14 Again in this market area we note a than for revenue passenger miles, pattern of significant increases in resulting in considerably higher load departures, capacity, and traffic in factors. Nonscheduled load factor the period of February and March 1992, increased to 75.7 percent from which represents a rebound from the 66.3 percent in fiscal year 1991. deepest declines caused by the Gulf War of the previous year. Historical (1982-1992) nonscheduled traffic (RPMs and enplanements), capacity (ASMs), and load factor statistics

PCIFIC ROUTE DEPARTURES may be found in Appendix C. FISCAL YEAR 1992 "2AIR CARGO TRAFFIC . oH ...... I...... Air cargo revenue ton miles (RTMs) p flown by U.S. air carriers reporting on E ,RSPA Form 41 totaled 16.5 billion in fiscal year 1992, up from 16.3 billion S in 1991. This included an increase of E...... E 2 tenths of 1 percent in system RTMs (14.4Sfreight/express billion) and 0 , D J F M A J J . A S an increase of 6.9 percent in mail RTMs (2.1 billion).

Domestic freight/express ton miles (7.7 billion) increased by 3.6 percent NONSCHEDULED in fiscal year 1992, while interna- TRAFFIC AND CAPACITY tional freight/express RTMs (6.7 billion) decreased by 3.5 percent. International RTMs in 1991 were higher, The number of nonscheduled (charter) in part as the result of the movement passengers flying on U.S. commercial of military supplies between the air carriers declined by 6.3 percent in United States and the Middle East. 8.7fiscal million. year 1992,Domestic to aenplanements total of Domestic mail RTMs (1.6 billion) 8.7 illon.ometicenplnemnts increased by 9.8 percent and interne- (5.1 million) increased by 2.1 percent, while international enplanements tional mail RTMs (0.5 billion) declined (3.5 million) decreased 16.4 percent. by 1.6 percent in fiscal year 1992.

Nonscheduled revenue passenger miles Historical (1982-1992) domestic and in- decreased 12.7 percent in fiscal year ternational air cargo statistics may be 1992, to 14.0 billion. Domestic pas- found in Appendix D. senger miles (5.1 billion) were down 6.2 percent, while international passenger miles (8.0 billion) decreased by 24.3 percent. It should be noted, however, that the 1991 figures were inflated by the large numbers of troops transported between the United States and the Middle East on civil aircraft.

Nonscheduled available seat miles (18.5 billion) decreased 23.5 percent. This decline is considerably greater

111-15 U.S. COMMERCIAL AIR CARRIERS NONSCHEDULED TRAFFIC

REVENUE PASSENGER MILES

18 =DOMESTIC -INTERNATIONAL B I 18 L L 14

N 12 S 10 0 F 8

PR 8 M M 4-

2- 0 -1 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR

PASSENGER ENPLANEMENTS

M 10-

L 9 MIDOMESTIC M INTERNATIONAL L I 8 0 N 7 S o 6- F P 5 A 4- S 3 E N G 2- E R 1 0 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR

111-16 U.S. COMMERCIAL AIR CARRIERS AIR CARGO REVENUE TON MILES

FREIGHT/EXPRESS TON MILES

14-B DOMESTIC - INTERNATIONAL

L 12 L I o 10 N S 8 0 F 8 R MT 4-

0 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR

MAIL TON MILES

2.25

2 * DOMESTIC • INTERNATIONAL B L 1.75 L I 1.5 N0 s 1.25 O 1 F R 0.75 T M 0.5

0.25

0 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR

III-17 result in the loss of one or more of FORECAST the carriers currently operating under ASSUMPTIONS Chapter 11 bankruptcy protection. A stronger than expected economic recovery in 1993 and 1994 could breathe The baseline forecasts of commercial new life into some of the financially air carrier traffic and activity during weaker carriers, thus slowing industry the next 12-year period (1993 to 2004) consolidation. are made against a complex background. The economyThe isis eco expectedex omect d tot entere ter ananContinued consolidation of the U.S. extended period of moderate expansion. commercial aviation industry, however, Chapter II discusses the economic does not preclude the emergence of new assumptions in detail, low-cost airlines seeking to establish a market niche for themselve.:--such as An important assumption is that the Air Reno. The current favorable market economic recovery, while not robust, for used aircraft actually facilitates will restore air traveler consumer this kind of entry. However, such confidence, in both business and carriers are expected to be relatively leisure travel markets. The recent few in number. In any case, present recession affected air travel more than low-cost carriers, such as Southwest, one might have expected, in large will continue to exert an important measure because business travel budgets competitive force in the market. were trimmed as a cost-cutting measure. We anticipate that this was a short- The industry is expected to continue term adjustment and not a permanent toward globalization, despite a recent shift in business travel demand, setback to this trend. In December 1992, British Airways pulled out of a On the leisure travel side, a high proposal to take a substantial equity proportion of those who lost jobs were stake in USAir. The proposed deal was in the professional ranks. The opposed by many carriers, and such confidence of those who tend to be air opposition will presumably occur with travelers--primarily the professional any major globalization proposal, since "white collar" workers--was greatly the stakes are high. The international affected, For most of the year, market is highly complex, and major persons in this consumer category deals seem to inevitably involve issues withdrew in significant numbers from of bilateral fairness. Globalization the air market. The perception was will obviously not come easy, but it that if a job was lost by a neighbor, will come. friend or relative, it could be lost by any person in the neighborhood, circle Existing arrangements, such as the or family. Therefore everyone spent association between Northwest and KLM, cautiously. This resulted in extremely became stronger in 1992. New low levels of consumer confidence. associations, such as that proposed involving Continental and Air Canada, The forecast also assumes that while are currently pending approval. the industry will continue to Whether this agreement is approved or consolidate into a smaller number of not, we expect that each of the large air carriers, competitive forces will U.S. air carriers will become remain strong. The extent and speed of increasingly global in scope. industry consolidation will depend, in part, on the timing and strength of Stronger alliances will take shape and airline industry recovery. A pro- may be in the form of cooperative longed continuation of the current marketing agreements, including joint slowdown in U.S. economic growth could flights, shared frequent programs, flyer and/or schedule coordination

111-18 to feed one carrier's passengers into the other carrier's hub system. DOMESTIC JET FUEL PRICES If there is increased industry consoli- FISCAL YEAR IOV.1992 (CURRENT S) dation, it will result in the merger 140 and/or liquidation of a number of the E financially weaker carriers, carriers T 0 ...... that have been recent leaders in the s promotion of deep discounted fares. P 8...... Even if more consolidation occurs, the 0 surviving carriers are expected to remain competitive and to continue to AL L experiment with methods to stimulate 20 N 2 travel markets, either through the use 0 of innovative discount fares or through ONDJFMAMJJASONOJFMAMJJAS other travel incentives. FY 191 FY 192

In the last year there was little new When jet fuel prices reached a peak hub development in the industry and during the third quarter of 1981 ($1.09 there were some hub reductions. In the per gallon), fuel costs accounted for immediate short term, air carriers are over 31.0 percent of U.S. air carrier likely to slow the expansion of their operating costs. However, by the present domestic hub systems or delay second quarter of 1989, jet fuel costs the development of new hubs at medium as a percentage of total operating and small airports. It is notable that costs had declined to only 13.7 per- one of the most profitable airlines in cent. The run-up in oil prices during recent years has been Southwest the first quarter of fiscal year 1991 Airlines, a carrier that is fully (October to December) increased this committed to point-to-point service, percentage to 23.0 percent. The de- rather than hub service. If more Cline in oil prices since November 1990 carriers turn to this approach, there reduced this percentage to more could be less emphasis on new hub reasonable levels, and in 1992 they development in the future.

INTERNATIONAL JET FUEL PRICES JET FUEL PRICES FISCAL YEAR 1991/1992 (CURRENT $) c140 E 12 Whi epri j t ueles cre ted ha oc nN N 12 ...... While jet fuel prices created havoc in T the~in~~~ u t y i i c l yo a 3 100~~soat , ...... the aviation industry in fiscal year 8 1991, the availability and supply of E fuel was not a severe concern in 1992. n 60 During fiscal year 1992, prices A 4 SA 4 generally declined, as stability L returned to the jet fuel market. Fuel 0 if costs averaged 64.5 cents a gallon in 0O F JJASONDJFM fiscal year 1992, with the average FY 1091 FY1902 62.7 cents for the domestic purchases and 69.6 cents for international. The system price was 18.8 percent lower were 12.8 percent of total operating than the average paid in 1991. costs. Barring any unforeseen fuel supply disruptions or major new oil Jet fuel prices have a major impact on discoveries, jet fuel costs are air carrier financial performance. expected to increase only gradually over the 12-year forecast period.

111-19 U.S. COMMERCIAL AIR CARRIERS

JET FUEL PRICES - CURRENT DOLLARS

140DOMESTIC INTERNATIONAL

E 120 N T S 100 P E 60 R G 60 A L L 40 0 N 20

0 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

JET FUEL PRICES REAL (FY-1992) DOLLARS

200 h o =DOMESTIC M INTERNATIONAL E N T S 150 P E R 100 G A L L 0 50 N

80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

111-20 System jet fuel current dollar costs and will better match real costs. Our are expected to increase to 65.3 cents forecasts ar.icipate moderate increases per gallon in 1993, up 1.2 percent, in real yield in the domestic market then to 67.8 cents in 1994, up and very moderate decreases in real 3.9 percent. By 2004, system jet fuel yield in the international arena, where in current dollars is expected to be competition is expected to force $1.096 a gallon, an average annual additional efficiencies. percent change during the forecast period of 4.5 percent. On a system basis, real yield is expected to increase 1.5 percent in 1993 to 1.`8 cents per mile, while nominal yield will increase 4.6 percent PASSENGER YIELDS to 13.2 cents per mile. In 1994, real yield is forecast to decrease slightly (down 0.2 percent), primarily as a There has been a long downward trend in result of stable domestic fares. airline passenger yields over the Nominal yield increases 3.2 percent in modern history of transportation. In 1994, to 13.6 cents per mile. On a terms of real yield (discounting fares system basis, real yield is expected to for inflation), fares in the years 1969 increase an average of 0.2 percent to 1971 averaged a little over 20 cents during the forecast period. Nominal per passenger mile (1992 dollars). yield in 2004 is expected to stand at There has been a steady decrease in 20.4 cents per mile, up an average of real yield over the years, with the 4.1 percent per year. causes of the decrease changing, but always with the result that fares have trended downward. Domestic Passenger Yields In the 1970s the dominant reason for the decrease was probably the introduction of large numbers of more Domestic real yield is expected to efficient jet aircraft into the fleets increase 2.4 percent in 1993. Some of operated by air carriers. In the 1980s this increase is already in place, as the continued decrease was fueled in fare increases in the fall of 1992 have part by the deflationary impact taken hold in the system. Nominal deregulation had on the industry. Not (current dollar) yield is expected to only were airlines able to rationalize increase 5.6 percent in 1993. This their route structures, but some labor increase is the largest in four years, costs decreased. In the last several but comes on the heels of the large years, financial weakness in the real yield decrease in 1992 of industry, coupled with high levels of 5.9 percent. capacity relative to demand, brought about intense fare competition. The yield change in 1992, comparing quarterly changes in current dollar We believe that the future will not see yield, shows the important effect of a continuation of the rapid decline in the fare wars during the peak third real yields. The industry can not quarter of the calendar year. Yield continue with large losses, which was down 11.5 percent during the result from the negative spread between quarter. breakeven costs and actual revenues. We believe that there is no new engine The forecast assumes no repetition of on the horizon to fuel major decreases deep discount "fare wars" in the peak in real yield. Therefore, real yields season. There are two major factors should no longer decline significantly, that have the potential to disrupt the

111-21 U.S COMMERCIAL AIR C1ARRIERS DOMESTIC PASSENGER YIELD CURRENT DOLLARS

22 20 18 C E 1 N T 14- S p 12 E 10 R R

4- 2 0 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

REAL (FY-1992) DOLLARS

22- 20 18 C E 16 N T 14- S p 12 E 10 R R 8 M 6 4- 2-

80 82 84 88 88 90 92 94 96 98 00 02 04 FISCAL YEAR

111-22 There has been a long-term decrease in DOMESTIC PSSENGER YIELDS international real yield similar to FISCAL YEAR 1991/1992 that in the domestic industry (and for largely similar reasons). Real 10o international yield has decreased an A ...... average of 2 percent per year from 1982 N 2to IE iw 1992, and an average of 1.5" percent per year in the decade before that. -o.7 -0.4[ Real yields in the international market 1 .... are generally lower than in the Ua domestic market, primarily because S-10- operating costs tend to be lower in A -11.5 these markets. These lower costs are 4/90 V191 2/91 3/91 4/91 1/92 2/92 3/92 associated with the long average stage length internationally and with the use of higher density aircraft, which tend short-term fare outlook for U.S. air to have lower seat mile costs. carriers: (1) the strength and timing of the U.S. economic recovery, and On a quarterly basis, the international (2) the financial position of those (current dollar) yield was up U.S. air carriers currently operating moderately each quarter in 1992. under Chapter 11 bankruptcy. A slow economic recovery could again pressure the financially weaker carriers to introduce deep discounted fares to INTERNATIONAL PASSENGER YIELDS maintain cash flow. FISCAL YEAR 1991/1992

Domestic real yield decreased 10- C 7 1...... approximately 3.3 percent per year from NAH 8-6.8 1982 to 1992, and approximately 1.3 percent per year in the decade E . before that. In the period of this a ...... forecast we project a moderate 2.4 per- 1 1 cent increase in real yield in 1993, u 2 with no change in the following • o 2 years. Thereafter, domestic real A yield is expected to increase an -2 4/90 1/91 2/91 3/91 4/91 1/92 2/92 3/92 average of 0.5 percent annually over the balance of the forecast period. Current dollar or nominal yields will increase also, at an average of We assume that the international 4.5 percent per year during the markets have little additional forecast period. efficiencies to allow significant decreases in real yield in the future. Real yield will continue to decrease International moderately in all markets. The total Passenger Yields international real yield is expected to decrease an average of 0.6 percent annually during the forecast period, The setting of international fare with the Atlantic market at that levels differs from the domestic pro- average, and the Pacific and Latin cess in that many international fares American markets at 0.7 percent average must meet International Air Transport annual decrease. Association (IATA) guidelines and/or approval by foreign governments.

111-23 U.S COMMERCIAL AIR CARRIERS INTERNATIONAL PASSENGER YIELD CURRENT DOLLARS

22 20 18 C E 16 N T 14- S 12 P E 10 R 8 R P 6 M 4- "-- PACIFIC "-- LATIN AM. 2- F ATLANTIC

0 I I I [ I I I [ [ 1 I T 80 82 84 86 88 90 92 94 96 98 O0 02 04 FISCAL YEAR

REAL (EY,1992) DOLLAR

22 20- 18.

CE 16: N T 14- 12- P E 10- R 8- R P 6- M

SATLANTIC -4- PACIFIC LATIN AM. 2

0 .. I I T I • I • I " - - • - T ' 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

111-24 While real yield in international by 0.6 percent annually. In current markets is expected to decrease an dollar terms, yield will have an annual average of 0.6 percent per year during average rate of growth during the the forecast period, current dollar forecast period of 3.2 percent, growing yield is pxrected to increase from 10.0 cents per mile in 1992 to 3.3 percent yearly. 10.3 cents in 1993, 10.6 cents in 1994, and 14.7 cents per mile in 2004.

Atlantic Routes Latin American Routes

In 1992, the major U.S. carriers on the Latin American yield increased transatlantic routes were American, significantly in 1992. This change was Delta, and United. Average real yield due primarily to Pan American's in the market decreased 2.5 percent for cessation of service in late 1991. Pan the year, while nominal fares were up American had been offering highly 0.4 percent. discounted fares and these were not continued by the carriers that remained Regardless of new alliances that may be in the market. Each quarter in 1992 formed in the transatlantic market, we saw a substantial increase in yield assume that such alliances will make compared to the previous year. the markets more competitive, not less competitive. Such competition will involve fares as well as non-price factors. Lower fares will be reflected LATIN AMERICAN ROUTE PASSENGER YIELDS in moderately decreased real yield. FISCALYEAR1991/1992

In 1992, quarterly yield was down in 20 18.5 C the first two quarters and up in the A 15 ...... 121 Il --... last two quarters. This result was due . . to the fact that fares were somewhat • 10 8 high in fiscal year 1991 due to R ...... increases associated with fuel costs. 1.3 1. 1.4 0 A l Also there was considerable discounting UUs in the markets in 1992. y -6 2:6 ...... RA -10 4/90 1/91 2191 3/91 4/91 1/92 2/92 3/92

ATLANTIC ROUTE PASSENGER YIELDS FISCAL YEAR 1991/1992

C15 12.3 These markets should see a change in AH ... yield as they become more competitive. S10- In 1992 there was a 9.3 percent E 6.7 S...... -...... _4A. increase in real yield and 12.5 percent 0 increase in nominal yield in Latin

o 0 American markets. The forecast assumes u, that this increase is temporary and -165 that future changes will reduce average R-.4 yield. -10 3/90 1/91 2/91 3/91 4/91 1/92 2/92 3/92 In 1993 and 1994, we expect real yield to decrease by 1.5 percent each year, then by 1.0 percent in 1995, and by During the forecast period, we forecast 0.5 percent per year for the balance of that fares will decrease in real terms the forecast period. On average for the

111-25 12-year forecast, real yield is expected to increase 2.5 percent, to expected to fall 0.7 percent per year 13.1 cents per mile. In 1994, nominal in real terms and increase on average yield is forecast to increase 2.8 per- 3.1 percent annually in nominal terms. cent to 13.4 cents per mile.

Pacific Routes PASSENGER TRIP LENGTH Real yield in the Pacific markets decreased 0.8 percent in 1992, and increased 2.2 percent in current dollar The average system passenger trip terms. There is no significant change length (1,007.0 miles) increased by anticipated in these markets, and we 20.2 miles in fiscal year 1992, largely expect a continued trend of moderate the result of a change in the mix of decrease in real yield. domestic and international traffic. The primary reason for the large change is that Latin American enplanements, with a low average passenger trip PACIFIC ROUTE PASSENGER YIELDS length, declined, while other FISCAL YEAR 199,v192 international enplanements, with very long trip lengths, increased. C 18 C .5 Average trip length is forecast to ...... 8 4 ...... h n n n i e A N '10 8.2 8.4 increase by more than nine miles "E annually over the 12-year forecast ,R 5-'" .. ..3.1.period, ...... reaching 1,117 miles by fiscal , year 2004. U 0" It should be noted that there can be eA -2 unusual swings in individual market

"4190 1/91 2191 3/91 4/91 1/92 2/192 3/92 trend lines. The movement in any one year will depend largely on the fare policies adopted by U.S. air carriers and by changes in the mix of Infrastructure development needs for business/vacation and domestic/inter- the aviation industry in the Far East national travelers. arc significant. The forecast assumes that these infrastructure problems will be solved gradually, and not add significantly to present costs, Domestic especially delay costs. New airports Passenger Trip Length are underway or planned in a number of P costslocations. could Withoutrise in thesethe area, developments, making it Over the 5 years from 1986 to 1991, the necessary to charge higher fares to be average domestic passenger trip length profitable. increased by 44 miles, growing from 764.1 miles in fiscal year 1986 to Real yield in the Pacific market is 807.7 miles in fiscal year 1991. forecast to decrease an average of However, the domestic passenger trip 0.6 percent per year during the length increased only 0.7 miles in forecast period. Nominal yield is 1992. forecast to increase an average of 3.2opercent pecryeare dung there se We assume the average trip length will 3.2 percent per year during the same c n i u o i c e s , a d w l d period. In 1993, the nominal yield is continue to increase, and will add three to six miles per year during the

111-26 U.S COMMERCIAL AIR CARRIERS

PASSENGER TRIP LENGTH

DOMESTIC

900

850 UN M 800 B E R 750 0 700 F M 650 I L E 600 S 550 500 80 82 84 86 a8 90 92 94 96 98 0 02 04 FISCAL YEAR

iNTERNATIONAL

4500 ATLANTIC 4PACIFIC -* LATIN AM

B 3500 E R 0 F 2500 M I L E 1500 S

500 - -•I I 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

111 -27 forecast period, iicreassing to 848 miles by 2004. This cot inues a AVERAGE AIRCRAFT SIZE trend, primarily caused by increased shifting of short distance services from large carriers to commuters. Bet-weten 1978 and 1983, the averagesy, tern seating capacity of aircraft utilized by U.S. commercial air carriers International increased by almost 20 seats (f rom Passenger Trip Length 147.2 to 167.1 seats). Since 1983, however, the aver(a e seat ilg ca(7pacity The international passenger trip length of the U.S. flet has renma ined (3,015.2 miles) increased by almost surprisin1ly stable, standing at 159 miles in fiscal year 1992. The in- 168.8 seats in 1992, up one seat from creases over the past 5 years result 1991, and less than two seats above largely from two factors. First, the 1983. relatively larger traffic growth in the longer haul transpacific markets tends A number of factors are responsible for loner aultrnspcifc mrkts end-; the constant averag~e seating capacityv to exert a disproportionate effect on t c the average international trip length. of the U.S. airline fleet. These Second, the increase in the number of factors are: (1) deregulation, transatlantic gateways and the over- (2) generally declining fuel prices, flying of established gateways in both (3) the continued expansion of hubbing the U.S. and Europe have substantially route systems, and (4) the increased increased the average transatlantic utilization of widebody twins on trans- passenger trip length. atlantic routes.

The change in 1992 was exceptional, and New legislation will require stage-2 resulted because the short distance aircraft to be out of the U.S. fleet by Latin American market enplanements January 1, 2000 (with waivers possible decreased, while other markets, with for some continued use until December trip lengths over 3,000 miles, 31, 2003). This legislation should increased, result in the retirement of significant numbers of the smaller stage-2 fleet The international trip length is pro- throughout the forecast period. This, jected to drop slightly in 1993 (to added to the fact that the aircraft 2,994 miles) due to the recovery in being delivered to the U.S. fleet are Latin American markets and to increase generally larger than the ones being slowly thereafter, replaced (the exception being the Fokker 100), should result in an in- The individual international markets crease in the average seating capacity are expected to increase in trip of the air carrier fleet throughout the length: 12-year forecast period.

Atlantic trip length increases The forecast assumes that the average from 3,895 miles in 1992 to seating capacity of the U.S. commercial 3,955 miles in 2004. airline fleet will increase by an average of about two seats per year over Latin American trip length the 12-year forecast period. In fiscal increases from 1,262 miles in year 2004, U.S. air carrier aircraft 1992 to 1,309 miles in 2004. are expected to have an average seating capacity of 195 seats. This forecast Pacific trip length increases is lower than that made last year, for from 3,773 miles in 1992 to two primary reasons. First, 1992 saw a 3,835 miles in 2004. surprisingly small increase over 1991,

[11-28 U.S COMMERCIAL AIR CARRIERS SEATS PER AIRCRAFT DOMESTIC SERVICE

190

S 180 E TA 170 S 160 P E R 150 A 140 1 R C 130 R A 120 F T 110

100 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

INTERNATIONAL SERVICE

400

-LATIN AM. ,S -- ATLANTIC -4- PACIFIC E 350.. T S-4S300

E R 250- A R 200

A F 150 T

100 - r-r - T r - T -T- T--• T--T- rT 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

TII-29 compared to what was expected. The aircraft, similar to their operation in increase was one seat, when an increase the transatlantic markets. However, of three was expected. Second, U.S. there are serious problems in the Asia- airlines made a number of capital Pacific area that argue against equipment decisions in 1992 that had widespread use of these aircraft, the effect of stretching out or especially the shortage of capacity at canceling orders for a number of larger the primary market, Tokyo. This aircraft. This has the effect of forecast assumes that there will be decreasing the size of the average increased use of aircraft smaller than aircraft in the future. the B-747, and that the average aircraft size in the Pacific market Domestic Routes will remain roughly constant through Average Aircraft Size the end of the century, then increase very moderately thereafter.

The average aircraft size of the The average seating capacity of inter- domestic fleet remained virtually national passenger aircraft is expected constant in the last decade. It stood to decrease somewhat in 1993, then at 150.7 in 1982 and has been within a remain roughly constant through the few seats of that level each year, year 2000, and incteabe moderately standing at 151.1 in 1992. This will thereafter. The market groups are change, with slow increases expected in expected to change as follows: average aircraft size as stage-2 aircraft are phased out of the fleet. The Atlantic market average By 2004, the average aircraft size aircraft stood at 245.2 seats in should approximate 175. 1992, down 12.5 seats from 1991. It is forecast to change very little in the future and to be at International Routes 248 seats in 2004. Average Aircraf Size The Latin American markets The average seating capacity of air- decreased 4.2 seats in 1992 to craft flown in international passenger 182.8 seats. The average size service (255.2 seats in 1992) has de- will change little in the clined by 37 seats since its peak of forecast period and stand at 292.2 in 1985. This decrease is 177 seats in 2004. largely a result of the increased utilization of the smaller two-engine The Pacific fleet averaged widebody aircraft (B-767 and A-310) on 318.1 seats in 1992, down almost both the transatlantic and Latin four seats from 1991. It is American routes. The increased forecast to remain basically presence of American, Delta, and United constant until the end of the in the international travel arena century, then increase slowly to should sustain this aircraft downsizing 325 seats in 2004. trend at least through the middle of the decade.

The main unknown in the Pacific area will be the extent of use of new aircraft like the B-777 or smaller twin engine aircraft such as the B-767 as more of these aircraft enter air carrier fleets. There may be marketing reasons for operating more of these

II-30 PASSENGER The air carrier industry seems to have FACTOR improved marketing and capacity LOAD management in recent years to operate more efficiently--that is, with higher load factors. We expect that air U.S. scheduled air carriers recorded a carrier scheduling policies can adapt systemwide load factor of 63.8 percent to this need for higher load factors in fiscal year 1992. This was a new during the forecast period. Therefore, record high load factor, beating the it is expected that systemwide load former high of 63.2 percent achieved in factors will increase to almost fiscal years 1996 and 1979. As discussed earlier, the 66 percent in in the 64 to 65 percent industry had an extraordinary domestic 1997 and remain hai balance 64 to for e nt load factor in the summer of 1992, but rangea forre the balance of the forecast. there was also a record high load range for factor in the international market.

Factors now affecting the industry are Domestic forecast to act together to create higher load factors in the next 5 to Passenger Load Factor 6 years. In 1992, air carriers dramatically reduced their capital U.S. scheduled domestic air carriers plans to delay or cancel aircraft they achieved a load factor of 62.6 percent had on order. Every major carrier has in fiscal year 1992, up 1.8 points from made significant changes in its fleet 1991. Airlines are capable of ad- plans. This will act to limit capacity justing capacity levels to changing increases in the short run. Absent new levels of demand. Domestic load equipment, carriers can only increase factors have varied very little over capacity by increasing aircraft the past 8 years, ranging from a low of utilization or by changing the seating 60.3 percent in 1986 to a high of density of their aircraft. This is a 62.6 percent last year. limited source of capacity improvement. We assume that the capital plans of the The extraordinary traffic in the scheduled carriers are relatively fixed domestic market that resulted from the for the next 5 years. peak season fare discounting was a major factor in 1992's high load The industry has made decisions that factor. There have never been 2 months will affect it for years and the (July and August 1992) with such high implicit decision is that the industry load factors in recent years. must operate at higher load factors in order to make a reasonable financial In 1993, we expect that capacity will return. Profitability for airlines is increase only moderately, at 3 percent achieved by exceeding a moving target, annually. This, coupled with about the namely the breakeven load factor. It same increase in RPMs, will result in a is apparent that the breakeven load load factor of 62.5 percent for 1993. factor has increased in recent years, Beyond 1993, however, we expect that and even at a record load factor in present fleet plans will provide 1992, the aviation industry had an capacity levels that should make load operating loss of approximately factor increase moderately, increasing $2 billion. Load factors, at least for to 64.5 percent in 1996 and 1997, the intermediate term, should increase before declining moderately to as a result of fleet actions taken in 62.5 percent in 2000. We believe that 1992. beyond 5 years, fleet plans are not set, so that capacity and traffic will be balanced at slightly lower load factor levels.

III-31 U.S COMMERCIAL AIR CARRIERS PASSENGER LOAD FACTOR DOMESTIC p E 66 R C E 64 N T 62

0F 60-

S E 58 A T S 56 0 C 54 C U P 52

D 50 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

INTERNATIONAL

P 78- E R C - ATLANTIC -+- PACIFIC * LATIN AM. E 74 N T 70 0 F S 66 E T 62-

0 58 C U 54 P I E I I I '-I T--T" 7T-T - T- - J D 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

111-32 International during the forecast period to Passenger Load Factor 63.1 percent in 2004. In the Pacific, load factor to 68.6 percent in The international load factor edged up increased points from 1991. to 67.1 percent from 67.0 percent in 1992, up two the load factor to 1991. While lower than the record of We forecast to a peak of 69.2 percent in 1990, it is still the increase gradually second highest annual load factor in 71.3 percent in 1997, then history. decline to a level of 70.0 percent for the period 2000 and ceyond. same forces that affect domestic The beyond. capacity (fleet plans and breakeven load factors) affect international capacity. As in domestic markets, it appears that U.S. airlines are capable of adjusting their international AIR CARRIER capacity levels to changing levels of FORECASTS demand. The international load factor is forecast to increase moderately during the forecast period, reaching a level of 69.6 percent in 1996 and 1997, and remaining between 68 and 69 percent The forecasts of air carrier demand are for the balance of the forecast period. based on a specific set of assumptions, not the least of which is the economic A load factor of approximately and political environment in which they 70 percent may be a practical limit in will take place. There are a number of the long term for international load uncertainties that could significantly factors, unless air carriers provide alter the short- and/or long-term some new services that modify the environment and cause the results to be market. Consistently exceeding these significantly different from those levels would involve greater sales of forecast. block space for low-priced travel, or perhaps a new means of selling last Some of the economic and/or political minute "fill-up" travel to fill what developments that could significantly would otherwise be empty seats. alter the forecast results include, but are not limited to, the following: The expectations for the individual market segments are as follows: (1) the current U.S. economic recovery could stagnate and/or take In the Atlantic, the 1992 load a longer time to get underway; factor was 68.9 percent, only slightly lower than achieved in (2) oil prices could be much higher the previous 2 years. We expect than predicted; it to increase gradually to a peak of 70.6 percent in 1996, (3) economic problems in Europe and then to level off at 69 percent Japan could become more serious than for the period of 2000 and expected, slowing growth in beyond. international markets, and;

In Latin America, load factor (4) structural changes in the declined to 58.3 percent in 1992, international markets could affect down four points from 1991. We U.S. carrier shares, either forecast that it will increase to positively or negatively. 60 percent in 1993, then increase

111-33 As always, the network of bilateral On the other hand, should real pass- pacts that the United States currently enger yields continue to fall through- has in place in Europe, the Far East, out the forecast period, traffic could and South America could significantly be higher than forecast. This last inhibit the expansion plans (current situation, however, would raise serious and future) of air carriers operating questions about the financial viability in these international regions and of the industry as we know it today. restrain traffic growth.

Three U.S. carriers--America West, REVENUE PASSENGER MILES Continental and Trans World Airways-- are currently operating under Chapter 11 bankruptcy protection. Additional U.S. scheduled air carriers recordea bankruptcies or liquidations of U.S. total of 474.6 billion revenue pas- airlines could negatively affect the senger miles in fiscal year 1992, up financial health of the industry, 6.2 percent. System passenger miles including the aircraft markets. are forecast to increase to 494.7 billion in fiscal year 1993, an The driving force for a turnaround in increase of 4.2 percent. The worldwide the airline industry, especially in the economic picture is expected to improve short term, is the strength of the U.S. in 1994 and 1995, with RPMs forecast to economy. If economic recovery occurs increase 6.2 and 5.7 percent respect- sooner or is stronger than predicted, ively in those years. After 1995, passenger demand could be higher than annual growth in RPMs is expected to be forecast. On the other hand, if the in the 4 to 5 percent range, and the economy stalls, and frequent travelers overall average rate of growth from do not change their confidence levels, 1992 to 2004 is expected to be then traffic demand is likely to be 4.7 percent. lower than forecast. International growth is anticipated to Additionally, this forecast has assumed be somewhat higher than domestic that the U.S. commercial airline indus- growth, with the average annual inter- try will continue to move toward national growth in RPMs during the 12- greater concentration among a smaller year forecast period being 6.6 percent, number of larger airlines. Inherent in this assumption is a move toward a more rational industry pricing policy. These assumptions have been incorpo- SHARE OF SYSTEM RPM. rated into the FAA forecast process by assuming a moderation in the long-term trend of declining real domestic passenger yields. The forecasts contained DOMESTIC 73.0% DOMESTIC U.5% herein assume a gradual increase (0.2 percent annually) in real yields over the 12-year forecast period. Should the increase in real yields be considerably higher than forecast, then traffic levels could be significantly INTL 2?.0% INTL. 33.5% lower. Likewise, if fleet plans of air FY-1992 FY-2004 carriers change dramatically, load factors and utilization of equipment could be somewhat different than forecast.

111-34 versus 3.9 percent for the domestic high/low scenarios, it is felt that, market. In the year 2004, the inter- based on the assumptions that underlie national share of the U.S. carriers' the forecasts (moderate growth in real system RPMs is expected to be GNP and 0.5 percent growth in real 33.5 percent, up from 27.0 percent in yields), the forecasts represent not 1992, and 21.1 percent in 1980. only a best case scenario but potentially, a high scenario as well. In other words, it is believed that Domestic most of the risk is on the downside, i.e., U.S. economic growth may be lower Revenue Passenger Miles than projected and domestic real yields may increase at a higher rate than Scheduled domestic passenger miles assumed Therefore, users of these totaled 346.3 billion in fiscal forecasts should be aware that the year 1992, up 3.8 percent. Domestic actual long-term growth could be lower traffic is projected to increase only than projected. slightly in 1993, with RPMs totaling 355.5 billion, up 2.6 percent. The relatively slow traffic growth in 1993 is largely due to the moderate growth of the U.S. general economy (real GNP Revenue Passenger Miles up 2.4 percent), coupled with an increase in real yield of 2.4 percent. After experiencing a decrease in international RPMs in 1991, caused by In 1994 and 1995, with increased levels the weak economy and the effects of the of activity in the U.S. economy (real Gulf War, international RPMs grew GNP up 3.0 percent in 1994 and 2.7 per- almost 14 percent in 1992. The growth cent in 1995) and no change in real was uneven, however, with increases of yield, the forecast is for a higher 22.5 percent in Atlantic markets and rate of growth in domestic passenger 11.2 percent in Pacific markets, and a demand. Domestic RPMs are forecast to decline of 6.5 percent in Latin increase to 5.5 percent in 1994 and American markets. 5 percent in 1995. RPMs are expected to grow thereafter at slightly lower Total RPMs in international markets are annual growth rates, tapering from expected to more than double during the 4.5 percent growth in 1996 to 3.3 per- forecast period, from 128.3 billion in cent growth in 2004. 1992 to 276.2 billion in 2004. The average annual growth rate over this Tapered growth rates for the later period is 6.6 percent. This is years of the forecast period are 2.7 percentage points higher than the consistent with recent history, and domestic growth rate, and continues a also reflect the slightly higher fares trend that will see a greater that are anticipated during the percentage of system RPMs in the forecast period. Domestic real yield international market. is expected to increase an average of one half percent per year from 1996 International RPMs are forecast to in- through the balance of the forecast crease to 139.2 billion in 1993, up period. 8.5 percenL, and to 150.3 billion in 1994, up 8 percent. Domestic RPMs are projected to total 51t8.4 biJ1X..-,.. in fiLcal yzar 2004, an The relative importance of inter- average annual growth rate of 3.9 per- national market areas changes during cent over the 12-year forecast period, the forecast period, with Atlantic RPMs decreasing from 45.0 percent of the Although the FAA does not develop total in 1992 to 39.8 percent in 2004.

111-35 U.S. COMMERCIAL AIR CARRIERS SCHEDULED REVENUE PASSENGER MILES

B 800-ITRAINL DMSC L 700- L o 600- N S 500- o 400- MMA F R 300 P M 200 100

0 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

SCHEDULED INTERNATIONAL RPMS BY TRAVEL REGION

300 - ______

B ATLANTIC =ZPACIFIC LATIN AM. 1 250- L L o 200- N 150- F R 100-

S50

80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

111-36 The shares of the other two market Latin American Routes entities increase during the forecast period, with Latin American RPMs Latin American passenger miles totaled increasing from 13.4 percent in 1992 to 17.1 billion in fiscal year 1992, down 14.4 percent in 2004, and Pacific RPMs 6.5 percent from 1991. This result increasing from 41.6 percent in 1992 to appears to be due to the changeover 45.8 percent in 2004. These changes from Pan American to United Airlines on result from the differing market growth a number of routes, with United getting rates anticipated during the forecast a slower start on the routes than period, expected. It is also due to a sharp increase in real yield of almost 12 percent. This is the sharpest year over year change in real yield in any international market in the period SHARE OF INTERNATIONAL RPMs since 1970.

Strong economic growth is forecast for WCIFIC most Latin American countries, and ATLANTIC 41.% PACIFIC United's capacity and traffic in 1993 is expected to increase significantly over 1992, as United continues the development of former Pan American

qL, 3.40% ý.qAMER.0rots

FY-1992 FY-2004 RPMs in 1993 are expected to rebound some 13.9 percent over 1992, and growth after 1993 is expected to be good, with average annual growth of RPMs of 7.3 percent during the forecast period. RPMs will increase during the forecast Atlantic Routes period by more than double 1992's traffic and will total 39.9 billion Scheduled revenue passenger miles on RPMs in the year 2004. transatlantic routes totaled 57.8 billion in fiscal year 1992, up 22.5 percent from 1991's depressed Pacific Routes level. Transatlantic RPMs are expected to increase by 7.9 percent in 1993, to Passenger demand between the 62.3 billion. This represents a return United States and the Pacific showed to normal growth in the market. moderate growth in fiscal year 1992, with RPMs totaling 53.4 billion, up Traffic growth is expected to remain 11.2 percent. This was a rebound strong in transatlantic markets after after the slow growth of 5.9 percent in 1993, averaging 5.5 percent annually 1991. The market area has been during the full 12 years of the affected by relatively slower growth in forecast period. Atlantic RPMs are Japan's economy, with ripple effects forecast to increase to 66.1 billion in felt in many other Asian economies. 1994 and to 70.1 billion in 1995. In 2004, Atlantic route RPMs are forecast Growth in 1993 is expected to be to total 109.9 billion, moderate, reflecting continued weakness in the Japanese economy. RPMs are expected to total 57.4 billion, up 7.5 percent. Growth beyond 1993 should improve somewhat, with 9.9 percent

111-37 growth anticipated in 1994 and 9 percent expected in 1995. Annual growth rates should taper off beyond 1995, and are expected to average SHARE OF SYSTEM ENPLANEMENTS 7.4 percent during the full 12-year forecast period. By 2004, we forecast 126.4 billion RPMs in the Pacific DESTIC90% DOMESTIC 67.8% market, up 135 percent from 1992.

One wild card in the later years of this forecast is the development of China and the extent of trade and travel between the United States and INTL. 9.04 INTL. 12.4% China. China represents a vast market FY-1992 FY-2004 potential whose dimensions are difficult to estimate. Domestic PASSENGER Passenger Enplanements ENPLANEMENTS U.S. scheduled domestic air carriers In fiscal year 1992, U.S. scheduled air enplaned a total of 428.8 million pas- carriers enplaned a total of 471.3 mil- sengers in fiscal year 1992, up lion passengers, up 4.0 percent. The 3.7 percent. The fare wars in 1992, gradual recovery of the U.S. economy is which affected even the peak season expected to result in moderate traffic travel, were largely responsible for growth in 1993, followed by somewhat the growth in 1992. Domestic pas- higher volumes in 1994 and 1995. Sys- senger enplanements are forecast to tem passenger enplanements are forecast increase to 436.7 million in fiscal to increase to 483.2 million in 1993, year 1993, up 1.8 percent. up 2.5 percent, with increases of 5.3 percent in 1994 and 4.9 percent in Domestic passenger enplanements are 1995. Thereafter, the growth rate will forecast to increase to 458.6 million taper off, similar to the change in in 1994 and to 479.8 million in 1995. RPMs discussed above. Overall average annual growth of enplanements for the The projected growth in domestic en- 12-year forecast period is expected to planements is expected to average be 3.8 percent. Enplanements grow at a 3.5 percent annually during the 12-year slightly lower rate than RPMs because forecast period, with the number of of the gradual increase in average trip domestic enplanements reaching length. 646.7 million in fiscal year 2004.

In 1992, 91.0 percent of enplanements were domestic. This will drop slightly to 87.6 percent in 2004. International Passenger Enplanements

A total of 42.5 million passengers were enplaned by U.S. scheduled international airlines in fiscal year 1992, up 7.1 percent. International enplanements are forecast to increase to 46.5 million in 1993, up 9.3 percent.

111-38 U.S. COMMERCIAL AIR CARRIERS SCHEDULED PASSENGER ENPLANEMENTS

M 1 800-

N 600- S 0 500- F 400- A S 300 E 200 N G E 100 S 0 80 82 84 86 88 90 92 94 98 98 00 02 04 FISCAL YEAR

SCHEDULED INTERNATIONAL ENPLANEMENTS BY TRAVEL REGIONS

M 1 100 ______L go ATLANTIC PACIFIC = LATIN AM. o 80- N 8 70- o 60- F 50- p A 40- S S 30- E N 20- G E 1 R S 0 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

111-39 JET AIRCRAFT ORDERS SHARE OF INTERNATIONAL ENPLANEMENTS U.8. CUSTOMERS N U 900

ATLANTIC • L33.3% • TIC ATLANTIC...... • .4• • '•, e • - "~Go...... 30.4%

F 500 R

FY-1992 FY-2004 T 6062646668707274787880828486880092 CALENDAR YEA.

Enplanements will grow at about the Aircraft manufacturers delivered same rate as RPMs. The average annual approximately 820 large jet aircraft rate of growth during the forecast worldwide in 1992. Of this total, 602 period will be 6.6 percent. The (73.4 percent) were two-engine individual international markets will narrowbody aircraft. all see significant growth during the forecast period:

Atlantic enplanements will increase JET AIRCRAFT DELIVERIES from 14.8 million in 1992 to U.S. CUSTOMERS 27.8 million in 2004, an average N percent; U 500 annual increase of 5.4 hM B E 400. Latin American enplanements will R 300 ...... increase from 13.6 million in 1992 OF to 30.5 million in 2004, an average F annual increase of 7.0 percent; and I200.

enplanements will increase R Pacific A from 14.2 million in 1992 to TF o 062 64 66 7072 74m778s8082s4a86889092 33 million in 2004, an average CALENDAR YEAR 7.3 percent. annual increase of

Looking at the year ending December AIR CARRIER FLEET 1992, the fleet for U.S. air carriers increased by an estimated 59 aircraft, World Pir carriers placed orders for an an increase of 1.4 percent. This estimated 411 large jet aircraft with compares to 1991, when the fleet U.S. and foreign aircraft manufacturers declined by 46 aircraft. Fleet changes during 1992, 30.9 percent fewer orders in 1992 were similar to changes which than in fiscal year 1991. Of this occurred in 1991, namely a steep total, 265 (64.5 percent) were for two- increase in stage-3 aircraft (up 292 engine narrowbody (B-737, B-757, MD-80, aircraft or 14.0 percent) and a steep and F-100) aircraft.

111-40 U.S. COMMERCIAL AIR CARRIERS LARGE JET AIRCRAFT

H M2-ENC. NB 3-E-Ns NB Z 4-ENG NB U 2-ENG WS Mt:::3SEND WB E] 4-ENG WS S A6- N

A 3

R2 A T

80 82 84 a6 88 90 92 94 96 98 00 02 04 AS OF JANUARY 1

PERCENT DISTRIBUTION BY AIRCRAFT. TYPE

2-NB 66.9% 2-NB5

WB 74,% \, 85.1%

-~ 2- B .1% --4-NB 4.9% 3-NB 9'7% -- 43.5% 1992 2004

111-41 decline in stage-2 aircraft (down by existing fleet plans, so future 201 aircraft or 10.3 percent). aircraft deliveries are assumed adequate to serve the forecast of This forecast assumes a 25-year life demand. cycle for large jet aircraft. However, the forecast also follows the guide- Based on the backlog of aircraft orders lines of the national noise legis- and the projections of air carrier lation. In particular, stage-2 air- traffic, seat capacity, load factors, craft are to be withdrawn from the U.S. and fleet requirements, the U.S. fleet by the end of 1999. commercial air carrier fleet is projected to increase from an inventory of At the end of 1992, there were 4,206 aircraft on January 1, 1992, to approximately 1,756 stage-2 aircraft 5,747 aircraft by January 1, 2004. (41.1 percent of the total fleet) This involves a net addition to the remaining in the U.S. air carrier jet fleet (after retirements of obsolete fleet. The forecast reflects a aircraft) of approximately 128 aircraft decreasing number of stage-2 aircraft annually (2.6 percent annually). in the fleet in each year. By far the largest increase, in terms of number of aircraft, is projected to occur in the two-engine narrowbody STAGE-2 AIRCRAFT aircraft category, which is expected to U.S. AIR CARRIER FLEET grow by an average of 139 aircraft N (4.8 percent) annually. By the year uM1000 2004, two-engine narrowbody aircraft SE ...... ~are...... r expectedx e t d tto totalo a 3,843, 4 unitsn t andn R Boo- to account for 66.9 percent of the Fo 60 ...... fleet, up from 51.8 percent in 1992.

A 400 Three-engine narrowbody (B-727) air- "I craft are expected to decline from ...... A 1,093 aircraft (26.0 percent of fleet) F C 70 in 1992 to 557 (9.7 percent of fleet) T B 0-8A407 B427 B-737 S200. DC-9 F-28 in the year 2004. Four-engine narrowbody aircraft will remain virtually unchanged, from 204 aircraft in 1992 to 203 aircraft in 2004. All remaining Numerous changes were made in the fleet three- and four-engine stage-2 aircraft plans of air carriers in fiscal year must be modified by the end of 1999 to 1992. The major effects of these satisfy noise regulations. changes are to reduce the number of aircraft on order and option, and to Widebody aircraft, which accounted for delay delivery of aircraft on order. 17.4 percent of the fleet in 1992, are Additional carrier fleet plans could expected to account for 19.9 percent in stretch out the life of some existing 2004. The two-engine widebody fleet stage-2 aircraft by either re-engining (A-300/310/330, B-767, and B-777) or hush-kitting existing aircraft. aircraft are the fastest growing of the These changes have been -incorporated widebody group. These are expected to into our fleet forecast. (As this increase by an average of 26 aircraft publication goes to press, United per year (8.0 percent), from 221 air- Airlines has announced additional fleet craft in 1992 to 532 aircraft in 2004. changes, including delivery delays. These changes are not included in the Four-engine widebody (B-747 and A-340) current forecast.) Of course, our aircraft are forecast to increase from forecast goes beyond the period covered 201 aircraft in 1992 to 226 aircraft in

111-42 2004, an annual increase that averages will also decrease, from 5.5 percent in 1.0 percent. This category declines 1992 to 4.6 percent in 2004, although until 1995, due to retirement of the the hours increase by an average annual oldest B-747 aircraft, but increases rate of 0.4 percent. thereafter. The three-engine widebody fleet (MD-Il, DC-10, -and L-1011) is Hours flown by three-engine narrowbody projected to grow from 309 aircraft in aircraft will decline significantly 1992 to 386 aircraft in 2004, an over the forecast period. The number average of 1.9 percent annually. of aircraft decrease significantly, as do the hours. Hours for this aircraft type drop from 2.0 million in 1992 to AIRBORNE HOURS 1.2 million in 2004, or 38.5 percent. This reflects the retirement of large U.S. commercial air carriers flew an numbers of B-727 aircraft during the estimated total of 10.6 million hours forecast period. Hours for the four- in fiscal year 1992, up from engine narrowbody fleet, made up 10.5 million hours in 1991. Two primarily of DC-8's, are expected to aircraft categories accounted for remain virtually unchanged. These three-fourths of total airborne hours: aircraft have to be modified by 2000 to two-engine narrowbody aircraft satisfy noise rules. (56.5 percent) and three-engine narrowbody (19.0 percent). In fiscal year 2004, the number of hours is forecast to increase to 15.7 million, an average annual increase of 3.3 percent.

Airborne hours are forecast to increase 2.6 percent in 1993 to 10.9 million, and 4.7 percent in 1994, to 11.4 million. Airborne hours generally increase at rates similar to the rate of growth of traffic, with some adjustment made for moderate increase in the average aircraft size.

Two-engine aircraft (both narrowbody and widebody) are projected to account for 78.9 percent of all airborne hours flown in fiscal year 2004. Narrowbody two-engine aircraft make up 66.9 percent of hours in 2004, up an average of 4.8 percent per year. Widebody two- engine aircraft make up 12.0 percent of the hours in 2004, up an average of 7.2 percent per year.

The number of hours flown by three- engine widebody aircraft is forecast to increase 2.8 percent annually during the forecast period, although the share of hours will decrease from 9.0 percent in 1992 to 7.4 percent in 2004. The share for four-engine widebody aircraft

111-43 U.S. COMMERCIAL AIR CARRIERS AIRBORNE HOURS

20 M 18 -N O3-N O4EGN I 2-ENG WB ~J3-ENG WS I 4-ENG WO L 16- L.. I14- 0..... N 12- S o 10- .. F

0 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

PERCENT DISTRIBUTION BY AIRCRAFT TYPE

2-NB 66.9% 2-NB 56.6%

-B5.5% 46

3-NBI 19.0%' B 7.4%%

4-NB18% % 3-B JQý2.0% FY-1992 4J11 FY-2004

The regional/commuter airline industry, sitions of, or equity interest in, for the purpose of this forecast, is their regional/commuter code-sharing defined as those air carriers that pro- partners. These actions have resulted vide regularly scheduled passenger ser- in a process of industry consolidation, vice and whose fleets are composed pre- increasing concentration, and in- dominantly of aircraft having 60 seats creasing integration with the large or less. During 1992, 140 commercial air carriers that has con- regional/commuter airlines reported tinued through 1992. traffic data to RSPA on Form 298-C. (A listing of these carriers is presented in Appendix E.) The FAA historical data base includes activity for all re- INDUSTRY SUMMARY gional/commuters operating in the 48 contiguous states, Hawaii, P u e r t o R i c o , a n d t h e During fiscal year 1992 the number of U.S. Virgin Islands. Excluded from the regional/commuter airlines totaled 140, data base is activity in Alaska, other compared to 151 in 1991. While the U.S. territories, and foreign territ- number of reporting airlines declined, ories. Additionally, the regional/com- industry growth continued to out-pace muter traffic statistics include dup- the growth of the larger air carriers. licated data for selected operators included in the commercial air carrier traffic statistics. The duplication is for those air carriers operating both REVENUE PASSENGER large jets (over 60 seats) and commuter type aircraft (see technical notes at ENPLANEMENTS the beginning of Chapter IX for Table 10 and Table 19). Total revenue passenger enplanements for the regional/commuter airlines, including Alaska and foreign terri- REVIEW OF 1992 tories, totaled 45.1 million, an increase of 11.9 percent compared to 1991. Excluding Alaska and foreign territories, enplanements totaiei Since .984, the regional/commuter air- 42.8 million, up 10.6 percent over line in•Justry has been in a period of 1991. transition. In 1985, there was a dramatic growth in the number of code- For the 48 contiguous states, sharing agreements with the major air enplanements increased 11.4 percent to carriers. This was followed in 1986 by 41.2 million. Enplanements in Hawaii, a wave of large jet air carrier acqui-

IV-I U.S. REGIONALS/COMMUTERS TRAFFIC TRENDS REVENUE PASSENGER MILES

2.8- ____ RPM'S - 4 QTR. MOVING AVG. 2.6 - ______B 2.4 L 2.2 L 2 o 1.8 N S 1.6 1.4 0 F 1.2 R 1 p 0.8- M0.6 s 0.4-f 0.2

I I 1 I l tI I I I I 1 11, 1] II 78 79 80 81 82 83 84 86 86 87 88 89 90 91 92 FISCAL YEAR BY QUARTER

PASSENGER ENPLANEMENTS

14 M 13 - I F[ NEMENTS 4-QTR.MOVING AVG. L 12 L I lo O 10 N S 9 O 8 F 7 P 6 A S 5 S 4 E N 3 G E 2

o •I, ILI• LA..LLL.L.LJ _..I_,&LL i U ..L I AJ [LL•LLL• LLL tLL.L kL Il• ~.I l.L LU 1.1.. .11 78 79 80 81 82 83 84 86 86 87 88 89 90 91 92 FISCAL YEAR BY QUARTER

IV-2 Puerto Rico, and the Virgin Islands size and sophistication of airline totaled 1.6 million--down from the operations, the players involved (es- 1.7 million reported in 1991. pecially the dominant industry operators), and aircraft fleets, to the in- Enplanements in Hawaii were unchanged dustry's relationship with the large compared to 1991. In contrast to commercial air carriers in the national Hawaiian traffic, enplanements in air transportation system. While the Puerto Rico and the Virgin Islands role of the industry, in the past and posted a decline of 7.7 percent. today, is to provide feeder service to the large hubs served by the large com- While not included in the forecast mercial air carriers, the exact scope base, enplanements in Alaska and and relationships of its role have foreign territories totaled changed dramatically. 2.1 million, an increase of 31.3 percent compared to 1991. Enplanements in In 1992 the composition of the re- Alaska were up 20.4 percent and all gional/commuter airline industry con- other areas increased 53.2 percent. tinued to evolve. The factors contributing to this change included economic and competitive influences and marketing strategies and alliances. Two REVENUE PASSENGER MILES distinct but interrelated trends form the basis for the changing character and composition of the industry since Revenue passenger miles (RPMs) totaled the mid-1980s. They are industry con- just over 8.6 billion in 1992, an solidation and increasing integration increase of 17.8 percent from 1991. of operations with the larger air car- For the 48 states, revenue passenger riers. miles increased 17.4 percent in 1992 to just under 8.1 billion. The reason for the significantly higher growth in RPMs relative to passenger enplanements is INDUSTRY CONSOLIDATION that the average passenger trip length increased by 10.2 miles in 1992 to 195.9 miles. From a high of about 250 carriers in 1981, the number of regional/commuter Passenger miles in Hawaii, Puerto Rico, operators has declined to 140 in 1992. and the Virgin Islands decreased 1.8 The 140 operators in 1992 represents a percent to 137.0 million, while in drop of 11 carriers compared to 1991 Alaska and other areas, revenue passen- when 151 carriers reported traffic data ger miles totaled 402 million, an in- to RSPA. Of the 151 carriers that re- crease of 31.4 percent compared to ported traffic data in 1991, 132 were 1991. in operation at the end of the year. Of the total of 140 carriers which opernted in 1991, 128 were still in operation at the end of the year. INDUSTRY Because of the increased integration of operatiGns with the large air carriers COMPO-SITION (through code-sharing agreements and acquisition of regionals totally or in part), the success of many regionals is The fundamental character of the tied closely to the success of their regional/commuter industry has changed larger partners. During 1992, this was dramatically since the mid-1980s. evidenced by the demise of several These changes range from the relative large regional air carriers. The most

IV-3 TOP 50

REGIONAL/COMMUTER AIRLINES

RANKED BY TOTAL PASSENGER ENPLANEMENTS

FISCAL YEAR 1992

1. Continental Express 26. Crown Airways 2. Flagship Airlines 27. Aloha IslandAir 3. Atlantic Southeast 28. Great Lakes Airlines 4. Horizon 29. StatesWest 5. Simmons 30. Paradise Island

6. WestAir 31. Sunaire 7. Comair 32. Scenic Airlines 8. Henson 33. Precision Airlines 9. Pennsylvania Airlines 34. ERA Aviation 10. Business Express 35. Northeast Express Regional

11. MetroFlight Airlines 36. MarkAir Express 12. Express Airline I 37. Viequies Air Link 13. SkyWest Airlines 38. Pan Am Express* 14. Trans States Airlines 39. Air Cape 15. Mesa Air Shuttle 40. Conquest Airlines

16. Mesaba Aviation 41. Peninsula Airways 17. Wings West Airlines 42. Jet Express 18. Executive Airlines 43. Airways International 19. CCAir 44. Air Nevada 20. Trans World Express 45. GP Express Airlines

21. Jetstream International 46. Lone Star Airlines 22. Atlantic Coast Airlines 47. Charter One Airlines 23. Chautauqua Airlines 48. Samoa Air 24. Air Midwest 49. Midway Commuter* 25. Commutair 50. Yute Air Alaska

* These reporting entities were no longer operating at the end of FY 1992.

Source: RSPA Form 298-C and Form 41 enplanement data

IV-4 TOP 30 CORPORATE STRUCTURES

Percent of Percent of Carrier/ Industry Carrier/ Industry Carrier Group Enplanements Carrier Group Enplanements

1. American 17.0 16. Chautauqua 1.2 2. Delta 13.3 17. Commutair .8 3. USAir 11.1 18. Crown Airways .8 4. Mesa 8.6 19. Aloha IslandAir .8 5. Texas Air 8.1 20. Great Lakes .8

6. Alaska 5.1 21. StatesWest .8 7. Business Express 4.3 22. Paradise Island .8 8. Metro 3.8 23. Sunaire .7 9. Express Airline I 3.8 24. Scenic .7 10. Trans States 2.9 25. ERA Aviation .6

11. Mesaba 2.6 26. Mark Air Express .6 12. CCAir 2.0 27. Viequies Air Link .3 13. Trans World Express 1.7 28. Pan Am Express .3 14. Atlantic Coast 1.3 29. Air Cape .3 15. Northeast Express 1.2 30. Conquest .2

notable are Midway Commuter and Pan Am planements increased by 11.9 percent in Express, which shut down as a result of 1992, the top 50 carriers grew at a the failure of the larger carriers slightly higher rate (12.8 percent). which owned them. At the present time, The top 50 carriers for 1992 are listed there is no reason to assume that the in the table on page IV-4. Although trend towards greater consolidation of the relative ranking has changed for the regional/commuter industry will not many carriers, the composition of the continue, group is basically unchanged from 1991.

The above data are based on RSPA Form 298-C and Form 41 reporting entities. INDUSTRY CONCENTRATION However, looking at the industry only in this manner does not reflect the true level of industry consolidation, While the number of carriers has de- concentration, and integration with the clined, the size of the dominant in- larger air carriers. Many of the car- dustry carriers has increased dramat- riers are owned, totally or in part, by ically. This has resulted in increased their larger code-sharing partners, industry concentration with the top and still others are owned by other 50 carriers accounting for approximate- regionals. A better picture of the ly 98.0 percent of total industry pass- current industry composition is pre- enger enplanements in 1992, up from sented by looking at the industry from 96.1 percent in 1991. While total en- a corporate structure point of view. A

IV-5 AIR CARRIER/COMMUTER AIRLINES CODE-SHARING AGREEMENTS

Air Carrier Designated Program Name Commuter Carrier Hubs Served

1. Alaska Airlines Horizon* Boise Portland Seattle Spokane

2. Aloha Airlines Aloha IslandAir Honolulu

3. America West Express Mesa Phoenix

4. American Eagle Executive Airlines San Juan Flagship Airlines Boston Miami Nashville New York Raleigh/Durham Metro Dallas/Ft. Worth Simmons Chicago Wings West Los Angeles San Jose

5. Continental Express Continental Express Cleveland Houston Newark Denver

6. Delta Connection Atlantic Southeast Atlanta Dallas/Ft. Worth Business Express Boston New York Comair Cincinnati Florida SkyWest Los Angeles Salt Lake City

7. Midwest Express Mesa Milwaukee

8. Northwest Airlink Express Airline I Memphis Minneapolis/St. Paul Horizon* Portland Seattle Mesaba Detroit Minneapolis/St. Paul

IV-6 AIR CARRIER/ COMMUTER AIRLINES CODE-SHARING AGREEMENTS (Continued)

Air Carrier Designated Program Name Commuter carrier Hubs Served

8. Northwest Airlink Northeast Express Boston (Continued) Newark Precision Boston Newark StatesWest Los Angeles San Francisco

9. Trans World Express Air Cape Boston Westates New York Trans States St. Louis irans World Express New York St Louis

10. United Express Atlantic Coast Washington, D.C. Mesa Denver Portland Seattle WestAir* Los Angeles San Francisco Great Lakes Aviation Chicago

11. USAir Express Air Midwest Kansas City Allegheny Commuter Baltimore Pittsburgh Philadelphia CCAir Charlotte Chautauqua Orlando Pittsburgh Commutair Boston New York Syracuse Crown Pittsburgh Henson Baltimore Charlotte Florida Philadelphia Jetstream Baltimore Indianapolis Mesa Tampa StatesWest Los Angeles

* Carrier operates both large jet and commuter aircraft.

IV-7 total of 14 regionals are owned, carriers will continue to serve primar- totally or in part, by four of the ily short-haul markets. The emphasis, larger air carriers, and seven more are however, will be on improved quality owned by three other regionals. The and schedule frequency in the markets table at the top of page IV-5 presents best suited to their operations. the top 30 corporate structures and their percent share of 1992 industry It is expected that the aircraft fleet enplanements. Viewed in this manner, will continue to grow during the fore- it can be seen that there is a much cast period. The average seats per higher level of industry concentration, aircraft is expected to increase from and also points out the degree of inte- 22.9 in 1992 to 35.7 in 2004, an aver- gration with the large commercial air- age annual growth of approximately lines. In 1992, enplanements for these 3.8 percent per year. carriers grew by 15.0 percent and accounted for 96.6 percent of total in- The average passenger trip length in dustry enplanements. the 48 States is projected to increase from 195.9 miles in 1992 to 230.0 miles in 2004, an average annual growth rate of 1.3 percent. The average trip length for Hawaii, Puerto Rico, and the FORECAST Virgin Islands is expected to remain ASSUMPTIONS constant at 86.0 miles throughout the forecast period.

Industry growth is expected to continue The average industry load factor is ex- to out-pace that of the larger air pected to increase only slightly from carriers and be driven by increased de- 48.3 in 1992 to 48.9 in 2004, reflect- mand. The introduction of new state- ing a continuing emphasis on frequency of-the-art aircraft offering amenities of service. similar to those found on large jet aircraft is expected to contribute to The baseline assumptions for the aver- greater public acceptance and stimulate age seats per aircraft, passenger trip higher growth. Increasing integration length, and load factors are presented of service with the larger commercial in Chapter IX, Table 18. air carriers, together with the introduction of new aircraft, is expected to lead to further route rationalization programs by the larger REGIONAL/COMMUTER air carriers, opening new opportunities for growth for the regional/commuter FORECASTS industry. While there are risks, the regional airline industry is expected to benefit from continued service REVENUE PASSENGER integration with the larger air MILES carriers and the introduction of larger aircraft. This will create new opportunities for growth through service substitution and expansion in Revenue passenger miles are projected markets currently served with large jet to increase to 9.2 billion (up aircraft. 11.8 percent) in 1993 and to 10.0 billion (up 9.0 percent) in 1994. Passen- While the average passenger trip length ger miles are expected to increase at is expected to increase during the an average annual rate of 7.7 percent forecast period, the regional/commuter during the 12-year forecast period, totaling 20.1 billion in 2004.

IV-8 U.S. REGIONALS/COMMUTERS FORECAST ASSUMPTIONS PASSENGER TRIP LENGTH

250

225- HAW/IP/VI 48 STATES

N 200 . U M 175- B E R 150 0 125 F M 100- L 75 E S 50 25

0i 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

AVERAGE AIRCRAFT SIZE PASSENGER LOAD FACTOR

40- 60"

36 p 48- 36- E

CR 46- 30" . . E N N4 4 U T " 9 26[ 0 E F 42- a S 020 E 40" F A T 816- 38- A 0 T C 3 6 " 10 U p 34 EI 6- O 32-

0 30- 60 12 94 S6S499 90 S8 00, 04 60 62 64 S5 8 O 92•04 g96 18 O0 0G2 04 FISCAL YEAR FISCAL YEAR

IV-9 U.S. REGIONALS/COMMUTERS SCHEDULED REVENUE PASSENGER MILES

24--

224 HAWAII/PR/VI - 48 STATES

20 L L 18 1 16 0 N 14 S 12" 0 F 10 R 8. M 6 5 4 2 0 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

SCHEDULED PASSENGER ENPLANEMENTS

90 L 80 - Hfi*WA1IPR IVI 48 S TA E I I 70 . 0 N S 60 O 50 F P 40 A S 30 S E N 20 EG 5 10 S 0 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

IV-10 Passenger miles in the 48 states are REGIONAL/COMMUTER projected to increase to 9.0 billion (up 11.9 percent) in 1993 and to FLEET 9.8 billion (up 8.8 percent) in 1994. During the 12-year forecast period passenger miles are expected to in- The current composition of the re- crease at an average annual rate of gional/commuter fleet underscores the 7.2 percent, totaling 19.7 billion in growth of the industry and quality of 2004. Passenger miles in Hawaii, service provided. From a fleet once Puerto Rico, and the Virgin Islands are composed predominantly of general avia- projected to increase to 146.2 million tion type aircraft, today's fleet is (up 6.7 percent) in 1993 and to increasingly composed of new state-of- 172.0 million (up 17.6 percent) in the-art aircraft offering amenities 1994. During the forecast period pas- similar to those found on large jet senger miles are expected to grow at an aircraft. Today's regional/commuter average annual rate of 8.4 percent, airlines have a large variety of air- totaling 361.2 million in 2004. craft from which to choose. Conse- quently, they can tailor their fleet to the specific markets they serve.

REVENUE PASSENGER While there are numerous aircraft ENPLANEMENTS models to choose from in the categories presented in this forecast, the most significant are the new aircraft with Passenger enplanements are projected to larger seating capacities--primarily incr'ease to 46.2 million (up 7.9 per- the 1120 to 40 seats" and the cent) in 1993 and to 49.5 million (up "greater than 40 seats" categories. 7.1 percent) in 1994. Passenger en- The introduction of the larger new air- planements are expected to increase at craft is reflected in the growth of the an average annual rate of 6.4 percent average seats per aircraft from 15A in during the 12-year forecast period, 1980 to 22. 9 in 1992, an increase of totaling 89.9 million in 2004. 51.8 percent, while the regional fleet grew by only 38. 7 percent during the Passenger enplanements in the 48 states same time period. are projected to increase to 44.5 million (up 8.0 percent) in 1993 During the forecast period, it is pro- and to 47.5 million (up 6.7 percent) in jected that the average seats per air- 1994. During the 12-year forecast craft will continue to grow at a rate period, passenger enplanements are significantly higher than the fleet. expected to increase at an average This reflects the continued introduct- annual rate of 6.3 percent, totaling ion of larger aircraft into the fleet. 85.7 million in 2004. Passenger en- The fleet is projected to grow at an planements in Hawaii, Puerto Rico, and average annual rate of 1.7 percent, the Virgin Islands are projected to increasing from 1,960 aircraft in 1992 increa,,e to 1.7 million (up 6.3 per- to 2,391 aircraft in 2004. cent) in 1993 and to 2.0 million (up 17.6 percent) in 1994. During the The number of aircraft having less than forecast period, passenger enplanements 15 seats--which once made up the bulk are expected to increase at an average of the fleet--remained relatively un- annual rate of 3.4 percent, totaling changed in 1992, accounting for 4.2 million in 2004. 27.2 percent of the fleet. Between 1992 and 2004, the number of aircraft in this category is expected to decline

IV-11 U.S. REGIONALS/COMMUTERS PASSENGER AIRCRAFT

3000

N LESS THAN 16 SEATS 16 - 19 SEATS U 2500 m 20 -40 SEATS M 41 SEATS OR MORE M B E R 2000 0 F- 1500 A R 1000 C R A F 500o T

0 80 82 84 86 88 90 92 94 96 98 00 02 04 AS OF JANUARY 1

PERCENT BY AIRCRAFT SEAT SIZE

15 - 19 '15 23.2%

15-"19 ( 15 37.5% 20 - 40 6.7% 39.5% 40 9.6%

20 - 40 30.6% 25.7% 1992 2004

iv-12 from 534 to 159, a drop of 70.2 per- ion of service and new route opport- cent. By the year 2004 it will repre- unities created through the use of sent only 6.7 percent of the total larger, longer range aircraft. In fleet. 1992, aircraft in the "20 to 40 seats" category accounted for 25.7 percent of In 1992, the "15 to 19 seats" category the regional fleet, while aircraft in accounted for the largest portion of the "greater than 40 seats" accounted the fleet (37.5 percent). During the for 9.6 percent. By the year 2004, last 10 years, most of the growth of these two categories are expected to the regional/commuter fleet has occur- account for a combined 70.1 percent of red in this category. However, this the total fleet, with 39.5 percent be- group is expected to decline steadily ing in the "20 to 40 seats" category throughout the forecast period. It is and the "greater than 40 seats" cate- projected that the "15 to 19 seats" gory accounting for 30.6 percent. category will decline from 735 aircraft During the forecast period, aircraft in in 1992 to 553 in 2004. Po-wever, this the "20 to 40 seats" category are category will still account for over 23 expected to increase from 503 aircraft percent of the fleet in 2004. in 1992 to 940 in 2004, an average annual increase of 5,3 percent. The greatest growth in the fleet is Aircraft in the "greater than 40 seats" expected to be in the "20 to 40 seats" category are expected to increase from and "greater than 40 seats" categories. 188 in 1992 to 729 in 2004, an average This is due to the continued substitut- annual growth of 12.0 percent.

IV-13 ------~ ,. ~- 1 ~-4~L P~~ ; -

pop a

~~A fit~1:0•1U, lil

I is

- . - . - Akl CHAPTER V

GENERAL AVIATION

General aviation is the term used to in a sharp decline in the shipments of describe all segments of the aviation all types of general aviation aircraft. industry except commercial air carriers and military. It describes a diverse Major events which have contributed to range of aviation activities from the the general downturn in general training of beginning pilots to the aviation activity since 1978 include: long-range jet transportation of three economic recessions; two fuel corporate executives. It includes crises; and three significant pieces of agricultural flying, air taxis, and legislation -- the Airline Deregulation pleasure flying. Act of 1978, repeal of the G. I. Bill of Rights in 1979, and the repeal of General aviation is an important com- the investment tax credit in 1986. ponent of both the aviation industry Additional factors include high and our national economy. It provides interest rates (during the 1970s and aviation services that commercial 1980s) and the overall high costs of aviation cannot or will not provide, purchasing and operating a general In addition, the production and sale of aviation aircraft. general aviation aircraft, avionics, and other equipment, along with the Unfortunately, the health of the provision of support services such as general aviation industry continues to flight schools, fixed base operators, be mixed. The continuing decline in finance, and insurance, make the shipments of the single engine piston general aviation industry an important aircraft is a cause for concern as the contributor to the nation's economy. single engine piston aircraft fleet is a mainstay of the base on which general From 1955 to 1978, th3 general aviation aviation activity must build. His- industry achieved phenomenal growth. torically, new pilots are trained in The general aviation active fleet single engine piston aircraft and work increased at an average annual rate of their way up through retractable 4.7 percent, from 37,700 in 1955 to landing gear and multi-engine piston to 184,300 in 1978. The number of hours turbine aircraft. When the single flown by general aviation aircraft grew engine piston market declines, as it steadily "J.3 percent annually) during has since 1978, it signals the slowing the same time period, increasing from of expansion in the Z-neral a"iatic:, 9.2 million houzs in 1955 to 38.5 mil- fleet and, consequently, a slowing in lion hours in 1978. Since 1978, how- the rate of growth of activity at FAA ever, the industry has been buffeted by facilities serving general aviation. a number of external factors that have inhibited its growth and have resulted

V-i since 1978. Despite generally szrong FACTORS AFFECTING economic growth during much of the GENERAL AVIATION 1980s, general aviation aircraft shipments continued to decline.

This section discusses several of the It is no longer possible to make in- factors believed to have affected the ferences relative to rises in general demand for general aviation activity, economic activity and the total general Chief among these factors are U.S. aviation fleet. Fifty-eight percent of economic activity, the cost of owning the active general aviation fleet falls and operating general aviation into the personal use category and aircraft, and the deregulation of the sales and operation levels have not re- commercial airline industry. sponded to general economic improvements. Sales of piston general aviation aircraft have declined from 17,032 in 1978 to 526 in 1992. During GENERAL ECONOMIC this same time period, real GDP increased at an average annual rate of GROWTH 2.0 percent.

While the sales of turbine-powered Fundamental changes have taken place aircraft have also declined, the drop within the general aviation industry, has been less dramatic. Sales of Prior to 1978, growth in the general turbine powered aircraft totaled 779 in aviation industry generally paralleled 1978, declining to 346 units in 1992. growth in business activity. If busi- However, since increases in economic ness activity was up, so was general activity do presage increased business aviation. If business conditions activity, it is believed that increased weakened, so did general aviation U.S. economic activity can still be activity, used as a predictor of future corporate and business aviation sales and The graph at the bottom of page V-3 activity. displays annual shipments of new general aviation aircraft relative to growth in U.S. real gross domestic product. There were surges in sales OWNERSHIP during the late 1960s and during most COST FACTORS of the 1970s. The introduction of the turbine-powered aircraft, in combination with the investment tax credit and growth in the U.S. general economy, The costo on and operati o were sufficient to overcome the 1973 general aviation aircraft consists of fuel crisis. two distinct costs: the initial cost of purchasing a new or used aircraft and However, the long and precipitous the costs associated with operating and decline in aircraft shipments that maintaining the aircraft over time. As began in the late 1970s, marked a shown by the graphics on pages V-4 to fundamental change in this relation- V-7 and detailed in Appendix F, both of ship. As shown in the graph, past these costs have increased bLeadily declines in aircraft sales have often since 1978. been associated with downturns in the national economy--for example, reces- Thenomnial cst ofop erai sions in 1960, 1970, and 1975--but maintaining all classes of general sales usually resumed as the recession aviation aircraft has increased subsided. This has not been the case approximately 85 to 95 percent (4.5 to

V-2 HISTORICAL TREND OF GENERAL AVIATION FIXED WING FLEET (IN THOUSANDS)

3001 , SINGLE ENGINE M;JLTI-ENGINE l

260- TURBO PROP JET 2o o ...... H 200- 0 SU 160-

A - ".•.' •'. "...... ' . . " N D 100 ......

6 0 ...... ii'...... ' i , . " . . . . '

1966 1960 1970 1980 1990

GENERAL AVIATION UNITS SHIPPED VERSUS GROSS DOMESTIC PRODUCT (1987 DOLLARS) T R 1 20.000 6 L L N

0 F 10,000- 3

6,000 - -2 7 0 ~1L D

1966 1960 1970 1980 1990 L A SR SAIRCRAFT -GDP

V-3 SINGLE ENGINE PISTON AIRCRAFT TRENDS

AIRCRAFT SHIPMENTS

16 T H 0 14 U S 12- A N D 10- S 0 8- F A 6-

C 4- "AR F 2

0 76 78 80 82 84 86 88 90 92 CALENDAR YEAR

AIRCRAFT PRICES OPERATING AND MAINTENANCE COSTS

400 500--

DN 350 NI450r' D OPERATINQ(/ E IE x X 400,-/ Y 30 : ;/ TO'hF-• S300 -,/ 1350 T A , AR R Ii /

2501- 3 0 0 FI

7 7 I7 2 202 250 HI E E !- MAINTENANCE o i 0200. A 150- A L L S S 150

0 !01 100 0 ~ lP o // 0

70 72 74 76 78 80 82 84 86 88 90 92 70 72 74 7678 80 82 84 86 8890 92 CALENDAR YEAR CALENDAR YEAR

V-4 MULTI-ENGINE PISTON AIRCRAFT TRENDS

AIRCRAFT SHIPMENTS

3000 2750 2500 2250 2000 1750-

1500 1250 1000 750

250,

76 78 80 82 84 86 88 90 92 CALENDAR YEAR

AIRCRAFT PRICES OPERATING AND MAINTENANCE COSTS

I 450 450 N N /4 D D OPERAT E E I x 4001 X 400 / E 3,50 Y I E- 3501-" A A R R TOTAL

2 250 2 250 E E MAINTENANCE Q 200- 0 200, A A L L I S 150F s 01 0 0 o i.

70 72 74 76 78 80 82 84 86 88 90 92 70 72 74 76 78 80 82 84 86 88 90 92 CALENDAR YEAR CALENDAR YEAR

V-5 TURBOPROP AIRCRAFT TRENDS

AIRCRAFT SHIPMENTS

1000 _--- . 9w04

800

700 -4

600-

500

400

200I ll l l I l 3001

0 -. 76 78 80 82 84 86 88 90 92 CALENDAR YEAR

AIRCRAFT PRICES OPERATING AND MAINTENANCE COSTS

N 360 N D D OPERAJ;# d E E X X 400- E E A A 350

300 Toý

7 Ii 1 i I' 2 200h 2 2m E E ' * 0 ~200~ o u AENAI A MAINTENANCE S S 150-

0 1000 0 o 0

70O72 74 7678 80e82 4 66 9 902 707274 76 7680846092 CALENDAR YEAR CALENDAR YEAR

V-6 TURBOJET AIRCRAFT TRENDS

AIRCRAFT SHIPMENTS

400

350

300

250

200

150,

100 I

76 78 80 82 84 86 88 90 92 CALENDAR YEAR

AIRCRAFT PRICES OPERATING AND MAINTENANCE COSTS

500--- -

I450-. 450- N -N o D OP ERATIN• E ' E X 400-1 X 400- f

E 3 0 -E 35 0 - • = = ' R-R ' / / ' TOR'• 1 300:ý 1 00

7 7 2 250, 2 250-. E E I. * o ?0 ~200 U .U, MAINTENANCE A A L L S 150 S 150

0 0 105 .,A 0 100

70 72 74 76 78 8 82 84 86 88 90 92 70 72 74 76 78 80 82 84 96 86 90 92 CALENDAR YEAR CALENDAR YEAR

V -7 4.9 percent annually) since 1978. on general aviation. These price These increases ha-e, for the most increases are probably the main reason part, been soriewhat lower than for the decline in aircraft shipments increases in the consumer price index over the last several years. (up 5.6 percent ar'-aally) during the same period. There was a relatively lar-e increase in these costs in 1991 (6.9 percent), but this increase was DEREGULATION OF largely due to higher fuel costs THE U.S. COMMERCIAL resulting from the Gulf War. In 1992, ownership costs actually declined after AIRLINE INDUSTRY increasing substantially during the previous year. With generally lower fuel costs in 1992, operating and The deregulation of the U.S. commercial maintenance costs were lower in most airline industry may also be having an cases. effect on general aviation. On the one hand, the increased service, better In contrast to the relatively constant connections, and low fares offered by costs of operating and maintaining an air carriers and regional/commuters aircraft, the nominal cost of pur- since deregulation have, to a large chasing a general aviation aircraft extent, reduced the desirability of has risen substantially since 1978, far using private, general aviation air- exceeding the rise in inflation. Be- craft when planning business or plea- tween 1978 and 1966 (the last year for sure trips. On the other hand, if real which data are available for this par- fares and delciys on short- and medium- ticular aircraft category), the cost of haul markets were to increase sub- purchasing a single engine piston air- stantially over time, general aviation craft, increased by 126 percent. Be- might once again become a more attrac- tween 1978 and 1992, the cost of pur- tive and viable alternative to the chasing a multi-engine piston aircraft business traveler. An analysis of the had risen by 213 percent; the cost of market stAtistics to date has not purchasing a turboprop aircraft, had identified the ulti, ate relationship risen by 188 percent; and the cost of between general aviation activity and purchasing a turbojet had risen by commercial airline deregulation. The 172 percent. The purchase price of all performance of the general aviation general aviation aircraft continued to market over the next several years may rise during the last 2 years--the price resolve this issue. of multi-engine piston aircraft was tup 8.1 percent, the price of turboprop aircraft was up 10.8 percent, and the price of turbojet aircraft was up FACTORS AFFECTING 13.3 percent. PERSONAL USE

Increases in product liability costs were one of the key factors responsible for the large increases it, the purchase Other factors possibly affecting the price of a general aviation aircraft, personal use of general aviation Over the last 10 years, annual claims include: changes in disposable, dis- paid by manufacturers have increased cretionary income; increases in air- from $24 million to over $210 million, space restrictions applied to VFR despite an improved safety record, aircraft; reductions in leisure time; and shifts in personal preferences as Clearly, these ownership cost in- to how leisure time is spent. All of creases, especially those in the these factors need to be more fully purchase price, have a negative impact exanined if we are to achieve both a

V-8 better understanding of the decline which to base future fleet and activity that general aviation experienced projections. This analysis raised con- during the 1980s and more accurate cerns tbout the relatively large nunber predictions of future general aviation of nonrespondents to the 1990 survey. activity levels. To investigate this, a telephone survey of nonrespondents to the 1990 survey Still another personal use issue is was conducted. The telephone survey related to environmental concerns and showed that the proportion of non- the continued availability of leaded respondents that were active was fuel. The Clean Air Act of 1991 considerably lower than those who threatened the availability of aviation responded to the 1990 survey. Based on gasoline because it required the phase- this analysis of survey nonrespondents, out of all leaded gasoline after Decem- the historical active general aviation ber 1995. Although it was initially aircraft fleet and hours flown for 1990 feared that the ban would include and subsequent years (back to 1985) piston aircraft, the Environmental were adjusted to account for the non- Protection Agency subsequently ruled respondent sampling error. The revised that the ban would not apply to general historical series are reflected in aviation. However, there still exists Tables 21 through 23, 25, and 26 the possibility that market forces (Chapter IX). could lead refiners to stop the production of low lead aviation gasoline, or alternatively, lead to very high prices for leaded general aviation FLEET COMPOSITION AND fuel. Higher fuel prices and/or the AIRCRAFT SHIPMENTS scarcity of aviation gasoline would have a significant negative impact personal flying. Total general aviation aircraft

shipments totaled only 872 units in 1992, a 14.6 percent decline from the 1,021 aircraft shipped in 1991. These REVIEW OF 1992 shipments included 526 piston aircraft (down 14.2 percent), 175 turboprop aircraft (down 21.2 percent), and 171 jets (down 8.1 percent). Export shipments The historical general aviation active totaled 348 (39.9 percent of total fleet and hours flown discussed in this shipments), 8.9 percent less than chapter are derived from the General shipped in 1991. Aviation Activity and Avionics Survey that is conducted annually by the FAA's General aviation aircraft billings Statistics and Forecast Branch. The totaled $1.8 billion in 1992, fleet data are estimated using a sample 7.0 percent below billings in 1991. from the MAA aircraft registry and are Export billings totaled $626.2 million subject to variation due to errors in (34.2 percent of total billings), a the registry and statistical sampling decline of 22.4 percent from 1991. procedures. Consequently, variations of plus or minus 5 percent in any of The total active general aviation fleet the above categories are not considered remained virtually constant in 1992, necessarily significant. increasing only a nominal 0.5 percent from the 197,372 aircraft reported in In 1991, the Statistics and Forecast 1991 to 198,386 aircraft in 1992. Branch undertook an analysis of the Single engine piston aircraft comprise sampling procedures to see if more the largest segment of the general accuratu estimates could be provided on aviation fleet, accounting for nearly

V-9 78 percent of the total fleet in 1992. earlier, when the pilot populati on This segment showed little change from totaled 702,659, a decrease of 1.5 per- 153,518 to 154,012 aircraft (up cent. 0.3 percent) while the multi-engine piston fleet moved only from 21,111 to The pilot population consists of four 21,246 (up 0.6 percent). major groupings: student, private, commercial, and airline transport. Fixed-wing turbine and rotorcraft tur- Only one of the four major pilot groups bine aircraft continue to be the increased in 1992--the number of fastest growing segments of the general airline transport pilots increased from aviation fleet. The turbojet fleet 107,732 to 112,167 (up 4.1 percent). increased from 4,068 to 4,353 (up The number of student pilots declined 7.0 percent) but the turboprop fleet 6.6 percent in 1992, from 128,663 to decreased from 5,256 to 4,920 (down 120,203; private pilots declined from 6.4 percent). The number of active 299,111 to 293,306 (down 1.9 percent); rotorcraft turbine helicopters in- and commercial pilots declined from creased from 3,700 to 3,800 (up 149,666 to 148,365 (down 1.9 percent). 2.7 percent) while the number of piston It is interesting to note, however, helicopters declined from 3,200 to that three small pilot categories 2,500 (down 21.9 percent). (helicopter, glider, and recreational), accounted for a total of 18,054 pilots in 1992, a gain of 3.4 percent over 1991. HOURS FLOWN It is also important to note that more pilots than ever were instrument rated Total hours flown by general aviation (43.8 percent) in 1992, up from 42.8 aircraft nominally declined 2.0 percent percent in 1991 and only 29.7 percent in fiscal year 1992, from 30.5 million in 1980. This reflects the increased to 29.9 million. This decline, is sophistication of both the aircraft and however, within the range of potential pilots utilizing the ration airspace sampling error. system.

Hours flown by all fixed wing aircraft These changes in the various pilot categories declined in 1992. Single categories reflect the continuing engine piston aircraft hours declined strong demand for airline transport 1.4 percent while multi-engine piston pilots and a decline in the interest aircraft hours declined 5.4 percent. in, or ability to afford, private Turboprop aircraft hours declined flying. 11.8 percent and turbojet aircraft hours declined 7.7 percent. However, rotorcraft hours flown were up 7.7 percent in 1992. Hours flown by the GENERAL AVIATION "other" aircraft category remained basically unchanged. FORECASTS

FLEET COMPOSITION PILOT POPULATION

The FAA general aviation forecasts As of January 1, 1992, the pilot include only active aircraft. (An population totaled 692,095. This was active aircraft is defined as any 10,564 fewer pilots than a year aircraft flown at least one hour during

V-10 the previous year.) Table 21 (Chapter 20.5 million hours in 1992 to 21.3 mil- IX) and the graphs on page V-12 show lion in 2004, an annual rate of growth that the active general aviation fleet of only 0.3 percent. Multi-engine is expected to grow slowly (up 0.6 per- piston aircraft hours are expected to cent annually) over the 12-year increase from 3.5 million in 1992 to forecast period, with the increase 3.8 million in 2004, 0.7 percent being driven by greater business use of annually. general aviation. Additionally, the forecast assumes, given the "hobby" Turbine-powered aircraft hours flown characteristic of recreational aviation are projected to increase from 2.7 mil- and the historically tight business lion in 1992 to 3.8 million in 2004, an climate, that retirement of fleet air- annual growth rate of 3.0 pcrccrt craft will be limited to accident Turbine rotorcraft hours flown are ex- attrition of aircraft. pected to increase at an annual rate of 7.4 percent over the same time period, The number of active piston aircraft is from 2.8 million to 5.8 million. expected to increase only slightly during the 12-year forecast period. Single engine piston aircraft are projected to increase from 154,021 in PILOT POPULATION 1992 to 159, 300 in 2004 (up 0. 3 percent) , while the number of multi-engine piston aircraft is expected to increase The graphic on page V-14 and Table 24 from 21,246 aircraft to 22,100 thousand (Chapter IX) shows that the total pilot in 2004 (up 0.2 percent). population is forecast to increase to a 1.2 percent annual Reflecting the increasing convenience 794,500 by 2004, rate. Airline transport pilots of general aviation flying to busi- growth to grow at 3 percent nesses and their push for technology, are projected 159,800 in 2004. turbine-powered aircraft are projected annually, reaching not only the continuing to increase from 9,273 in 1992 to This reflects transport pilots to 13,000 in 2004, an annual growth rate demand for airline of increased traffic, of approximately 2.9 percent. The meet the demands but also the belief that the commercial turbine rotorcraft fleet is projected airline industry has not yet reached to increase at an annual rate of maturity. If, however, the commercial 4.9 percent over the 12-year period, airline industry fails to grow as from 6,292 in 1992 to 8,600 in 2004. projected, then the projected increases in total and transport pilots also run the risk of being too optimistic.

HOURS FLOWN At the other end of the spectrum, the number of private pilots is projected to grow by only 0.3 percent annually As shown graphically on page V-13 and during the 12-year forecast period. in tabular form in Table 23 While the growth in the number of (Chapter IX), growth in general private pilots is relatively slow, aviation hours flown is expected to there are a number of encouraging signs average 1.4 percent annually over the among the pilot statistics. The number 12-year forecast period, reaching an of student and recreational pilots is estimated 35.3 million hours flown in expected to increase by 18.9 percent 2004. over the forecast period in response to a strengthening economic climate. This Single engine piston aircraft hours points to growth in general aviation flown are forecast to increase from pilot training and flight schools

V-11 ACTIVE GENERAL AVIATION AIRCRAFT

350 --- _ _ T- H SE-PISTON 77ME-PISTON T-PROP o 300- uT-JET ZZROTOR OTHER A 250H

S 200~ o

R 100j

RI A so0 I F T 0 80 82 84 86 88 90 92 94 96 98 00 02 04 AS OFJANUARY I

PERCENT BY AIRCRAFT TYPE

SE-P 7.6%SE-P 75.0%

OTHER 3.8% /OTHER 4.4% ROTOR 3.2% RTR41 TTA~iAT-JET 2.8% - ME-P10.7%T-PROP 3.3% ME-P t0.4% 1992 2004

V- 12 GENERAL AVIATION HOURS FLOWN

50 SE-PISTON ZZ ME-PISTON T-PROP

L 0 80 83856 8 9 2 9 6 8 0 2 0

OTE

17008ME- -RO -E

200

80 24 8 8 90 92 94 6 8V0 0 0 ACTIVE PILOT TRENDS AND FORECASTS

TOTAL PILOTS STUDENT PILOTS

9007,0y

800- 200,

T 700- T H H 0 0160 U U I S m~ S A A 140 N N S S 120 O 0 10D F 400 - F 00 P P L L 0 0 60 T S 2007 S40 100- 201

0. 0- so8 48 wwN0WW0 bO 62 4 SaG w92496mSwOwON AS OF JANUARY I AS OF JANUARY 1

PRIVATE PILOTS AIRLINE TRANSPORT PILOTS

400 160

350 140-

T T H 30- H 120- 0 0 U U S S A 250- A 100 N N D D S S 200- O 0 F F P 150- P 0 L L O 0 T 1001 T 40 S S

50 20

0 - . . . . . 0 80 8S 84 6U8 oOU9496ie9Seo~o 04 lo 2 84N888e lO 912 4 B6Ui6OO ( 4

AS OF JANUARY I AS OF JANUARY 1

V-14 which, in turn, implies future growth by 13.8 percent over the same time in the industry. The number of com- period, driven by expected increases in mercial pilots is expected to increase corporate business flying.

V-15 04

Ord#

JrA OVA 'Von A

ir A401 CHAPTER VI HELICOPTERS

OF 1992 craft in the United States, about REVIEW 8.7 percent less than the 6,900 reported as active in 1991.

SHIPMENTS The number of active turbine helicopters increased slightly in 1992. The 3,800 active turbine helicopters Preliminary data for calendar year 1992 made up approximately 60.3 percent of indicate that shipments of new U.S. the active fleet in 192, up from civil helicopters will total 337 units 52.7 percent in 1991. The number of valued at $146 million. Compared to active piston-powered rotorcraft de- 1991, the number of helicopters shipped creased by 23.2 percent in 1992 to decreased by 43.5 percent, while the 2,500. The number of active piston- value of the shipments decreased powered helicopters in 1991 was 23.2 percent. Decreases in the number 24.2 percent lower than the previous of units shipped and in the value of peak of 3,300 observed in 1982. these shipments indicate that the anticipated economic recovery of the Rotorcraft flew an estimated 2.8 mil- industry in particular, and the nation lion hours in 1992. Turbine-powered as a whole, still did not occur in rotorcraft flew 2.2 million hours, 1992. 78.6 percent of the total number of hours flown. In 1992, the number of In 1992, the value of new and used hours flown by piston-powered rotor- helicopters exported decreased by craft remained unchanged relative to 8.9 percent to $156 million. Imports the final estimates for 1991, while also decreased substantially (down hours flown by turbine-powered rotor- 35.6 percent) to $186 million, leading craft increased 10 percent relative to to a net loss in the foreign trade 1991. balance of helicopters of approximately $30 million. This year's loss added to the previous year's loss has led to an aggregate net loss of $114 million in HELICOPTER the trade balance over the past 2 years. FORECASTS

FLEET AND HOURS FLOWN The forecasts of rotorcraft fleet and hours flown presented in this section are derived from the general aviation As of January 1, 1992, there were ap- forecasts (see Chapter V) which we pre- proximately 6,300 active civil rotor- pared using econometric models and time

VI-I series analyses. Forecasts of helicop- 500,000 hours during the latter years ter activity were generated by user of the forecast period. category (executive, business, personal, etc.) and were combined to obtain the national forecasts. The inde- FUEL CONSUMED pendent variables used in the estimates include the cost of owning a helicopter, total employment, and the cost of In 1992, fuel consumed by rotorcraft oil and gas relative to other prices, totaled 72.3 million gallons. By 2004, One of the underlying assumptions in fuel consumed will increase to about applying these models to project future 161.5 million gallons, an average an- fleet size and hours flown is that the nual increase of 6.9 percent. More cost of fuel will increase. As this than 96.3 percent of the fuel consumed occurs, increased petroleum production in 2004 will be used by turbine-powered and exploration would be more profit- rotorcraft, compared with approximately able, leading to increased rotorcraft 91.4 percent in 1992. usage, particularly in off-shore dril- ling operations. This, together with increased use of helicopters in the general economy, will lead to an increase in the fleet and in hours flown. HELICOPTER OPERATOR ECONOMICS

FLEET AND HOURS FLOWN In October 1992, the Helicopter Association International (HAI), the American Helicopter Society (AIlS), and the Federal Aviation Administration The active rotorcraft fleet is expected (FAA) sponsored an executive-level to reach 8,600 in the year 2004, an Transportation Research Board (TRB) average annual increase of 2.7 percent workshop on helicopter operator over the 1992 level. In 2004, the economics and improving the performance turbine-powered rotorcraft are expected of the industry. The 2-day workshop to number 6,800, an annual increase of was conducted in Miami Beach, Florida, 4.9 percent. In 2004, the turbine- and was attended by 50 CEO and senior powered portion of the fleet will ac- management staff participants from count for 79.1 percent of the rotor- helicopter operators, manufacturers, craft fleet, up from 60.3 percent in trade associations, and other key pub- 1992. The piston-powered fleet is ex- lic and private organizations. pected to decrease to 1,800 from its current level of 2,500 helicopters, The impetus for this senior workshop continuing the trend of piston-powered was an initial Helicopter Operator fleet decreases. Economics conference in November 1991 at which attention was drawn to the The anticipated growth in the fleet economic problems plaguing the indus- will be accompanied by growth in hours try. Previous meetings between FAA, flown, which will reach 5.8 million HAI, and AHS officials had led to the in 2004. This represents an annual decision to initiate a dialogue among average growth rate of 6.3 percent. the affected parties to "assess current Hours flown by turbine-powered heli- conditions, analyze underlying causes, copters will increase by approximately and identify remedial actions." 141.0 percent and will reach 5.3 million by 2004. In contrast, The key issue discussed at the workshop hours flown by piston-powered rotor- addressed the previously-voiced concern craft will decrease to approximately

VI-2 ACTIVE ROTORORAFT

12 - -- H 11 11111PISTON ZZTUBN 010- U S A 9 N 8- D S 7- 0 6- F 5- A 1 4-K C 3- R A 2 F T 0 80 82 84 86 88 90 92 94 96 98 00 02 04 AS OF JANUARY 1

PERCENT BY AIRCRAFT TYPE

PISTON PSO

56.8% 7UR.IN 1992768 2004

V1-3 ROTORORAFT HOURS FLOWN

67 1 5.- I = PISTON ZC- T-RBIN L 4.52 L S4-

N 223.5-H'1!

F 1.5 4iK

R S19

0580 82 84 86 88 90 92 9496 98 000O20ý4 FISCAL YEAR

PERCENT BY AIRCRAFT TYPE

1992NPITO 20049

TURBINE that the industry has an inadequate rotorcraft increased only 5 percent understanding of the factors that drive faster over the same time period. both direct operating and life-cycle costs. The results of a recently- An analysis of the increase in the completed analysis of helitopter price of spare parts and overhaul economic factors provided data on the services compared to inflation in- cost of operation of various classes of dicated that the cost of spare parts helicopters (Direct Operating Cost per has risen more than 150% of the Avilable Seat Mile) and the cos: of increase in the Consumer Price Ind-x acquisition of same classes of (CPI) while the price increases , helicopters (Acquisition Cost per overhaul services have actually been Available Seat). The first measure lower than the increase in the CPI. focuses on the revenue generation capability of the helicopter and the A cooperative and concerted effort is second also provides insight into the now underway to collect cost infor- additional investment required to ob- mation and train operators to under- tain a greater capability, stand their full costs. The marketing of helicopter services and an education The study also analyzed the increase in and public awareness effort on the ben- the cost of acquisition of various efits of the industry are also priority helicopter classes as a function of targets for this forum. inflation and found that, on average, turbine helicopter prices increased Further details and information are 20-30 percent faster than inflation available in the January 1993 TRB during the 1986-1992 timeframe. In Report on the CEO Workshop. contrast, pricts for piston powered

VI-5 1K;; CHAPTER VII

FAA WORKLOAD MEASURES

The FAA provides the aviation community 1992, basically the same operations with three distinct air traffic ser- count recorded in fiscal year 1991. vices: (I) air traffic control tower During the last decade (1983 to 1992), service at selected airports (401 in towered airport activity has registered FY 1992); (2) traffic surveillance and increases in all but the last 2 years aircraft separation by air route traf- (down 3.2 percent in 1991), a period fic control centers (22 in FY 1992); during which aircraft activity at FAA and (3) flight planning and pilot towers increased by 21.5 percent briefings at flight service stations (2.0 percent annually). (172 in FY 1992). All four aviation system user groups--air carriers, corn- However, despite the growthi that hazs muters/air taxis, general aviation, and occurred over the past 10-year period, military--use these FAA operational the level of activity recorded at FAA services to enhance the flow and safety towered airports in 1991 remains of aviation traffic. 3.9 percent below the operation counts recorded (64.0 million) during the Because the four aviation system user 12-month period immediately preceding groups differ in the demand they impose the August 1981 air traffic control- on the air traffic system, multiple lers' strike (hereafter referred to as indicators are used to describe the the pre-strike period). total FAA operational workload. No single measure typifies past t'ends or Since 1982, there has been strong de- future demand for the services provided mand for commercial aviation services. by the FAA. There have been, and will continue to be, different socioeconomic forces driving the growth of each of the aviation-user categories. COMMERCIAL TOWER OPERATIONS FISCAL YEAR 1992

REVIEW OF 1992 6!LA Ill.. 3 4 46i4.3i9- 3 .6

FAA TOWER ACTIVITY cH 2- -Oi A G 8-! -4.7 Aircraft activity at the 401 FAA -Ea------...---... towered airports (up from 399 in 1991) 0 N 0 J F M A M J J A S totaled 61.5 million in fiscal year

VII-1 TOWERED AIRPORT OPERATIONS ACTUAL AND 12-MONTH MOVING AVERAGE TOTAL OPERATIONS

ACTUAL 12-MTH MOVING AVG L 1 6 - 0 N

0 F 5 0 ES R A 4- T

79 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR BY MONTH

COMMERCIAL OPERATIONS NONCOMMERCIAL OPERATIONS

2.2-61

2.1 ACTUAL -A- 12-MTH MOVING AVG. ACTUAL -4- 12-MTH MOVING AVG

M 2 M L t.L 5 L L 0 1.8- 0 N N S S. 1.7 - O 0 F F 4 O 0 E EA R R A 1.4- A T T I I 3 0 1.3- 3 N N S2.5

1.1

79 80 E1 82 83 84 86 86 87 88 89 90 91 92 79 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

VII-2 Commercial activity (the sum of air Noncommercial activity (the sum of gen- carrier and commuter/air taxi opera- eral aviation and military operations), tions) is up 53.9 percent (4.4 percent on the other hand, has increased by annually) since 1982. Despite a 1.4 percent increase in 1992, however, commercial activity has remained NONCOMMERCIAL TOWER OPERATIONS virtually flat during the past 4 years. FISCAL YEAR 1992

Air carrier activity at FAA towered A 10 (12.4 million operations) has N a airports 14 6- 4 declined by 3.9 percent during the past A .-.31 2 years and has remained virtually flat L .... U2 since 1986. The decline during the 0- past 2 years is due largely to the c 4 ml -1.9 -2 liquidation of three commercial air H carriers: Eastern Air Lines in January 8 .7 1991 (4.2 percent of air carrier oper- E - - -... ations in FY-90), Pan American Airways o N D i F M A M J . A S in December 1991 (1.8 percent of air carrier operations in FY-91), and Midway Airlines, also in December 1991 only 8.8 percent (0.9 percent annually) (1.6 percent of air carrier operations over the past decade. In fiscal year in FY-91). This factor alone is esti- 1992, noncommercial activity totaled mated to have reduced the number of air 39.7 million operations, down 1.0 per- carrier operations at FAA towered air- cent from 1991 activity. ports by approximately 385,000 operations (3.1 percent) in 1991 and After recording increased activity 390,000 operations (3.1 percent) in counts in six of the nine years fol- 1992. Capacity cutbacks by other lowing the 1981 air traffic controllers carriers operating under Chapter 11 strike, general aviation activity has bankruptcy has reduced operation counts declined for two consecutive years. still further. General aviation activity totaled 36.9 million opcrations in fiscal year Commuter/air taxi activity increased by 1992, a 5.4 percent decline from 1990 4.5 percent in fiscal year 1992 and and a 1.9 percent decline from 1991. continues to be the fastest growing of In fact, the 1992 operations count was all user groups. Its activity levul only 78.3 percent of general aviation's has increased in every year but one pre-strike level of 47.1 million oper- (down 3.3 percent in 1986) since the ations. user category was designated in 1972. During the past decade, commuter/air After increasing by 7.8 percent during taxi activity at FAA towered airports the 1989-90 time period, the number of has grown at an average annual rate of local general aviation operations 6.2 percent, from 5.1 million oper- (15.7 million) has declined 5.4 percent ations in fiscal year 1982 to 9.3 mil- over the past 2 years, down 1.9 percent lion during the current year. Much of in fiscal year 1992, reflecting a weak this growth is the result of commuter U.S. economy and the resultant decline code-sharing and schedule tie-in agree- in student training. Itinerant general ments with the larger commercial air aviation operations declined by carriers. The liquidation of Eastern 0.9 percent in fiscal year 1992 to and Pan American has also adversely 21.3 million, reflecting a decline in affected the operations of its code- corporate business flying as a result sharing partners, thus contributing to of continued slow U.S. economic growth. reduced commuter/air taxi activity Itinerant operations in 1992 were at counts in fiscal years 1991 and 1992. 77.5 percent of pre-strike activity

VII-3 levels (27.5 million), while local operations were at 81.4 percent of the pre-strike level (19.3 million). COMMERCIAL INSTRUMENT OPERATIONS FISCAL YEAR 1992 Military operations totaled 2.8 million in fiscal year 1992, a 12.0 percent A I Be increase over 1991 Gulf War depressed N a 4-542 4... N I activity levels. Most of the growth U8 23•ij occurred during the December-April L 2 LIS period (up 23.1 percent), reflecting 0, ii_• i:m the redeployment of a large number of C -23I,113 -02 military aircraft and personnel from A the Middle East. Local military N operations increased 13.1 percent in E., . - 1992 to 1.4 million, while itineranT a N D J F M A M J J A S military operations increasec by 11.3 percent to 1.4 million. Commuter/air taxi instrument operations at FAA towered airports totaled 9.9 million in fiscal year 1992, up INSTRUMENT OPERATIONS 4.2 percent over 1991 activity levels. Noncommercial instrument operations Instrument operations handled at FAA (22.3 million) increased by only towers totaled 45.6 million in fiscal 0.9 percent in fiscal year 1992 but are year 1992, 1.1 percent above the 1991 up 27.4 percent (2.5 percent annual activity level and 17.5 percent above growth) during the past decade. Gen- the level of activity recorded in the eral aviation activity totaled pre-strike period (38.8 million). Much of the increase in instrument operations during the past decade (up NONCOMMERCIAL INSTRUMENT OPERATIONS 43.9 percent) can be attributed to the FISCAL YEAR 1992 increase in commercial activity (up __ 65.3 percent) and to commuter code- A 07. 1 N 8 sharing and schedule tie-in agreements N 51 i52 with the larger commercial airlines. A 4 L1 ....

Commercial aircraft activity (23. 3 mil- m 10.8! lion operations) increased by 1.3 per-• HC -2-4 .- 0.9 cent in fiscal year 1992 but is down N - . 4-3 0.4 percent from 1990 activity levels. G - -6 Air carrier instrument operations -I0 totaled 13.4 million, down 0.7 percent 0 N O J F M A M J J A S in fiscal year 1991 and 4.3 percent during the last 2 years. 18.2 million in 1992, 0.6 percent

Air carrier instrument activity counts higher than the activity level recorded in both 1991 and 1992 were affected by in 1991. However, general aviation the liquidation of Eastern, Pan activity increased 30.9 percent during American, and Midway. It is estimated the past 10 years. Most of the in- that these shutdowns reduced air car- crease in general aviation activity rier instrument operation counts by since 1982 can be attributed to the almost 800,000 (3.0 percent) during the formation of Airport Radar Service past 2 years. Areas (ARSAs) at 137 locations in the United States. Under the previous

VII-4 INSTRUMENT OPERATIONS ACTUAL AND 12-MONTH MOVING AVERAGE TOTAL OPERATIONS

4.4 M I 4.2 ACTUAL -- _12-MTH MOVING AVG. I L L 4 O 3.8 N S 3.6

R A 2.8- T I 2.6- 0 N 2.4 .... 2.2 L ...... 79 80 81 82 83 84 85 86 87 88 89 90 91 92 FISCAL YEAR BY MONTH

COMMERCIAL OPERATIONS NONCOMMERCIAL OPERATIONS

- 2.3- 2.4-______ACTUAL 12-MTH MOVING 2.2- ACTUAL -A 12-MTH MOVING A/G. 2.2 2.1 MI MI L 2 L 2 1 2 0I 1.9 - oI N N r

s1.8- S •1.8 0 01.7 F F 0 1,6- 0 1

p16 p E 1E5 E R R A A T 1.4 0T 1.4- I o .3 0 N N SS 1.2 1.2-

1.1A

84 85 86 87 88 89 90 91 92 79 80 81 82 83 84 85 86 87 88 89 90 91 92 79 80 81 82 83 BY MONTH FISCAL YEAR BY MONTH FISCAL YEAR

VII-5 Terminal Radar Service Area (TRSA) con- pressed both air carrier and commuter/ cept, general aviation aircraft could air taxi center activity counts for enter the TRSA without communicating much of fiscal years 1991 and 1992. with and without being counted by air traffic control (ATC). Under the ARSA Noncommercial aircraft handled concept all aircraft must be in contact (12.5 million) remained virtually with ATC, and, hence, are now counted, constant in fiscal year 1992. The num-

Military instrument operations totaled 4. 1 million in fiscal year 1992, a NONCOMMERCIAL CENTER OPERATIONS 2.5 percent increase over Gulf War FISCAL YEAR 1992 depressed 1990 operation counts. A 10 8.1

NNNa 6" A 4" CENTER ACTIVITY L 2 0. 0.41 % 0-! •

C -2i '3 ... In fiscal year 1991, the number of air- N -6 .. craft flying under instrument rules EG -8 " . . .. . -J -5.6 handled by FAA air route traffic - 10 ....-.----.= control centers totaled 36.7 million, 0 N D J F M A M J J A S an increase of 0.8 percent during 1990 1 activity counts. Most of the increase at en route centers over the last ber of general aviation aircraft han- 10 years (up 31.5 percent) can be died totaled 7.4 million while military attributed to the growth in commercial activity totaled 5.1 million. Military aviation activity (up 50.6 pe-cent). activity failed to recover any of the The number of commercial aircraft 7.3 percent decline suffered in 1991 as handled at the centers (24.1 million) a result of the deployment of military increased 0.8 percent in fiscal year aircraft to Lhe Middle East. 1992. The number of air carrier aircraft handled totaled 18.3 million FLIGHT SERVICE STATION COMMERCIAL CENTER OPERATIONS ACTIVITY FISCAL YEAR 1992

NA - 6.3 Pilot briefings, the filing of flight UN eplans, ..... • .. .3.6. 3.6 ...... 4 and aircraft contacts by flight 4- 2.service .6 stations (FSSs) totaled L 2- ...... 2 40.2 million in fiscal year 1992, a de- % 00.2 cline of 2.2 percent from 1991 activity H levels. Activity declined in each of N these categories. The number of air-

G-4.E .craft-3.7 contacted dropped 3.5 percent to 6 .5.6 million, the number of pilot 0 N 0 J F M A M J J A S briefings declined 1.8 percent to 1_ 10.8 million, and the number of flight rtaxi plans originated decreased 1.5 percent while the number of commuter/air to6.amllon to 6.5 million. aircraft handled totaled 5.9 million (up 5.4 percent). The liquidations of However, the FAA also provides auto- Eastern, Pan American, and Midway de- mated flight services, which supplement

VII-6 IFR AIRCRAFT HANDLED ACTUAL AND 12-MONTH MOVING AVERAGE TOTAL AIRCRAFT HANDLED M L 3.6 L • ACTUAL - 12-MTH MOVING AVG. 0 3.4- N S 3.2 0 F 3 A 2.8 R C AR 2.6 F T 2.4 H A 2.2 N D L 2- E 79 80 81 82 83 84 85 86 87 88 89 90 91 92 D FISCAL YEAR BY MONTH

COMMERCIAL AIRCRAFT HANDLED NONCOMMERCIAL AIRCRAFT HANDLED

2.4- 1.4

M 2.3- ACTUAL -12-MTH MOVING AV. M ACTUAL "- 12-MTH M-OVING AG. I , I L 2.21 L

02.1 O N N S 2 S 1.2- O 0 F 1.9 F A 1.e A

CR 1.7-. R R R A 1.67 A F F T TI H H A 1.4- A N N D 00.9 L 1.3 L E E D 1.2 0 1.1 s 0.8-e 79 80 81 82 83 84 86 86 87 88 89 90 91 92 79 80 81 82 83 84 8686 87 88 89 90 91 92 FISCAL YEAR BY MONTH FISCAL YEAR BY MONTH

VII-7 TOTAL FLIGHT SERVICES M_ ACTUAL AND 12-MONTH MOVING AVERAGE I L L 8- N 7. Ns ACTUAL #-- 12-MTH MOVING AVG. S 7 -- INCL. DUATS e• 12-MTH AVG (W/DUATS)

F 6. F 6 ...... S 5 .5 - ----...... E R 5 ...... V 4 .5 ...... C ... E 4 - .-.--.-...... S 3.5 ...... -.-..-.------..-.-.--.--...... - - --...... RE 3 ...... N 2 .5 ...... -I ...... E 2

E FISCAL YEAR BY MONTH D

FSS activity. The Direct User Access CONTRACT TOWERS Terminal System (DUATS) provides an alternative to the FSS for obtaining pilot briefing information and filing The FAA is currently contracting out flight plans. Use of this series, "low activity towers," and the oper- introduced in February 1990, is ation counts at these locations are not growing. If the services provided included in the FAA tower workload through DUATS are included with measures. There were 27 contract traditional FSS services, total flight towers in operation during fiscal plans filed have increased 1.2 percent year 1992, two more than in 1991. The and pilot briefs have increased new contract towers added during 1992 5.1 percent. Thus, the total flight were Smyrna Airport (Tennessee) and services provided by the FAA in 1992 Mosinee Central Wisconsin Airport have increased 2.7 percent (see graphic (Wisconsin). above).

At the end of fiscal year 1992, there ovr16mlinnfsclya19,Operations at contract towers totaled werea f ttal5 autmatd flght over 1.6 million in fiscal year 1991, sere a total of 59 automated flight an increase of 5.6 percent over the service stations (AFSSs) and 113 flight number of operations recorded at con- service stations. During 1992, only tract towers in 1991. General aviation one FSS was consolidated with its accounted for the vast majority respective AFSS. (84.5 percent) of the activity at these contract towers, up 4.5 percent to

VII-8 nearly 1.4 million operations. Com- number of FAA towered airports will muter/air taxi operations totaled remain constant at the 1992 level of 154,587 (up 7.8 percent), while mili- 401 airports throughout the 12-year tary operations totaled 92,476 (up forecast period. 18.0 percent). Air carrier activity at contract towers increased 47.8 percent There are currently 29 Terminal Control in fiscal year 1992. However, air Areas (TCAs) and 120 ARSAs. This fore- carrier operations totaled only 8,953 cast assumes that there will be three in 1992, only 0.5 percent of total additional TCAs and three additional contract tower activity. ARSAs added to the system during the next 2 years. This expansion of con- A listing of the current contract trolled airspace is reflected in the towers can be found in Appendix H. forecast for instrument operations at Operation counts for the 401 FAA airports with FAA traffic control towered airports and the 25 contract service. towers, by user group, can be found in the publication FAA Air Traffic The number of flight service stations Activity FY 1992, compiled by the and automated flight service stations Statistics and Forecast Branch, Office totaled 172 at the end of fiscal year of Aviation Policy, Plans, and 1992: 59 AFSSs and 113 FSSs. Of the Management Analysis (APO-II0), phone remaining FSSs, 82 will be closed and (202) 267-3355. 31 will continue in operation as auxiliary flight service stations in locations of unique weather or operational conditions. This will be in addition FORECAST to the 61 fully consolidated AFSSs. The current schedule calls for all ASSUMPTIONS 61 automated AFSSs to be commissioned and fully consolidated by 1994.

Forecast growth in FAA workload measures includes not only the demand imposed on the existing National EXTERNAL FACTORS Airspace System, but also aviation activity at new locations not previously provided with FAA services. Despite projections of moderate to Aviation activity at contract towers is strong growth in the U.S. economy and excluded from the workload measures, in activity levels at FAA facilities, there is uncertainty associated with these forecasts. A number of external events could significantly alter the NUMBER OF FAA FACILITIES short-term environment and cause the activity levels to be significantly lower than those forecast. Two new FAA towered airports were commissioned during fiscal year 1992, In 1991, the Gulf War and the liqui- bringing the total number of FAA dation of Eastern Air Lines combined to towered airports to 401. The two new lower activity levels. In 1992, the FAA towered airports are: Central dampening factors were: the failure of Florida Regional Airport in Sanford, the U.S. economy to sustain its Florida (November 1991) and Manassas recovery, the liquidation of two Municipal/Harry P. Davis Field (HEF), additional air carriers (Pan American Manassas, Virginia (March 1992). The Airways and Midway Airlines), and the current forecast assumes that the reduction in service levels by carriers

VII-9 operating under, or very close to, through increased aircraft utilization, Chapter 11 bankruptcy. higher load factors, and retrofitting of larger numbers of stage-2 aircraft. In 1993, the course of the U.S. economy Changes in the mix of air carrier and the financial health of the U.S. aircraft being flown (larger rather air carrier industry are still to be than smaller) result in relatively resolved. Three U.S. air carriers, slower growth in air carrier activity which currently account for approx- levels during the early years of the imately 14 percent of air carrier forecast period and, correspondingly, relatively higher growth starting in 1997-98 when large numbers of new PERCENTAGE OF AIR CARRIER OPERATIONS aircraft are forecast to be delivered U.S. MAJORS - SEPTEMBER 1992 to U.S. airlines. OL co, 147% 6.9°% If the air carriers' current capital FM A/A 3.8% 13t acquisition plans are reduced or NW delayed further, this could reduce the 80% HP* growth in air carrier activity levels ...... 3 0% at FAA air traffic facilities. (As

WN this publication goes to press, United ALLA.9% OTHER Airlines TW" 14,6% has announced additional fleet 41 reductions and delays--these cutbacks UAUA 1056% _are us not included in the current fore- CUREN1LY IN C,,HAPTE XuUPTY 13.9% casts of air carrier activity and fleet.) Of course, should both U.S. economic growth and passenger demand activity at FAA towered airports, are exceed expectations, thereby resulting operating in Chapter 11 bankruptcy. In in improved air carrier finances, addition, the weak balance sheets of current capital acquisition plans could several other heavily leveraged be revised upward. This, in turn, carriers calls into question their could result in relatively higher air continued financial viability. Should carrier activity levels. one or more of these carriers be forced into liquidation, it would signifi- One additional factor to be considered cantly impact aircraft activity at FAA is the impact of the phase-out of air facilities, both in total, but more carrier stage-2 aircraft on regional/ significantly, at those airports and commuter carriers' activity levels. As hubs currently served by those stage-2 aircraft are phased out of the carriers, air carrier fleet, it is expected that some of the larger carriers may elect In addition, a number of U.S. air to transfer the routes formerly served carriers--most notably American, Delta, by these aircraft to their code-sharing Northwest, and United--have signifi- partners. Should the number of route cantly reduced their capital expansion/ transfers greatly exceed current expec- acquisition plans, especially in the tations, regional/commuter operations short term. This has resulted in the at FAA air traffic facilities could be outright cancellation of some aircraft higher than currently forecast. orders and options and in the delay of Conversely, air carrier operations significant numbers of aircraft deliv- would be lower. eries until the mid to late 1990s. As a result, significantly fewer aircraft are expected to enter the U.S. air carrier fleet during the early years of the forecast period, with the projected increases in passenger demand being met

VII-IO WORKLOAD activities of general aviation and commuters/air taxis are expected to FORECASTS account for 75.3 percent of total tower operations in fiscal year 2004, up only slightly from a 75.1 percent share in FAA TOWER ACTIVITY 1992. Air carrier operations' share of towered airport activity is expected to increase at a slightly faster pace over the forecast period, from 20.2 percent Activity at FAA towered airports is in 1992 to 21.0 percent in fiscal year expected to exceed the pre-strike level 2004. of 64.0 million operations in 1994 and to exceed the 1979 all-time peak The forecasted activity levels and (69.0 million) in 1998. average annual growth rates for each Operations at FAA towered airports are taviation h userer20 group fromr:cmue/i the year 1992 oper- forecast to increase by 1.6 percent (to taxi, from 9.3 to 12.9 million air 62.5 million) in fiscal year 1993. The ations (2.8 percent annual growth); million growth in 1993 is in large part due to carrier,(.om 12.4 to 16.1 the expected recovery in the U.S. econ- operation, (2.2 percent); and general aviation, fm. to 44. mellron omy (GDP up 2.4 percent) from the rela- 36.9 to 44.8 million tively slow tivlyslogrowthgowt experiencedeperened duringurng operationsaviation, from(1.6 percent). Itinerant are fore- the last several years. This is ex- general aviation operations pected to provide the impetus for a geraavtinortosaefr- cast to increase from 21.3 to 25.9 mil- recovery of both commercial activity lion operations (1.6 percent annually) and corporate business flying. In and local general aviation operations addition, the economic recovery is from 15.7 to 18.9 million operations expected to spur a recovery in student/ (1.6 percent annually). Military oper- pilot training. ations are expected to remain at the 1992 level of activity (2.8 million) As the U.S. economic recovery gathers throughout the 12-year forecast period. so will momentum during 1994 and 1995, activity at FAA towered airports. FAA Commercial aircraft activity at FAA tower activity is forecast to increase towered airports is expected to grow at to 64.1 million operations (up 2.6 per- an average annual rate of 2.4 percent cent) in 1994 and to 65.6 million oper- during the 12-year forecast period, ations (up 2.3 percent) in 1995. from 21.7 to 29.0 million. Noncom- During the 12-year forecast period, mercial activity is forecast to in- operations at FAA towered airports are crease from 39.7 million in 1992 to projected to increase by 1.9 percent 47.6 million in fiscal year 2004, an annually. In absolute numbers, towered average annual increase of 1.5 percent. operations are projected to total 76.6 million in fiscal year 2004.

The mix of aircraft using FAA towered INSTRUMENT OPERATIONS airports is expected to increase gradually toward larger jet aircraft. This results from the fact that the combined total of general aviation and An increase in the number of TCAs and commuter/airotaxio pgeralavations ( , TRSAs in both 1993 and comm u te r/ a ir tax i op e ra t ion s (i .e .,t o r s i i n g w 1994 is expected operations performed by smaller air- to result in growthh somewhats me at higheri h r craft) is expected to growsat a some- than that forecast at FAA towered air- what slower pace than the number of air ports. Instrument operations are fore- whatsloerpce han he umbe ofair cast to grow by 1.8 percent in 1993, by carrier operations (24.9 percent com- cs t percent in 1993, by pared with 29.8 percent). The combined 2.6 percent in 1994, and by 2.7 percent

VII-11 AIRCRAFT OPERATIONS AT AIRPORTS WITH FAA TRAFFIC CONTROL SERVICE

M11

L 100-I MILITARY AT/COMMUTEREZ AIR CARRIER L 1 90go GA-LOCAL FI1GA-ITIN. 70

F 70 ... o 50......

E 40 R A 3 T 20 o 10 N $ 0 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

DISTRIBUTION OF WORKLOAD BY USER GROUP

MIL 4.6% ML37

GA 60.1% GA 58.5% 1992 2004

VIIT-12 in 1995. During the 12-year forecast relatively moderate growth during the period. instrument operations are ex- early years of the forecast period, in- pected to increase at an average annual creasing by 2.2 percent in 1993, rate of 2.0 percent, growing from a 2.4 percent in 1994, and 2.3 percent in total of 45.6 million operations in 1995. During the 12-year forecast i992 to 58.0 million operations in period, the number of aircraft handled fiscal year 2004. at en route centers is forecast to increase at an average annual rate of The mix of instrument operations is not 2.0 percent. In absolute numbers, the expected to change dramatically during center workload is forecast to increase the forecast period. The number of from 36.7 million aircraft handled in commuter/air :axi and general aviation 1992 to 46.6 million in fiscal 2004. operations performed by smaller aircraft will increase only slightly more Commercial aircraft activities' share slowly than the number of operations of center workload is forecast to in- performed by the larger, more sophisti- crease from 65.9 percent in 1992 to cated air cnrrier aircraft (29.2 versus 69.5 percent in 2004. Between 1992 and 31.3 percent). By fiscal year 2004, the year 2004, the air carrier share is 62.6 percent of all instrument oper- forecast to increase from 49.9 percent ations are expected to be performed by to 51.1 percent. The commuter 'air taxi commuter/air taxi and general aviation share is expected to increase from aircraft, up from 61.6 percent in 1992. 16.1 percent to 18.5 percent during the same time period. The projected activity levels and average annual growth rate for each user The projected activity levels and group from the year 1992 to 2004 are: average annual growth rates for each commuter/air taxi, from 9.9 to user group from 1992 to 20n4 are: 13.7 milioi,. operations (2.7 percent commuter/air taxi, from 5.9 to 8.6 nil- annually); air carrier, from 13.4 to lion aircraft handled (3.2 percent 17.6 million operations (2.3 percent annual growth); air carrier, from 18.3 annually); and general aviation, from to 23.8 million aircraft handled 18.2 to 22.6 million operations (2.2 percent annually); and general (1.8 percent annually). Military aviation, from 7.4 to 9.1 million air- activity is "- ected to remain at the craft handled (1.7 percent annually). 1992 operations level (4.1 million) The number of military operations is throughout the forecast period, expected to remain at its 1992 level of activity (5.1 million) during the During the 12-year forecast period, entire forecast period. commercial activity is axpected to increase at an average rate of 2.5 per- Commercial activity is expected to grow cent annually, from 23.3 to 31.3 mil- at an average annual rate of 2.5 per- lion. Noncommercial activity is fore- cent during the 12-year forecast cast to increýase from 22.3 million in period, from 24.2 to 32.4 million. 1992 to 26.7 million in fiscal Noncommercial activity is forecast to year 2004, an average annual growth increase by 1.1 percent annually, from rate of 1.5 percent. 12.5 million in 1992 to 14.2 million in fiscal year 2004.

Forecasts for individual centers are CENTER ACTIVITY available upon request from the Statistics and Forecast Branch, Office of Aviation Policy, Plans, and The workload at FAA air route traffic Management Analysis (APO-IlO), phone control centers is expected to exhibit (202) 267-3355.

VII-13 INSTRUMENT OPERATIONS AT AIRPORTS WITH FAA TRAFFIC CONTROL SERVICE

M 80. L 7CMILITARY L 7C * COMMUTER I - AIR CARRIER GENERAL AVIATION 0 60 N

0 F40

0 P 30 E R A 20 T 0 10 • . N S 0 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

DISTRIBUTION OF WORKLOAD BY USER GROUP

AC 29.4% N<,-AC 30.3% AT/C 21.7%Al/236

MIL 9.0% MIL 7.1%

GA 39.9% . . 1992 GA 39.0% 2004

VII-14 IFR AIRCRAFT HANDLED AT FAA AIR ROUTE TRAFFIC CONTROL CENTERS

M 7 0<- - L MIITR AIR TAXI/COMMUTER

NL L E AIR CARRIER GENERAL AVIATION 0 o 50 P

E R 2 T

S 0 I 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

DISTRIBUTION OF WORKLOAD BY USER GROUP

AT/C 16.1% A/ 85

SMIL 13.9% (MIL 10.9%

AC 49.9%/ / AC 51.1% GA 20.2% G 95

1992 20

VII- 15 FLIGHT SERVICE STATION (down 5.8 percent) in 1994, and 4.8 million (down 2.0 percent) in 1995. ACTIVITY Thereafter, the number of aircraft contacted is expected to increase only marginally (0.4 percent annually), Forecast reaching a total of only 5.0 million in the year 2004.

Total traditional flight services originating at FAA flight service Additional stations are projected to decline Flight Service Activity Data through fiscal year 1995 before resuming a pattern of slow growth over the remainder of the forecast period. In absolute numbers, the number of The introduction of new technology to flight services is expected to decline flight service applications has signi- to 38.8 million (down 3.5 percent) in ficantly changed the operating environ- 1993, to 37.5 million (down 3.4 per- mn ftefih evc ytm cent) in 1994, and to 37.4 million Viewed in the larger context of the (down0.3rcent) in 199 57.4 Asmilign (d ow n 0 .3 p e r c e n t ) in total National Airspace System, the 1 9 9 5 . A s s um i .ig r c n o k o d t e d o n t n c s that the FSS consolidation program is recent workload trends do not neces- completed prior to fiscal year 1995, sarily indicate declining demand for total flight services should begin to flight planning services. Rather, they increase gradually, growing at an may indicate that demand is being met average annual rate of 0.6 percent over through increased use of automation and the remaining 9 years of the forecast new system capabilities resulting in period. Total flight services should increased system efficiencies and pro- reach 39.4 million by the year 2004. ductivity.

The number of pilot briefings is fore- Specifically, several factors resulting cast to decline to 10.5 million (down from automation will tend to dampen the 2.8 percent) in 1993, 10.1 million growth in FSS workload measures, as (down 3.8 percent) in 1994, and currently defined. First, pilots can 10.0 million (down 1.0 percent) in now obtain weather briefings through 1995. Starting in 1996, the number of the Telephone Information Briefing Sys- pilot briefings begins to increase tem (TIBS), which does not require con- gradually (0.4 percent annually) over tact with a flight service specialist, the remaining 8 years of the forecast and is not, therefore, included in the period, reaching a total of 10.3 mil- FSS pilot briefings count. Second, lion in the year 2004. private weather briefing vendors, par- ticipating in recently implemented The number of flight plans originated memorandums of agreement, can also file is projected to decline to 6.3 million flight plans for their customers with- (down 3.1 percent) in 1993 and to out going through an FSS. Third, 6.2 million (down 1.6 percent) in 1994. starting February 1990, DUATS became Over the next 10 years of the forecast operational. Using DUATS, pilots with period, the number of flight plans access to a computer, modem, and tele- originated is forecast to increase phone can directly access a national moderately (1.1 percent annually), weather data base for weather briefings reaching a total of 6.9 million in the and flight plan filing without ever final year of the forecast period, going through an FSS.

The number of aircraft contacted is This automated access may be through forecast to decline to 5.2 million the pilot's own computer or through (down 7.1 percent) in 1993, 4.9 million those of field-based operators offering

VII-16 FLIGHT SERVICES ORIGINATED AT FAA FLIGHT SERVICE STATIONS

L - o0 AC CONTACTED PILOT B3RIEFS =ZJFLIGHT PLANS S 60- 0 F 50 E

C S

N D 10 \ \ E0 D 80 82 84 86 88 90 92 94 96 98 00 02 04 FISCAL YEAR

DISTRIBUTIQN BY TYPE OF SERVICE RENDERED

BRIEFS BRIEFS 53.7% 52.3%

CONTACTS 12.7%CT 13.9% PLANS 1.%PLANS 32.3% 35.0% 1992 2004

VII- 17 the service to their customers. None in the FAA flight service station of the flight planning services pro- workload measure. vided through the above sources is included in the FSS workload measures. Starting in fiscal year 1994, with more than 3 years of historical DUATS data, During fiscal year 1992, there was a forecasts of flight service activity total of 3.6 million DUATS trans- will be developed for, and distributed actions. If each transaction involved by, source of service--DUATS versus FAA a weather briefing, this represents flight service stations. 3.6 million pilot briefs. In addition, just under 613,200 flight plans were Forecasts for individual flight service filed through the DUATS system. Using stations are available upon request the weighted total flight services from the Statistics and Forecast formula (two times pilot briefs plus Branch, Office of Aviation Policy, flight plans filed), this translates Plans, and Management Analysis into approximately 8.4 million total (APO-II0), phone (202) 267-3355. flight services that are not included

VII-18

CHAPTER VIII

FORECAST ACCURACY

The Federal Aviation Administration has The minimal forecast error in 1992 can developed forecast models and estab- be attributed to two factors: The lished a forecast process that attempts failure of the U.S. economy to rebound to anticipate changes that may affect from the recession as quickly as ex- the future direction of the industry. pected; and the loss of Pan American Using this forecast process, the FAA and Midway Airlines. These two air- provides 12-year forecasts of workload lines accounted for 3.4 percent of measures annually for aviation-related operations in 1991. manpower and facility planning. The FAA frequently sponsors workshops to The 10-year forecast errors are higher critique the techniques and practices because of unanticipated external currently used by the FAA and other events that have had long-term impacts aviation forecasters and to examine the on the aviation system. These are the outlook for the aviation industry and more than doubling of aviation fuel its prospects for future growth. The prices caused by OPEC actions taken in workshops focus on the forecast process 1979-1980 and the failure of general and ways to improve the reliability and aviati~on to respond to the economic utility of forecast results. recovery of the 1980s. The air traffic controller strike in the early 1980s The two tables on pages VIII-3 and also had a severe impact on operations. VIII-4 provide some measure of the And finally, the FAA does not use cy- accuracy of FAA workload forecasts. clic. economic projections in preparing The tables compare forecast data for its forecasts. As a result, the feces- both the short-term and the long-term sions of 1980, 1982, and 1991 were not periods. The short-term, I to 5 years, considered in any of the forecasts pre- is the critical period for manpower pared prior to 1990. planning; the long-term period, 10 years out, is important for facility On the other hand, some of the FAA's planning, The two key FAA workload past 10-year forecasts have proven to measures employed are instrument oper- be quite accurate, The 1982 forecast ations and aircraft handled, of 492.2 million enplanements for 1993, for example, will be very close to the For short-term trends, the forecast er- mark and consistent with FAA's projec- rors normally tend to be minimal: the ted annual growth rate of 4.6 percent. 1992 forecast for instrument operations was 1.0 percent higher than the actual number recorded,

VIII-I THE FAA AVIATION cast results constitute an essential process. FORECASTING PROCESS part of the

SYSTEM BACKGROUND INTRODUCTION As part of the need to ensure safe and efficieut operation of the National of te Naio - The FAA's forecasting process is a con- Aice Systion System, FAA operates 401 air- tinuous and interactive one that in- Airspace traffic control towers, volves the FAA Statistics and Forecast ports with air Branch, otherFAA St tics and Serviast 22 air route traffic control centers, Branch, other FAA Offices and Services, and 172 flight service stations (FSSs). other Government agencies, and aviation Many of the nonautomated flight service industry groups. In addition, the pro- stations will be absorbed into 59 new cess uses various economic and aviation automated facilities (AFSSs). However, data bases, econometric models and given the recent Congressional mandate equations, and other analytical tech- to implem'ýnt a system of auxiliary niques. flight service stations in addition to the 59 AFSSs, 36 of the FSSs that were Forecasting aviation activity is an scheduled to be closed will remain essential component of the FAA's open. planning process. The forecasts are used to determine staffing levels and FAA facilities perform a large and di- capital expenditures that will be need- verse number of services for the avia- ed to accommodate growth of activity tion community. The FAA towers provide while maintaining a safe and efficient sequencing and separation services to environment. The forecasts are also pilots and aircraft arriving at or de- used for short-term budget preparation, parting from individual airport facil- cost-benefit analyses, and safety anal- ities. These services are provided to yses. The relative importance of the various categories of aircraft: air forecasting function in the planning carrier, commuter, air taxi, general process can be gauged by examining the aviation, and military. Arrivals and major changes being made to the air- departures (landings and takeoffs) ire space infrastructure through the generally referred to as aircraft oper- Capital Investment Plan out to the year ations. Arrivals and departures are 2005. These changes are being made, in further classified as itinerant or lo- large part, to accommodate the pro- cal, operations depending on the pur- jected growth in air traffic. pose of the flight or the distance between the airports from which the To improve the air traffic control and landings and takeoffs were made. These air navigation systems, the FAA is in- operations are measures of workload or stalling new aircraft landing systems, activity at individual airports. The developing new radar and communication sum of these operations at all towered of systems, and upgrading the weather airports makes up the national count services it provides to aircraft opera- aircraft operations. invest- tors. Because of the sizeable ments being made in the National Air- Another important workload measure at space System, it is essential that the FAA tower airports is the number of FAA develop and utilize the most ac- instrument operations, that is air- curate and reliable forecasts possible. craft operations performed in accord- Thus, the periodic review and evalua- ance with an instrument flight rule tion of the FAA forecasting procedures, models, forecast assumptions, and fore-

VIII-2 FAA INSTRUMENT OPERATIONS FORECAST EVALUATION

Forecast Activity Level (Millions) Actual Published-.Years Earlier YearForecast Being (Millions)Activity 1 2 3 4 5 10 Year Years Years Years Years Years 1986 40.5 40.6 40.9 40.8 42.6 44.8 46.2 1987 43.4 41.7 42.3 42.3 42.4 44.3 45.9 1988 44.5 45.4 43.0 43.8 43.6 44.2 49.9 1989 45.0 45.8 47.2 44.2 45.7 45.5 53.9 1990 46.8 46.4 47.7 49.1 45.4 47.3 54.2 1991 45.1 47.8 48.0 49.5 50.7 46.4 52.4 1992 45.6 46.1 48.9 49.6 51.3 51.8 51.5 1993 46.4 47.4 50.1 50.8 52.5 50.3 1994 47.6 48.8 51.4 52.2 52.0 1995 48.9 50.1 52.9 52.2 1996 50.0 51.2 51.7 1997 51.0 573 1998 56.6

2002 j ______1______j_ _ _ _ _1_ _ _ _ _J 56.2

Forecast Activity Percent Error Published -- Years Earlier Year Being 1 2 3 4 5 10 Forecast Year Years Years Years Years Years 1986 0.3 1.0 0.7 5.2 10.6 14.1 1987 (3.9) (2.5) (2.5) (2.3) 2.1 5.8 1988 2.0 (3.4) (1.6) (2.0) (0.7) 12.1 1989 1.8 4.9 (1.8) 1.6 1.1 19.8 1990 (0.8) 1.9 4.9 (3.0) 1.1 13.6 1991 6.0 6.4 9.8 12.4 2.9 16.2 1992 1.1 7.2 8.8 12.5 13.6 12.9

Note on how to read this table: In 1989 we forecast 46.4 million operations would occur in 1990. In fact 46.8 million operations were recorded meaning the forecast was 0.8 percent lower than actual. In 1988 we forecast 47.7 million operations would occur in 1990. This forecast was 1.9 percent higher than actual. The 1992 forecast is shown In italics.

VIII -3 FAA ARTCC AIRCRAFT HANDLED FORECAST EVALUATION

Forecast Activity Level (Millions) Actual Published.-Years Earlier Year Being Activity 1 2 3 4 5 10 Forecast (Millions) Year Years Years Years Years Years

1986 34.2 34.0 33.9 33.1 32.8 33.6 36.3 1987 35.8 35.4 35.1 35.0 34.0 34.0 39.6 1988 36.4 37.0 36.6 36.1 36.1 35.1 42.8 1989 36.6 37.2 38.0 37.6 37.2 37.4 42.0 1990 37.4 37.8 38.2 39.2 38.7 38.4 42.2 1991 36.4 38.5 39.1 39.7 40.3 39.6 40.3 1992 36.7 37.3 39.6 40.1 40.8 41.4 39.3 1993 37.5 38.3 40.6 41.0 41.6 40.7 1994 38.4 39.4 41.5 41.9 43.6 1995 39.3 40.3 42.7 43.6 1996 40.0 41.1 44.0 1997 40.7 46.0 1998 45.3

2002 T - 45.1

Forecast Activity Percent Error Published -- Years Earlier Year Being 1 2 3 4 5 10 Forecast Year Years Years Years Years Years 1986 (0.6) (0.9) (3.2) (4.1) (1.7) 6.1 1987 (1.1) (2.0) (2.2) (5.0) (5.0) 10.6 1988 1.6 0.5 (0.8) (0.8) (3.6) 17.6 1989 1.6 3.8 2.7 1.6 2.2 14.7 1990 1.1 2.1 4.8 3.5 2.7 12.8 1991 5.8 7.4 9.1 10.7 8.8 10.7 1992 1.6 7.9 9.2 11.1 12.8 7.1

Note on how to read this table: In 1989 we forecast 37.8 million aircraft would be handled In 1990. In fact 37.4 million aircraft were recorded meaning the forecast was 1.1 percent higher than actual. In 1988 we forecast 38.2 million aircraft would be handled In 1990. This forecast was 2.1 higher than actual. The 1992 forecast is shown in italics.

VIII -4 (IFR) flight plan or an aircraft flight these, four economic independent var- where IFR separation between aircraft iables are obtained from sources ex- is provided by the facility. At times, ternal to the FAA and the FAA has no advisory services may be offered to control over these truly exogenous var- aircraft flying under visual flight iables. There are 12 quantifiable air rules (VFR). Instrument operations are carrier forecast assumptions and 4 further subdivided into (1) primary quantifiable regional/commuter carrier instrument operations (separation and forecast assumptions. Within justi- sequencing services provided to air- fiable limits, these forecast assump- craft landing at the airport providing tions are subject to the discretion of the service), (2) secondary instrument the FAA forecast analysts. There are operations (services provided to air- 83 aviation variables (other than FAA craft landing at a nearby airport), and workload measures) that influence the (3) overs (services provided to air- workload measures in one way or anoth- craft that are transiting the facil- er. Finally, there are 30 aviation ity's controlled airspace without land- variables that are the workload meas- ing in the area). ures used by the FAA for policy and planning considerations and for man- Each air route traffic control center power and investment planning. (ARTCC) controls aircraft that are flying under instrument flight rules in The table on page VIII-1O contains a the center's designated geographic con- list of the variables and the sources trol area. The workload measures for of the historical data and their the centers are the numbers of IFR air- relationship to the fore-ast process. craft handled, which is 2 times depar- Forecasts of the economic vakiables and tures, plus overs. The IFR counts are the military fleet and hours flown are categorized by user groups, developed outside the FAA. All other forecasts are developed by the FAA. Flight service stations provide a variety of services to the aviation commu- Research undertaken in the early and nity. They collect and disseminate mid-1970s indicated that some measures meteorological and other flight infor- of economic activity (such as gross mation, provide briefings to pilots, national product or total employment) and provide assistance in emergencies and some measures of prices (for ex- to lost, disoriented, or downed airmen, ample, aircraft prices and aviation The workload measures at flight service fuel prices) were useful predictors of stations are weighted sums of the num- aviation activity. Some unique events ber of flight plans filed, pilot brief- (including the air craffic controller ings provided, and aircraft contacted, strike in August 1981 and the prolonged depressed state of the general aviation The introduction of new technology to manufacturing industry) have altered flight service applications has changed the relationships between the key its operating environment. It appears aviation variables and the economic that an apparent decline in demand for variables used previously. It has been flight planning services may actually difficult, therefore, to produce econo- signify that the demand is being met mic or econometric models that predict through increased use of automation and aviation activity with the same degree new system capabilities. The result is of reliability as the models developed increases in system efficiency and pro- in earlier periods. Thus, for the ductivity. present, the forecasters must rely to a greater degree on subjective judgment, The FAA must consider at least 133 var- evaluation, and expertise than was re- iables when producing a set of national quired previously. This is not at all forecasts. (The number does not include unusual in times of significant changes derived subtotals and totals.) Of in a volatile industry.

VIII-5 THE FAA FORECASTING portion due to improper model specific- PROCESS ations, erroneous forecasts of independent variables, erroneous forecast assumptions, or incorrect analysts' The FAA forecasting process is an thejudgments forecast and error opinions. analysis If maywarranted, lead to a formuationrof the mod e ad to interactive system that combines eco- a reformulation of the model and to nometric and time series model results additions or deletions of independent with aviation industry forecasts, ex- variables, revisions of forecast as- pert opinions, and anticipated policy sumptions, and/or changes in analysts' impacts to derive a set of FAA aviation opinions and judgments about future forecasts that are used in the deci- events. sionimaking process. The following flow diagram shows a generalized version of the FAA aviation forecasting process.

The first step in developing the fore- FORECAST EVALUATION casts is to enter the economic and demographic variables into a set of econometric models or equations that It is essential that the FAA forecasts represents a simplified version of the of the demand for services at the FAA real world. The degree of accuracy of towers, air route traffic control cen- the forecasts of aviation activities ters, and the flight service stations depends on both the accuracy of the be accurate. Large forecast errors can forecasts of the independent variables lead to inefficient allocation of re- and the ability of the models to por- sources which, in turn, could lead to tray activities in the real world, capacity constraints and delays, or to excess capacity in the National Air- The mechanical execution of forecast space System. For this reason, the FAA models is only the first step in pro- must continuously evaluate the fore- ducing a set of forecasts. In general, casting process and its results. these models and equations are simple The evaluation of the forecast process portrayals of a complex system. They poe on seve fonts. onea cannot account for a number of politi- proceeds on several fronts. On a cal, social, psychological, and econom- monthly basis, FAA tracks its short- ic variables and for all the interrel- term forecasts of aircraft operations, ated actions and reactions that event- instrument operations, aircraft han- ually lead to a particular set of re- dled, and flight services vis-a-vis the sults. It is particularly important, actual counts at the facilities. This therefore, that the initial model re- tracking system alerts FAA management sults are reviewed, revised, and ad- to unexpected deviations from the justed to reflect the analysts' best trends suggested by the forecasts. In- judgment of the impacts of the events quiries are then initiated to determine occurring or expected to occur during the cause(s) of the differences and re- the forecast period, vised short-term forecasts may be generated, if necessary. The FAA forecasting process is both continuous and iterative. As such, it To help the analysts make correct de- is important to evaluate the forecast cisions and informed judgments when results and to determine the basis of developing the forecast assumptions, the deviations of the forecast values FAA holds meetings with industry from the actual values observed in the real world. The analysis of the errors generally identifies the causes of the deviatiom ind helps determine the pro-

VIII-6 FAA FORECASTING SYSTEM

INDUSTRY EXOGENOUS HISTORICAL NATIONAL FORECASTS VARIABLES DATA AIRSPACE AND ANALYSES o ECONOMIC SYSTEM o DEMOGRAPHIC PARAMETERS

FORECAST SYSTEM o MODELS o DATA o ASSUMPTIONS ANALYST IEXPERTISE

MODEL o ADD MODELS FORECASTS I AND VARIABLES

____ o REVISE MODELS

COMBINE MODEL OUTPUT, ___ "FORECASTS

FORECAST EVALUATION

DECISIONMAKING SYSTEM o BUDGET o PLANNING o INVESTMENT ANALYSIS o SAFETY ANALYSIS

VIII-7 representatives to discuss industry dissemination of the forecast results, trends, recent developments, and pos- solicitation of industry comments, and sible future courses of events. Every critique of the forecasts. The main two years, for example, in cooperation avenues for this purpose are the "FAA with the National Academy of Sciences, Aviation Forecast Conferences" held Transportation Research Board (TRB), annually in February and March. The the FAA sponsors a "forecast assum- 300 to 400 participants at these con- ptions workshop." This workshop is ferences generally include airline ex- attended by 70 to 80 industry planners ecutives, aircraft and engine man- and forecasters representing the air- ufactuiers, consumer groups, and other lines, aircraft manufacturers, engine industry representatives, and the news manufacturers, and other industry media. To the maximum extent possible, groups. FAA responds to questions raised about the forecasts both during and after the The participants in various subgroups conference. identify specific assumptions about the short-term and long-term future trends An important part of these conferences of the economic and aviation variables is the opportunity for various segments that are important to their segments of of the aviation community to make tech- the industry, indicate why these are nical presentations on a variety of considered important, and show why topics of interest to the aviation com- specific trends are anticipated. After munity. The FAA aviation forecast con- discussing the assumptions, the entire ferences establish avenues of commun- group attempts to reach a consensus ication through which FAA releases its about the key variables affecting the forecast to the aviation community and industry and the most likely future the public, and receives comments, courses of these variables. Finally, criticisms, and feedback about the the TRB prepares and publishes a work- forecasts. The FAA also receives shop report. The participants benefit valuable information and insights from the discussions and the analysts through the papers presented at the have the TRB workshop report as a forecast conferences. benchmark for preparing forecasts or for evaluating forecasts prepared by Because of the importance of the U.S. other organizations. FAA uses this general aviation industry and the fact forum and the workshop report in pre- that its issues and problems cannot be paring and in evaluating its aviation adequately addressed in a single con- forecasts. ference, the FAA has scheduled a third General Aviation Conference in March Formal and informal -.Leetings with in- 1993. The cost of the General Aviation dividuals and representatives of spec- Industry will be presented at that con- ific industry groups are another way ference. Fuller industry discussion of the FAA promotes dialogue and dis- the outlook for this segment of av- cussion with the aviation community and iation will be initiated. solicits input and comments. Separate meetings are held regularly with the FAA also seeks to improve forecast aircraft manufacturers, as a group, accuracy and credibility by inviting with members of the Air Transport Asso- FAA regional and state participation in ciation, and with members of the the forecast process. For example, General Aviation Manufacturers facility level terminal area forecasts Association. In addition, FAA analysts and flight service station forecasts maintain one-on-one contact with indus- are circulated to FAA Regions for re- try representatives, view and comments. The comments and suggested changes are incorporated in Another intermediate step in the FAA the final facility level reports. In aviation forecast process is the public the case of the terminal area fore-

VIII-8 casts, the FAA Regions have the capa- th- forecasts of key workload measures bility to make changes by computer. The with the acctracy of forecasts of eco- final facility level forecasts derived nomic variables prepared by major fore- by this procedure must be consistent casting services. Based on the result; with the national forecasts. of these studies, the FAA forecasts compare quite favorably with those pro- Periodically, FAA prepares a technical duced by major forecasting services. report that compares the accuracy of

VIII-9 FAA AVIATION FORECAST VARIABLES AND DATA SOURCES

TYPES OF VARIABLES AND VARIABLE NAMES DATA SOURCES

ECONOMIC: Gross Domestic Product (GDP) OMB, DRI, Evans, WEFA Consumer Price Index (CPI) OMB, DRI, Evans, WEFA Oil and Gas Deflator OMB, DRI, Evans, WEFA

AIR CARRIER:

FORECAST ASSUMPTIONS Domestic Operations: Average seats per aircraft RSPA/computed Average passenger trip length RSPA/computed Revenue per passenger mile (current $) RSPA/computed Revenue per passenger mile (1992 $) Computed Average jet fuel prices (current $) RSPA/computed Average jet fuel prices (1992 $) Computed International Operations (For 3 World Travel Regions): (Same as Domestic) (Same)

SCHEDULED PASSENGER TRAFFIC Domestic: Revenue passenger miles (RPMs) RSPA Revenue passenger enplanements RSPA Available seat miles (ASMs) RSPA Load factors RSPA/computed International (For 3 World Travel Regions): (Same as Domestic) (Same)

FLEET 2-Engine narrowbody FAA/AFS-620 3-Engine narrowbody FAA/AFS-620 4-Engine narrowbody FAA/AFS-620 2-Engine widebody FAA/AFS-620 3-Engine widebody FAA/AFS-620 4-Engine widebody FAA/AFS-620

HOURS FLOWN BY EQUIPMENT (Same as Fleet) RSPA

VIll-10 FAA AVIATION FORECAST VARIABLES AND DATA SOURCES (Continued)

TYPES OF VARIABLES AND VARIABLE NAMES DATA SOURCES

FUEL CONSUMED Jet: Domestic air carriers RSPA International air carriers RSPA General aviation FAA/APO-110 Aviation Gasoline: Air carriers FAA/APO-1lO General aviation FAA/APO-110

REGIONAL/COMMUTER:

FORECAST ASSUMPTIONS Average seats per aircraft RSPA/computed Average passenger trip length (48 states and Hawaii, Puerto Rico, Virgin Islands) RSPA/computed Average load factor RSPA/computed

PASSENGER TRAFFIC Revenue passenger enplanements (48 states and Hawaii, Puerto Rico, Virgin Islands) RSPA Revenue passenger miles (48 states and Hawaii, Puerto Rico, Virgin Islands) RSPA

FLEET Less than 15 seats FAA/AFS-620 15 to 19 seats FAA/AFS-620 20 to 40 seats FAA/AFS-620 More than 40 seats FAA/AFS-620

GENERAL AVIATION:

FLEET Single engine piston aircraft FAA/APO-110 Multi-engine piston aircraft FAA/APO-110 Turboprop aircraft FAA/APO-110 Turbojet aircraft FAA/APO-110 Piston-powered rotorcraft FAA/APO-110 Turbine-powered rotorcraft FAA/APO-110 Other general aviation aircraft FAA/APO-110

NUMBER OF AIRCRAFT BY REGION Total aircraft in each of nine FAA Regions FAA/APO-I10

VIII-11 FAA AVIATION FORECAST VARIABLES

AND DATA SOURCES (Continued)

TYPES OF VARIABLES AND VARIABLE NAMES DATA SOURCES

HOURS FLOWN Hours flown by equipment type FAA/APO-110 (See general aviation fleet)

FUEL CONSUMED Fuel consumed by equipment type FAA/APO-110 (See general aviation fleet)

ACTIVE PILOTS: Students FAA/APO- 110 Private pilots FAA/APO-1I0 Commercial FAA/APO- 110 Airline transport FAA/APO-1i0 Helicopter FAA/APO- 110 Glider FAA/APO- 110 Other FAA/APO- 110 Instrument rated FAA/APO- 110

FAA WORKLOAD MEASURES:

FAA TOWERS Number of FAA Towers FAA/APO-110

Aircraft Operations: Air carrier itinerant operations FAA/APO-1I0 Air taxi/commuter itinerant operations FAA/APO-IIO General aviation itinerant operations FAA/APO-IIO Military itinerant operations FAA/APO-110 General aviation local operations FAA/APO-IIO Military local operations FAA/APO-110

Instrument Operations: Air carrier FAA/APO- 110 Air taxi/commuter FAA/APO- 110 General aviation FAA/APO- 110 Military FAA/APO- 110

VIII-12 FAA AVIATION FORECAST VARIABLES AND DATA SOURCES (Continued)

TYPES OF VARIABLES AND VARIABLE NAMES DATA SOURCES

Non-IFR Instrument Operations: Terminal control areas FAA/APO-110 Expanded radar service areas FAA/APO-110

AIR ROUTE TRAFFIC CONTROL CENTERS IFR Departures: Air carrier FAA/APO-110 Air taxi/commuter FAA/APO-110 General aviation FAA/APO-110 Military FAA/APO-110

IFR Overs: (Same as IFR departures) FAA/APO-110

FLIGHT SERVICE STATIONS IFR-DVFR flight plans originated FAA/APO-II0 VFR flight plans originated FAA/APO-110 Pilot briefings FAA/APO-110 Air carrier aircraft contacted FAA/APO-110 Air taxi/commuter aircraft contacted FAA/APO-I10 General aviation aircraft contacted FAA/APO-110 Military aircraft contacted FAA/APO-110 IFR-DVFR aircraft contacted FAA/APO-110 VFR aircraft contacted FAA/APO-110

MILITARY:

FLEET Jet DOD Turboprop DOD Piston DOD Helicopter DOD

HOURS Hours flown by equipment DOD (See Fleet)

VIII-13 FAA AVIATION FORECAST VARIABLES AND DATA SOURCES (Continued)

TYPES OF VARIABLES AND VARIABLE NAMES DATA SOURCES

TERMINAL AREA FORECASTS (2O00 Towered and Nontowered Airports):

ENPLANEMENTS U.S. Air Carrier RSPA Foreign Flag Carrier INS Commuter RSPA Air Taxi FAA/TSC

OPERATIONS (Towered Airports) Air Carrier FAA/APO-110 Commuter/Air Taxi FAA/APO-110 General Aviation FAA/APO-110 Military FAA/APO-110

OPERATIONS (Nontowered Airports) FAA/NFDC

VIII-14 ......

ok"

IV, CHAPTER IX

YEAR-BY-YEAR DATA FOR FAA AVIATION FORECASTS FISCAL YEARS 1993 - 2004

Chapter IX provides the detailed data for the National Aviation and FAA workload series forecasted by the FAA Office of Aviation Policy, Plans, and Management Analysis. The following should be noted:

o Table 10 - Contains the unduplicated passenger traffic reported by U.S. scheduled air carriers reporting on RSPA Form 41 and commuter carriers reporting on RSPA Form 298-C.

o Table 11 - Those carriers contained in the Air Carrier forecast data base are listed in Appendix A.

- Includes the following traffic which is also reported as commuters/regionals traffic in Table 19.

ENPLANEMENTS RPMs ENPLANEMENTS RPMs (Millions) (Millions) (Millions) (Millions)

1987 4.100 683.6 1990 4.674 984.9 1998 3.117 583.3 1991 6.559 1,315.3 1989 4.072 861.2 1992E 10.391 2,001.8

o Table 19 - Includes the duplicated traffic listed above for those air carriers and commuters/regionals reporting on both RSPA Forms 41 and 298-C.

- Forecasts and historical data exclude Alaska and foreign territory traffic.

- The forecasts exclude the following carriers because of the predominance of jet aircraft in their fleets : Altair (beginning in 1982), Empire (1985), and Air Wisconsin (1987).

IX-I "o Table 20 - Includes only aircraft with 60 seats or less. Aircraft also included with general aviation fleet shown in Tables 21 and 22.

"o Table 26 Includes the rotorcraft fleet and hours flown shown in Tables 21 and 23.

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IX-40 Appendix A

ACTIVE U.S. LARGE CERTIFICATED AIR CARRIERS FY 1992

REPORTING ENTITIES Air Carrier Code DOM INT ATL LAM PAC

Major Carriers America West X X X X American X X X X X Continental X X X X X Delta X X X X X Federal Express X X X X X Northwest X X X X Pan American X X X X Trans World X X X United X X X X X USAir X X X X

National Carriers Air Wisconsin X Alaska X X Aloha X American Trans Air X X Emery C X X Evergreen NS X X Hawaiian X X X Markair X Midway X Southern Air NS X X Tower X X United Parcel C X X X X X USAir Shuttle X X X Westair X World NS X X

Large Regional Carriers Air Transport Intl. C X X X American Intl. C X X Amerijet C X X Arrow C X X Aspen X Braniff Intl. X Carnival X X X Challenge X X Executive Airlines X X X Express One NS X X

A-1 ACTIVE U.S. LARGE CERTIFICATED AIR CARRIERS FY 1992 (cont.)

REPORTING ENTITIES Air Carrier Code DOM INT ATL LAM PAC Large Regional Carriers (cont.) Flagship C/NS X X X X Florida West C/NS X X Key X X X MGM Grand X Northern Air C X Reeve X Rich NS X X Simmons X Sun Country NS X X Trans Continental C/NS X X Trans States X Zantop C X

Medium Regional Carriers Aerial C X X Airline of the Americas NS X X Airmark NS X Av Atlantic NS X X Buffalo C/NS X Casino Express X Great American NS X Intl. Cargo Express NS X Jet Fleet NS X Miami Air NS X X Millon C/NS X North American NS X Patriot C/NS X Private Jet NS X X Ryan Intl. C X X Sierra Pacific NS X Spirit X Trans Air Link C/NS X X Wilbur's X Wrangler C/NS X

Codes: C=Cargo only, NS=Nonscheduled.

NOTE: Some carriers listed are included in the data base because they operated during the year, even though they were out of business by the end of the fiscal year. Carriers are classified by RSPA based on annual operating revenues as follows: Major-$l billion +; Nationals=$100 million to $1 billion; Large Regionals= $20 million to $99.99 million; Medium Regionals=$O to $19.99 million.

A-2 Appendix B

CARRIERS NO LONGER INCLUDED IN AIR CARRIER DATA BASE

Date Date of First of Last Carrier Carrier Reported Traffic (31 Reported Air Carrier Type (1) Grouping (2) Domestic Int'l, Traffic (4) 1. Aeromech (KG) S MR 7-79 5-81** 2. Aeron F MR 4-83 5-89* 3. Air America S LR 12-89* 4. Air Atlanta (CC) S LR 2-84 7-86* 5. AirCal (OC) S N 1-79 3-87m

6. Air Florida (QH) S N 1-79 7-80 5-84* 7. Air Illinois (UX) S LR 1-83 2-84* 8. Airlift (RD) C MR 7-84 7-84 12-85* 9. Airmark C MR 8-84 9-84 12-84* 10. Air Midwest (ZV) S LR X 12-84**

11. Air National (AH) C LR 4-84 6-84* 12. Air Nevada (LW) S MR 4-81 7-82** 13. Air New England (NE) S MR X 10-81* 14. Air North (NO) S MR 6-80 8-82** 15. Air North/Nenana (XG) S MR 3-81 8-82**

16. Air One (CB) S LR 4-83 7-84* 17. AirPac (RI) S LR 4-84 12-85* 18. All Star (LS) S MR 4-83 4-83 10-85* 19. Altair (AK) S MR 1-79 9-82* 20. American Int'l. (AV) S LR 11-82 9-84*

21. Apollo (ID) S MR 5-79 7-81** 22. Arista (RI) C MR 12-82 8-82 3-84* 23. Aspen (AP) S LR 1-85 4-91m 24. Atlantic Gulf (ZY) C MR 9-85 7-86* 25. Best (IW) S MR 7-82 10-85**

26. Big Sky (GQ) S MR 6-79 9-82** 27. Blue Bell (BB) C MR 6-83 2-84* 28. Braniff (BN) (8) S N 3-84 6-89* 29. Britt (RU) S LR 10-84 6-87** 30. Cascade (CZ) S LR 1-85 11-85*

31. Capitol (CL) S N 7-80 7-81 9-84* 32. Challenge (CN) F MR 8-82 6-86* 33. Challenge Air Int'l. S MR 7-86 8-87* 34, Cochise (DP) S MR 1-79 12-81* 35. Coleman (CH) S MR 9-79 3-80*

B-I CARRIERS NO LONGER INCLUDED IN AIR CARRIER DATA BASE (Continued)

Date Date of First of Last Carrier Carrier Reported Traffic (3) Reported Air Carrier Type (1) Grouping (2) Domestic Int'!. Traffic (4) 36. Colgan (CJ) S MR 4-81 3-83** 37. Connor F MR X 7-91* 38, Discovery S LR 3-90 7-90* 39. Eastern (EA) S M X X 1-91* 40. Emerald (OD) S LR 7-82 6-91*

41. Empire (UR) S LR 10-79 4-86m 42. Five Star (12) C LR 12-85 5-89* 43. Flight International C MR 4-84 6-86 9-85* 44. Florida Express (ZO) S LR 1-84 1-87 2-89m 45. Flying Tiger (FT) F M X X 8-89m

46. Frontier (FL) S N X X 8-86m 47. Frontier Horizon (FH) S LR 1-84 1-85* 48. Galaxy (GY) C MR 10-83 12-83 5-87* 49. Global (GL) C LR X X 12-84* 50. Golden Gate (GG) S MR 5-80 7-81*

51. Golden West (GW) S MR 2-79 7-82** 52. Gulf Air Transport (GA) C MR 1-85 12-89* 53. Guy America (HX) S MR 8-81 2-83* 54. Hawaii Express (LP) S LR 10-82 10-83* 55. Imperial (II) S MR 1-80 6-82**

56. Independent Air C MR 7-90 57. International Air Service C LR 7-88 3-89* 58. Int'l. Air Service (IE) C LR 11-83 5-85* 59. Interstate F LR 5-85 5-85 10-87* 60. Jet America (SI) S N 1-82 8-87m

61. Jet Charter C MR 7-82 7-82 5-85* 62. Kodiak (KO) S MR X 11-82** 63. L.A.B. (JF) S MR 1-82 8-82** 64. McClain (MU) S LR 11-86 2-87** 65. Mid-South (VL) S MR 6-80 2-84*

66. Midstate (IU) S MR 7-81 7-82** 67. Mid Pacific (HO) S LR 10-85 9-87* 68. Midway Express S LR 10-84 7-85* 69. Mississippi Valley (XV) S MR 4-79 8-82** 70. Munz (XY) S MR X 8-83*

B-2 CARRIERS NO LONGER INCLUDED IN AIR CARRIER DATA BASE (Continued)

Date Date of First of Last Carrier Carrier Reported Traffic (3) Reported Air Carrier Ty.e (1) Groupin- (2) Domestic Int'l. Traffic (4) 71. New Air (NC) S MR 5-79 9-82** 72. New York Air (NY) S N 12-80 12-86m 73. New Wien (VC) S MR 9-85 10-85* 74. Northeastern (QS) S LR 7-84 2-85* 75. Orion F MR 1-87 1-87 12-89

76. Overseas (OV) C LR 10-82 10-85* 77. Ozark (OZ) S N X 9-86m 78. Pacific East (PR) S LR 9-82 3-84* 79. Pacific Express (VB) S LR 2-82 10-83* 80. Pacific Southwest (PS) S N 1-79 4-88m

81. Peninsula (KS) S MR 1-82 1-83** 82. People Express (PE) S N 5-81 5-83 12-86m 83. Piedmont (PI) S M X 7-87 8-89m 84. Pilgrim (PM) S LR 9-85 12-86* 85. Ports of Call Travel Club C LR 9-85 1-86*

86. Presidential (XV) S LR 10-85 11-89* 87. Pride Air (NI) S LR 10-85 11-85* 88. Republic (RC) S M X 9-86m 89. Rocky Mountain (JC) S MR 7-81 9-82** 9'0. Royale (CC) C IV 3-84 6-84**

91. Royal West S LR 7-86 92. Ryan C LR 4-84 4-84 5-86* 93. Sea Airmotive (KJ) S MR 1-80 6-82** 94. Sky Bus (FW) S MR 7-85 11-86* 95. Skystar C MR 1-85 3-85 1-87*

96. Sky West (QG) S MR 7-79 12-84** 97. Sky World C LR 10-85 10-85 7-89* 98. Samoa (MB) S MR 2-85 6-85* 99. Southeast (NS) S MR 7-79 1-80* 100. South Pacific Island (HK) S LR 7-81 11-86*

101. Sun Coast (WS) C MR 5-87 9-87* 102. Sunworld (JK) S LR 5-83 9-88 103. Swift Aire (WI) S MR 1-79 7-81* 104. T-Bird (DQ) C MR 4-82 8-84* 105. Total Air (TA) C MR 10-84 5-85 1-87*

B-3 CARRIERS NO LONGER INCLUDED IN AIR CARRIER DATA BASE (Continued)

Date Date of First of Last Carrier Carrier Reported Traffic (3) Reported Air Carrier Type (1) Grouping (2) Domestic Int'l. Traffic (4) 106. TPI International F MR 3-90 8-90* 107. Transamerica (TV) S N 5-79 9-86* 108. Trans International F MR 5-85 1-85 12-88* 109. Transtar (MA) S LR 8-81 8-87m 110. Universal F MR X 3-90

111. Wien (WC) S N X 11-84* 112. Western (WA) S M X X 3-87m 113. Western Yukon (WX) S MR 7-81 6-82* 114. Worldwide C MR 10-84 10-84 3-86* 115. Wright (FW) S MR X 11-82**

(1) S - Scheduled; C - Charter; F - All-Cargo. (2) M - Majors; N - Nationals; LR - Large Regionals; MR - Medium Regionals. (3) Date of first reported traffic is indicated for those carriers starting service since the passage of the Airline Deregulation Act of 1978. Traffic reported by those carriers certificated prior to deregulation is indicated by an X. (4) Carriers that have discontinued scheduled passenger service indicated by an *. Carriers now filing RSPA Form 298-C in lieu of RSPA Form 41 indicated by **. Carriers that have merged operations indicated by an m.

B-4 Appendix C

U.S. AIR CARRIERS NONSCHEDULED TRAFFIC AND CAPACITY

DOMESTIC

ASMs RPMs L.F. ENPLANEMENTS FISCAL YEAR (MIL) (MIL) (M) (000) Historical 1983 6,854 5,109 74.5 2,882 1984 8,142 6,078 74.6 3,840 1985 9,841 7,491 76.1 5,318 1986 8,404 6,345 75.5 4,856 1987 6,170 4,422 71.7 3,933

1988 6,651 4,954 74.5 4,490 1989 6,862 5,128 74.7 4,887 1990 7,393 5,551 75.1 5,208 1991 7,888 5,488 69.5 5,041 1992E 7,932 5,147 64.9 5,147

INTERNATIONAL

ASMs RPMs L.F. ENPLANEMENrS FISCAL YEAR (MIL) (MIL) (%) (000) Historical 1983 9,443 8,045 85.2 3,034 1984 8,513 7,385 86.8 2,824 1985 8,637 7,438 86.1 2,857 1986 7,517 6,327 84.2 2,662 198, 10,510 8,626 82.1 3,708

1988 11,118 9,148 82.3 3,932 1989 12,165 9,444 77.6 4,660 1990 11,220 8,152 72.7 3,906 1991 16,325 10,566 64.7 4,213 1992E 10,586 7,997 75.5 3,523

C-I U.S. AIR CARRIERS NONSCHEDULED TRAFFIC AND CAPACITY (Continued)

TOTAL

ASMs RPMs L.F. ENPLANEMENTS FISCAL YEAR (MIL) (MIL) (%) (000) Historical 1983 16,297 13,154 80.7 5,916 1984 16,655 13,463 80.8 6,664 1985 18,478 14,929 80.8 8,175 1986 15,921 12,672 79.6 7,518 1987 16,680 13,048 78.2 7,641

1988 17,769 14,102 79,4 8,422 1989 19,027 14,570 76.6 9,547 1990 18,613 13,703 73.6 9,114 1991 24,213 16,055 66.3 9,254 1992E 18,518 14,014 75.7 8,670

Source: RSPA Form 41

C-2 Appendix D

U.S. AIR CARRIERS CARGO REVENUE TON MILES (In Millions)

FREIGHT/EXPRESS RTMs

FISCAL YEAR DOMESTIC INTERNATIONAL TOTAL Historical 1983 3,809 2,910 6,719 1984 4,391 3,.-28 7,719 1985 3,943 3,340 7,284 1986 4,869 3,988 8,857 1987 5,782 4,781 10,563

1988 6,699 5,702 12,401 1989 7,413 6,749 14,162 1990 7,542 6,771 14,313 1991 7,451 6,906 14,358 1992E 7,716 6,674 14,390

MAIL RTMs

FISCAL YEAR DOMESTIC INTERNATIONAL TOTAL Historical 1983 1,040 400 1,440 1984 1,145 441 1,586 1985 1,203 450 1,653 1986 1,233 438 1,671 1987 1,314 435 1,749

1988 1,423 463 1,886 1989 1,463 488 1,951 1990 1,478 516 1,994 1991 1,463 507 1,970 1999E 1,607 499 2,106

D-1 U.S. AIR CARRIERS CARGO REVENUE TON MILES (Continued) (In Millions)

TOTAL RTMs

FISCAL YEAR DOMESTIC INTERNATIONAL TOTAL Historical 1983 4,849 3,310 8,159 1984 5,536 3,769 9,305 1985 5,146 3,790 8,936 1986 6,102 4,426 10,528 1987 7,096 5,216 12,312

1988 8,122 6,165 14,287 1989 8,876 7,237 16,113 1990 9,020 7,287 16,307 1991 8,914 7,414 16,328 1992E 9,323 7,173 16,496

Source: RSPA Form 41

D-2 Appendix E

ACTIVE U.S. REGIONALS/COMMUTERS

1. Action Air 36. Chautauqua Airlines 2. Air Alpha 37. Christman Air System 3. Air Cape 38. Colgan Air 4. Air LA 39. Comair 5. Air Midwest 40. Commutair

6. Air Molokai 41. Conquest Airlines 7. Air Nevada 42. Continental Express 8. Air Sedona 43. Crown Airways 9. Air Sunshine 44. Dawn Air 10. Air Vantage 45. Direct Air

11. Air Vegas 46. Ellis Air Taxi * 12. Airways International 47. Empire Airways 13. Alaska Island Air * 48. ERA Aviation * 14. Allegheny Commuter 49. Executive Airlines ** 15. Alliance Air * 50, Express Airline 1

16. Aloha IslandAir 51. Flagship Airlines 17. Alpha Air 52. Flamenco 18. Alpine Air 53. Florida Air 19. Arctic Circle Airlines* 54. Freedom Air * 20. Arizona Pacific Airways 55. Frontier Flying Service *

21. Atlantic Coast 56. GP Express 22. Atlantic Southeast 57. Grand Airways* 23. Baker Aviation * 58. Grand Canyon Helicopter 24. Barrow Air * 59. Great Lakes Aviation 25. Bellair * 60. Gulf Air Taxi *

26. Bemidji 61. Gulf Flight Center 27. Bering Air * 62. Gulfstream International 28. Big Sky 63. Hageland Aviation Services * 29. Business Express ** 64. Haines Airways * 30. Cape Air 65. Harbor Air Service *

31. Cape Smithe * 66. Harbor Airlines 32. CCAir 67. Henson Aviation 33. Chalks International 68. Hermans Air * 34. Chartair 69. Horizon ** 35. Charter One 70. Iliamna Air Taxi *

E-1 ACTIVE U.S. REGIONALS/COMMUTERS (Continued)

71. Island Express 106. Scenic Airlines 72. Jet Express 107. Sea Air Shuttle 73. Jetstream International 108. Simmons Airlines ** 74. Kenmore Air Harbor 109. Skagway Air Service * 75. Ketchikan Air Service * 110. SkyOne Express

76. L'Express Airlines 111. SkyWest Aviation 77. LAB Flying Service * 112. Skymaster Airlines 78. Lake Powell Air Service * 113. Southcentral Air * 79. Lake Union Air Service * 114. Southeast Airlines 80. Larry's Flying Service * 115. Springdale Air

81. Las Vegas Airlines 116. StatesWest Airlines 82. Loken Aviation * 117. Sunaire(Aviation Associates) 83. Lone Star Airlines 118. Tanana Air Service * 84. Long Island Airlines 119. Taquan Air Service * 85. Mesa Air Shuttle 120. Tatonduk Air Service *

86. Mesaba Aviation 121. Temsco Airlines * 87. Metro-flight Airlines 122. Trans Air 88. Midway Commuter 123. Trans States Airlines ** 89. Mohawk Airlines 124. Trans World Express 90. New England Airlines 125. Viequies Air Link

91. New York Helicopters 126. Village Aviation(Camai Air) * 92. Northeast Express Regional 127. Virgin Air 93. Olson Air Service * 128. Walker's International 94. Pacific Coast Airlines 129. Warblow's Air Venture* 95. Pacific Island Aviation * 130. West Isle Air

96. Pan Am Express 131. WestAir ** 97. Paradise Island 132. Westates Airlines 98. Peninsula Airways * 133. Wilbur's Inc. * 99. Pennsylvania Airlines 134. Wings of Alaska * 100. Precision Airlines 135. Wings West Airlines

101. Redwing Airlines 136. WRA Inc. 102 Rocky Mountain Airways 137. Wright Air Service * 103. Ross Aviation 138. Yutana Airlines * 104. Ryan Air Service * 139. Yute Air Alaska * 105. Samoa Air * 140. 40-Mile Air *

* Carriers, primarily in Alaqka, whose traffic is not included in the regional/commuter data base and forecast.

•** Carriers operate both large turbojet and turboprop aircraft and report traffic data on RSPA Form 41.

E-2 Appendix F

GENERAL AVIATION AIRCRAFT COST INDICES

SINGLE ENGINE PISTON AIRCRAFT

PRICE AND COST INDICES

(1972 - 100)

Calendar Purchase Maintenance Operating Total Year Price Cost Cost Cost

1970 93.7 86.4 98.2 95.0 1971 95.7 93.2 98.8 97.4 1972 100.0 100.0 100.0 100.0 1973 100.0 109.2 109.9 109.8 1974 100.0 129.6 148.8 143.6 1975 114.1 138.9 158.9 153.6 1976 132.4 169.1 173.1 172.1 1977 142.2 184.5 202.2 197.5 1978 149.9 192.0 230.9 220.5 1979 165.6 201.1 287.6 264.5

1980 173.8 214.8 364.6 324.5 1981 216.6 227.8 425.7 372.7 1982 245.3 256.2 443.7 393.6 1983 280.7 269.1 450.6 401.9 1984 304.3 279.6 446.1 401.5 1985 316.4 289.1 436.8 397.1 1986 338.4 294.6 411.9 380.4 1987 * 300.0 405.3 376.9 1988 * 308.5 405.3 379.2 1989 * 317.3 405.3 381.5

1990 * 327.9 430.3 402.7 1991 * 338.5 466.5 432.0 1992 * 346.7 459.7 429.2

* Not calculated because all models in index have stopped production.

Source: FAA-APO Estimates

"F-I GENERAL AVIATION AIRCRAFT COST INDICES (CONTINUED)

MULTI-ENGINE PISTON AIRCRAFT

PRICE AND COST INDICES

(1972 100)

Calendar Purchase Maintenance Operating Total Year Price Cost Cost Cost

1970 82.6 96.7 98.1 97.5 1971 90.5 99.9 98.8 99.2 1972 100.0 100.0 100.0 100.0 1973 100.0 109.0 109.9 109.5 1974 102.9 130.0 148.6 140.5 1975 117.5 150.0 158.8 154.9 1976 128.6 172.8 173.0 173.0 1977 137.6 187.8 202.0 196.8 1978 151.8 196.5 230.8 215.8 1979 168.9 207.1 287.3 252.1

1980 185.3 216.6 364.2 299.5 1981 211.3 226.5 425.3 338.1 1982 232.9 240.6 443.4 359.2 1983 248.0 250.4 450.2 362.6 1984 289.4 260.0 445.7 364.3 1985 327.5 268.8 436.7 363.1 1986 343.2 274.2 411.7 351.2 1987 341.0 279.3 405.0 349.6 1988 367.6 287.2 405.0 353.1 1989 400.7 295.3 405.0 356.7

1990 439.9 305.2 429.9 375.0 1991 450.6 315.1 466.1 399.6 1992 475.4 322.7 459.3 399.1

Source: FAA-APO Estimates

F-2 GENERAL AVIATION AIRCRAFT COST INDICES (CONTINUED)

TURBOPROP AIRCRAFT

PRICE AND COST INDICES

(1972 = 100)

Calendar Purchase Maintenance Operating Total Year Price Cost Cost Cost

1970 87.7 99.3 92.7 95.3 1971 93.9 103.1 97.9 99.9 1972 100.0 100.0 100.0 100 0 1973 100.0 108.9 118.8 114.8 1974 103.0 130.0 146.6 139.9 1975 113.8 144.4 156.8 151.7 1976 125.6 150.2 164.6 158.7 1977 125.6 144.1 181.9 166.6 1978 131.9 156.8 221.4 195.2 1979 145.0 160.7 296.9 241.8

1980 157.8 163.4 354.0 276.9 1981 182.7 169.6 403.8 309.0 1982 189.9 180.2 420.8 323.2 1983 204.3 187.5 434.7 334.6 1984 213.0 194.7 434.7 337.5 1985 236.2 201.3 429.9 335.4 1986 247.5 205.3 384.8 310.2 1987 251.8 209.1 384.8 311.7 1988 295.6 215.0 384.8 314.1 1989 318.4 221.1 384.8 316.6

1990 343.1 228.5 422.4 342.0 1991 357.52 235.9 465.1 370.3 1992 380.1 241.6 458.0 368.4

Source: FAA-APO Estimates

F-3 GENERAL AVIATION AIRCRAFT COST INDICES (CONTINUED)

TURBOJET AIRCRAFT

PRICE AND COST INDICES

(1972 = 100)

Calendar Purchase Maintenance Operating Total Year Price Cost Cost Cost

1970 87.0 94.6 92.6 93.3 1971 87.0 96.2 97.8 97.2 1972 100.0 100.0 100.0 100.0 1973 100.2 109.0 118.7 115.6 1974 104.7 130.0 127.4 128.2 1975 115.1 140.2 156.8 151.4 1976 123.4 153.5 164.6 160.9 1977 135.9 167.6 181.9 177.3 1978 151.5 174.3 221.4 206.2 1979 167.2 179.4 296.9 259.0

1980 205.7 182.7 353.9 298.7 1981 216.7 187.1 403.8 333.9 1982 240.4 198.7 420.8 348.9 1983 251.8 206.7 434.7 361.2 1984 266.2 214.7 434.7 363.7 1985 278.4 221.3 429.9 362.8 1986 299.0 225.7 384.8 333.8 1987 309.3 229.9 384.8 335.2 1988 328.2 236.4 384.8 337.3 1989 326.9 243.1 384.8 339.4

1990 363.1 251.2 422.8 367.8 1991 370.0 259.3 465.6 399.4 1992 411.4 265.6 458.4 396.6

Source: FAA-APO Estimates

F-4 Appendix G

FAA TOWERED AIRPORTS

Birmingham, AL (BHM) Fresno Air Terminal, CA (FAT) Dothan, AL (DHN) Fullerton Municipal, CA (FUL) Huntsville Madison County, AL (HSV) Hawthorne, CA (HHR) Mobile Bates Field, AL (MOB) Hayward, CA (HWD) Montgomery Dannelly Field, AL (MGM) La Verne Brackett, CA (POC)

Tuscaloosa Van De Graaf, AL (TCL) Lancaster Fox Airport, CA (WJF) Anchorage International, AK (ANG) Livermore Municipal, CA (LVK) Anchorage Lake Hood SPB, AK (LHD) Long Beach, CA (LGB) Anchorage Merrill, AK (MRI) Los Angeles International, CA (LAX) Bethel, AK (BET) Modesto City County, CA (MOD)

Fairbanks International, AK (FAI) Monterey, CA (MRY) Juneau, AK (JNU) Napa County, CA (APC) Kenai Municipal, AK (ENA) Oakland International, CA (OAK) King Salmon, AK (AKN) Ontario, CA (ONT) Kodiak, AK (ADQ) Oxnard Ventura County, CA (OXR)

Deer Valley, AZ (DVT) Palm Springs Municipal, CA (PSP) Falcon/Mesa, AZ (FFZ) Palmdale, CA (PMD) Goodyear, AZ (GYR) Palo Alto, CA (PAO) Grand Canyon Municipal, AZ (GCN) Redding, CA (RDD) Phoenix Sky Harbor Int'l., AZ (PHX) Riverside Municipal, CA (RAL)

Prescott, AZ (PRC) Sacramento Executive, CA (SAC) Scottsdale, AZ (SDL) Sacramento Metro, CA (SMF) Tucson, AZ (TUS) Salinas Municipal, CA (SNS) Fayetteville Drake Field, AR (FYV) San Carlos, CA (SQL) Fort Smith Municipal, AR (FSM) San Diego Brown Field, CA (SDM)

Little Rock Adams Field, AR (LIT) San Diego Gillespi, CA (SEE) Texarkana, AR (TXK) San Diego Lindberg, CA (SAN) Bakersfield Meadows Field, CA (BFL) San Diego Montgomery, CA (MYF) Burbank, CA (BUR) San Francisco, CA (SFO) Camarillo, CA (CMA) San Jose International, CA (SJC)

Carlsbad Palomar, CA (CRQ) San Jose Reid Hillview, CA (RHV) Chico, CA (CIC) San Luis Obispo, CA (SBP) Chino, CA (CNO) Santa Ana/Orange County, CA (SNA) Concord, CA (CCR) Santa Barbara, CA (SBA) El Monte, CA (EMT) Santa Maria Public, CA (SMX)

G-1 FAA TOWERED AIRPORTS

Santa Monica, CA (SMO) Sanford, Fl (SFB) Santa Rosa Sonoma County, CA (STS) Sarasota Bradenton, FL (SRQ) South Lake Tahoe, CA (TVL) St. Petersburg Clearwater, FL (PIE) Stockton, CA (SCK) St. Petersburg Whitt, FL (SPG) Torrance Municipal, CA (TOA) Tallahassee, FL (TLH)

Van Nuys, CA (VNY) Tamiami, FL (TMB) Aspen Pitkin County, CO (ASE) Tampa International, FL (TPA) Broomfield Jefferson County, CO (BJC) Vero Beach, FL (VRB) Colorado Springs, CO (COS) West Palm Beach, FL (PBI) Denver Stapleton Int'l., CO (DEN) Albany, GA (ABY)

Deiý;ver/Centennial, CO (APA) Atlanta DeKalb Peachtree, GA (PDK) Grand Junction, CO (GJT) Atlanta Fulton County, GA (FTY) Pueblo, CO (PUB) Atlanta International, GA (ATL) Bridgeport, CT (BDR) Augusta, GA (AGS) Danbury Municipal, CT (DXR) Columbus, GA (CSG)

Groton/New London, CT (GON) Macon Lewis B. Wilson, CA (MCN) Hartford Brainard, CT (HFD) Savannah Municipal, GA (SAV) New Haven, CT (HVN) Hilo General Lyman Field, HI (ITO) Windsor Locks, CT (BDL) Honolulu, HI (HNL) Wilmington Greater Wilmington, DE (ILG) Kahului, HI (OGG)

Washington National, DC (DCA) Kona Ke Ahole, HI (KOA) Craig Field .Tacksonville, FL (CRG) Lihue, HI (LIH) Daytona Beach, FL (DAB) Molokai, HI (MKK) Fort Lauderdale, FL (FLL) Boise, ID (BOI) Fort Lauderdale Executive, FL (FXE) Idaho Falls Fanning Field, ID (IDA)

Fort Myers Page Field, FL (FMY) Lewiston, ID (LWS) Fort Myers Regional, FL (RSW) Pocatello, ID (PIH) Fort Pierce, FL (FPR) Twin Falls, ID (TWF) Gainesville, FL (GNV) Alton St. Louis Regional, IL (ALN) Hollywood, FL (HWO) Aurora Municipal, IL (ARR)

Jacksonville International, FL (JAX) Bloomington/Normal, IL (BMI) Key West, FL (EYW) Carbondale, IL (MDH) Melbourne, FL (MLB) Champaign University of Illinois, IL (CMI) Miami International, FL (MIA) Chicago Du Page, IL (DPA) Opa Locka, FL (OPF) Chicago Meigs, IL (CGX)

Orlando Executive, FL (ORL) Chicago Midway, IL (MDW) Orlando International Airport, FL (MCO) Chicago O'Hare International, IL (ORD) Panama City Bay County, FL (PFN) Chicago Palwaukee, IL (PWK) Pensacola, FL (PNS) Decatur, IL (DEC) Pompano Beach Airpark, FL (PMP) East St. Louis State Park, IL (CPS) Moline, IL (MLI)

c-2 FAA TOWERED AIRPORTS

Peoria, IL (PIA) Bedford, MA (BED) Rockford, IL (RFD) Beverly Muncipal, MA (BVY) Springfield Capital, IL (SPI) Boston Logan, MA (BOS) Bloomington Monroe County, IN (BMG) Hyannis, MA (HYA) Evansville, IN (EVV) Lawrence, MA (LWN)

Fort Wayne, IN (FWA) Nantucket Memorial, MA (ACK) Indianapolis International, IN (IND) New Bedford, MA (EWB) Lafayett Purdue University, IN (LAF) Norwood, MA (OWD) Muncie Delaware County, IN (MIE) Westfield, MA (BAF) South Bend, IN (SBN) Worcester, MA (ORH)

Terre Haute, IN (HUF) Ann Arbor Municipal, MI (ARB) Cedar Rapids, IA (CID) Battle Creek, MI (BTL) Des Moines Municipal, IA (DSM) Detroit City, MI (DET) Dubuque, IA (DBQ) Detroit Metro Wayne County, MI (DTW) Sioux City Municipal, IA (SUX) Detroit Willow Run, MI (YIP)

Waterloo, IA (ALO) Flint Bishop, MI (FNT) Hutchinson, KS (HUT) Grand Rapids, MI (GRR) Olathe, KS (OJC) Jackson Reynolds Municipal, MI (JXN) Salina, KS (SLN) Kalamazoo, MI (AZO) Topeka Forbes Field, KS (FOE) Lansing, MI (LAN)

Wichita Mid Continent, KS (ICT) Muskegon, MI (MKG) Cincinnati Greater, KY (CVG) Pontiac, MI (PTK) Lexington, KY (LEX) Saginaw Tri City, MI (MBS) Louisville Bowman, KY (LOU) Traverse City, MI (TVC) Louisville Standiford, KY (SDF) Duluth, MN (DLH)

Alexandria, LA (ESF) Minneapolis Crystal, MN (MIC) Baton Rouge Ryan Field, LA (BTR) Minneapolis Flying Cloud, MN (FCM) Houma, LA (HUM) Minneapolis St. Paul Int'l., MN (MSP) Lafayette, LA (LFT) Rochester, MN (RST) Lake Charles, LA (LCH) St. Paul, MN (STP)

Monroe, LA (MLU) Greenville Municipal, MS (GLH) New Orleans Lakefront, LA (NEW) Gulfport, MS (GPT) New Orleans Moisant, LA (MSY) Jackson Hawkins, MS (HKS) Shreveport, LA (SHV) Jackson Municipal Airport, MS (JAN) Shreveport Downtown, LA (DTN) Meridian Key, MS (MEI)

Bangor International, ME (BGR) Columbia Regional, MO (COU) Portland, ME (PWM) Joplin, MO (JLN) Baltimore Washington Int'l, MD (BWI) Kansas City International, MO (MCI) Camp Springs Andrews AFB, MD (ADW) Kansas City Municipal, MO (MKC) Hagerstown, MD (HGR) Springfield, MO (SGF)

G-3 FAA TOWERED AIRPORTS

St. Joseph, MO (STJ) Charlotte Douglas, NC (CLT) St. Louis International, MO (STL) Fayetteville Grannis, NC (FAY) St. Louis Spirit of St. Louis, MO (SUS) Greensboro Regional, (GSO) Billings, MT (BIL) Kinston, NC (ISO) Great Falls, MT (GTF) Raleigh Durham, NC (RDU)

Helena, MT (HLN) Wilmington New Hanover County, NC (ILM) Missoula, MT (MSO) Winston Salem, NC (INT) Grand Island, NE (GRI) Bismarck, ND (BIS) Lincoln Municipal, NE (LNK) Fargo Hector Field, ND (FAR) Omaha, NE (OMA) Grand Forks International, ND (CFK)

Las Vegas McCarran Int'l, NV (LAS) Minot International, ND (MOT) North Las Vegas, NV (VGT) Akron Canton Regional, OH (CAK) Reno International, NV (RNO) Cincinnati Lunken, OH (LUK) Lebanon, NH (LEB) Cleveland Burke Lakefront, OH (BKL) Manchester, NH (MHT) Cleveland Hopkins Int'l, OH (CLE)

Atlantic City, NJ (ACY) Columbus Ohio State, OH (OSU) Caldwell, NJ (CDW) Dayton, OH (DAY) Morristown, NJ (MMU) Mansfield Lahm Municipal, OH (MFD) Newark, NJ (EWR) Port Columbus International, OH (YNG) Teterboro, NJ (TEB) Toledo Express, OH (TOL)

Trenton, NJ (TTN) Youngstown, OH (YNG) Albuquerque Int'l, NM (ABQ) Clinton Sherman, OK (CSM) Roswell, NM (ROW) Lawton Municipal, OK (LAW) Santa Fe, NM (SAF) Oklahoma City Wiley Post, OK (PWA) Albany County, NY (ALB) Oklahoma City Will Rogers, OK (OKC)

Binghamton Broome County., NY (BGM) Tulsa International, OK (TUL) Buffalo International, NY (BUF) Tulsa Riverside, OK (RVS) Elmira, NY (ELM) Eugene, OR (EUG) Farmingdale, NY (FRG) Hillsboro, OR (HIO) Islip MacArthur, NY (ISP) Klamath Falls, OR (LMT)

Ithaca Tompkins County, NY (ITH) Medford Jackson County, OR (MFR) John F. Kennedy International, NY (JFK) Portland International, OR (PDX) La Guardia, NY (LGA) Salem McNary Field, OR (SLE) Niagara Falls, NY (lAG) Troutdale, OR (TTD) Poughkeepsie Dutchess County, NY (POU) Allentown, PA (ABE)

Rochester Monroe County, NY (ROC) Capital City/Harrisburg, PA (CXY) Syracuse Hancock International, NY (SYR) Erie, PA (ERI) Utica, NY (UCA) Harrisburg International, PA (MDT) White Plains Westchester, NY (HPN) Lancaster, PA (LNS) Asheville, NC (AVL) North Philadelphia, PA (PNE)

G-4 I FAA TOWERED AIRPORTS

Philadelphia International, PA (PHL) San Angelo, TX (SJT) Pittsburgh Allegheny, PA (AGC) San Antonio International, TX (SAT) Pittsburgh Greater International, PA (PIT) San Antonio Stinson, TX (SSF) Reading, PA (RDG) Tomball D. W. Hooks, TX (DWH) Wilkes Barre, PA (AVP) Tyler, TX (TYR)

Williamsport, PA (IPT) Waco Municipal, TX (ACT) Providence, RI (PVD) Ogden Municipal, UT (OGD) Charleston AFB Municipal, SC (CHS) Salt Lake City Int'l, UT (SLC) Columbia Metropolitan, SC (CAE) Burlington International, VT (BTV) Florence City, SC (FLO) Charlottesville Albemarle, VA (CHO)

Greenville Municipal, SC (GMU) Lynchburg, VA (LYH) Greer, SC (GSP) Newport News, VA (PHF) Rapid City, SD (RAP) Norfolk International, VA (ORF) Sioux Falls Foss Field, SD (FSD) Richmond Byrd Int'l, VA (RIC) Bristol Tri City, TN (TRI) Roanoke, VA (ROA)

Chattanooga, TN (CHA) Washington Dulles Int'l, VA (IAD) Knoxville McGhee Tyson, TN (TYS) St. Croix Alex Hamilton, VI (STX) Memphis International, TN (MEM) St. Thomas H.S. Truman, VI (STT) Nashville Metropolitan, TN (BNA) Everett Paine Field, WA (PAE) Abilene, TX (ABI) Moses Lake Grant, WA (MWH)

Amarillo, TX (AMA) Olympia, WA (OLM) Austin, TX (AUS) Pasco Tri Cities, WA (PSC) Beaumont Port Arthur, TX (BPT) Renton, WA (RNT) Brownsville International, TX (BRO) Seattle Boeing, WA (BFI) College Station, TX (CLL) Seattle Tacoma Int'l, WA (SEA)

Corpus Christi, TX (CRP) Spokane Felts Field, WA (SFF) Dallas Addison, TX (ADS) Spokane International, WA (GEG) Dallas Love Field, TX (DAL) Tacoma Narrows, WA (TIW) Dallas Redbird, TX (RBD) Walla Walla, WA (ALW) Dallas/Ft. Worth Int'l, TX (DFW) Yakima Air Terminal, WA (YKM)

El Paso International, TX (ELP) Charleston, WV (CRW) Fort Worth Meacham, TX (FTW) Clarksburg Benedum, WV (CKB) Fort Worth/Alliance, TX (AFW) Huntington, WV (HTS) Harlingen Industrial AP, TX (HRL) Morgantown, WV (MGW) Houston Hobby, TX (HOU) Parkersburg Wood County, W' (PKB)

Houston Intercontinental, TX (IAH) Wheeling, WV (HLG) Longview, TX (GGG) Appleton, WI (ATW) Lubbock, TX (LBB) Green Bay Austin Straubel, WI (CRB) McAllen, TX (MFE) Janesville, WI (.IVI) Midland, TX (MAF) Lacrosse, WI (LSE)

G-5 FAA TOWERED AIRPORTS

Madison, WI (MSN) Cheyenne, WY (CYS) Milwaukee Mitchell, WI (MKE) San Juan International, PR (SJU) Milwaukee Timmerman, WI (MWC) San Juan Isla Grande, PR (SIC) Oshkosh Wittman Field, WI (OSH) Kwajalein AAF, WK (KWA) Casper, WY (CPR) Pago Pago International, AS (TUT)

G-6 Appendix H

CONTRACT TOWERS

1. Flagstaff, Arizona (FLG)

2. Pacoima/Whitman, California (WHP)

3. Lakeland, Florida (LAL)

4. Valdosta Municipal, Georgia (VLD)

5. Halley, Idaho (SUN)

6. Marion Williamson County, Illinois (MWA)

7. Waukegan, Illinois (UGN)

8. Topeka-Phillip Ballard, Kansas (TOP)

9. Owensboro-Daviees County, Kentucky (OWB)

10. Paducah Barkley Field, Kentucky (PAH)

11. New Iberia, Louisiana (ARA)

12. Martha's Vineyard, Massachusetts (MVY)

13. Cape Girardeau, Missouri (CGI)

14. Nashua, New Hampshire (ASH)

15. Farmington Municipal, New Mexico (FMN)

16. Hobbs Lea County, New Mexico (HOB)

H-1 CONTRACT TOWERS (Continued)

17. Cleveland-Cuyahoga County, Ohio (CGF)

18. Ardmore Municipal, Oklahoma (ADM)

19. Clinton Sherman, Oklahoma (CSM)

20. Enid Woodring Municipal, Oklahoma (WDG)

21. Pendleton, Oregon (PDT)

22. Myrtle Beach, South Carolina (CRE)

23. Smyrna, Tennessee (MOY)

24. Laredo, Texas (LRD)

25. Bellingham, Washington (BLI)

26. Lewisburg-Greenbrier, West Virginia (LWB)

27. Mosinee, Wisconsin (CWA)

H-2 Appendix I

TERMINAL CONTROL AREAS AND AIRPORT RADAR SERVICE AREAS

Birmingham, AL (BHM) Tallahassee, FL (TLH) Huntsville Madison County, AL (HSV) Tampa International, FL (TPA) Mobile Bates Field, AL (MOB) West Palm Beach, FL (PBI) Montgomery Dannelly Field, AL (MGM) Atlanta International, GA (ATL) Anchorage International, AK (ANC) Augusta, CA (AGS)

Phoenix Sky Harbor Int'l., AZ (PHX/P50*) Columbus, GA (CSG) Tucson, AZ (TUS/U90) Macon Lewis B. Wilson, CA (MCN) Fort Smith Municipal, AR (FSM) Savannah Municipal, GA (SAV) Little Rock Adams Field, AR (LIT) Honolulu, HI (HNL) Burbank, CA (BUR/B90*) Honolulu, HI (ZHN)

El Toro, CA (NZJ)* Kahului, HI (OGG) Fresno Air Terminal, CA (FAT) Boise, ID (BOI) Los Angeles Int'l, CA (LAX/L56*) Champaign Univ. of Illinois, IL (CMI) Monterey, CA (MRY) Chicago Midway, IL (MDW) Oakland International, CA (OAK/090*) Chicago O'Hare Int'l, IL (ORD/C90*)

Ontario, CA (ONT/040*) Moline, IL (MLI) Palm Springs Municipal, CA (PSP) Peoria, IL (PIA) Sacramento Metro, CA (SME/MCC*) Rockford, IL (RFD) San Diego Lindberg, CA (SAN/NKX*) Springfield Capital, IL (SPI) San Francisco, CA (SFO) Evansville, IN (EVV)

San Jose International, CA (SJC) Fort Wayne, IN (FWA) Santa Ana/Orange County, CA (SNA) Indianapolis International, IN (IND) Santa Barbara, CA (SBA) South Bend, IN (SBN) Colorado Springs, CO (COS) Cedar Rapids, IA (CID) Denver Stapleton Int'l, CO (DEN/D84*) Des Moines Municipal, IA (DSM)

Hartford Bradley Int'l, CT (BDL/Y90*) Wichita Mid Continent, KS (ICT) Washington National, DC (DCA) Cincinnati Greater, KY (CVG) Daytona Beach, FL (DAB) Lexington, KY (LEX) Fort Lauderdale, FL (FLL) Louisville Standiford, KY (SDF) Fort Myers Regional, FL (RSW) Baton Rouge Ryan Field, LA (BTR)

Jacksonville International, FL (JAX) Lafayette, LA (LFT) Miami International, FL (MIA) Lake Charles, LA (LCH) Orlando Int'l Airport, FL (MCO) Monroe, LA (MLU) Pensacola, FL (PNS/P31*) New Orleans Moisant, LA (MSY) Sarasota Bradenton, FL (SRQ) Shreveport, LA (SHV)

I-i TERMINAL CONTROL AREAS AND AIRPORT RADAR SERVICE AREAS

Bangor International, ME (BGR) Wilmington New Hanover County, NC (ILM) Portland, ME (PWM) Fargo Hector Field, ND (FAR) Baltimore Washington Int'l, MD (BWI/B95*) Akron Canton Regional, OH (CAK) Camp Springs Andrews AFB, MD (ADW) Cleveland Hopkins Int'l., OH (CLE) Boston Logan, MA (BOS/A90*) Columbus International, OH (CMH)

Detroit Metro Wayne County, MI (DTW/D21*) Dayton, 01 (DAY) Flint Bishop, MI (FNT) Toledo Express, OH (TOL) Grand Rapids, MI (GRR) Youngstown, OH (YNG) Kalamazoo, MI (AZO) Oklahoma City Will Rogers, OK (OKC) Lansing, MI (LAN) Tulsa International, OK (TUL)

Muskegon, MI (MKG) Portland International, OR (PDX/P80*) Saginaw Tri City, MI (MBS) Allentown, PA (ABE) Minneapolis St. Paul, MN (MSP/M98*) Capital City/Harrisburg, PA (CXY) Gulfport, MS (GPT) Erie, PA (ERI) Jackson Municipal Airport, MS (JAN) Philadelphia International, PA (PHL)

Kansas City International, MO (MCI) Pittsburgh Greater Int'l, PA (PIT) St. Louis International, MO (STL/T75*) Wilkes Barre, PA (AVP) Billings, MT (BIL) Providence, RI (PVD/G90*) Great Falls, MT (GTF) Charleston AFB Municipal, SC (CHS) Lincoln Municipal, NE (LNK) Columbia Metropolitan, SC (CAE)

Omaha, NE (OMA/R90*) Greer, SC (GSP) Las Vegas McCarran Int'l., NV (LAS) Bristol Tri City, TN (TRI) Reno International, NV (RNO) Chattanooga, TN (CHA) Atlantic City, NJ (ACY) Knoxville McGhee Tyson, TN (TYS) Newark, NJ (EWR) Memphis International, TN (MEM)

Albuquerque International, NM (ABQ) Nashville Metropolitan, TN (BNA) Albany County, NY (ALB) Abilene, TX (ABI) Binghamton Broome County, NY (BGM) Amarillo, TX (AMA) Buffalo International, NY (BUF) Austin, TX (AUS) Elmira, NY (ELM) Beaumont Port Arthur, TX (BPT)

Griffiss AFB, NY (RME) Corpus Christi, TX (CRP) John F. Kennedy Int'l, NY (JFK/N90*) Dallas Love Field, TX (DAL) La Guardia, NY (LGA) Dallas/Ft. Worth Regional, TX (DFW/DIO*) Rochester Monroe County, NY (ROC) El Paso International, TX (ELP) Syracuse Hancock Int'l, NY (SYR) Houston Hobby, TX (HOU)

Asheville, NC (AVL) Houston Intercontinental, TX (IAH/190*) Charlotte Douglas, NC (CLT) Longview, TX (GCG) Fayetteville Grannis, NC (FAY) Lubbock, TX (LBB) Greensboro Regional, NC (GSO) Midland, TX (MAF) Raleigh Durham, NC (RDU) San Antonio International, TX (SAT)

1-2 TERMINAL CONTROL AREAS AND AIRPORT RADAR SERVICE AREAS

Salt Lake City Int'l., UT (SLC/S56*) Green Bay Austin Straubel, WI (GRB) Burlington International, VT (BTV) Madison, WI (MSN) Norfolk Regional, VA (ORF) Milwaukee Mitchell, WI (MKE) Richmond Byrd International, VA (RIC) Agana NAS, SP (GUM/ZUA*) Roanoke, VA (ROA) San Juan International, PR (SJU/ZSU)

Washington Dulles Int'l, VA (IAD) * Indicates that airport has terminal radar Seattle Tacoma Int'l, WA (SEA/S46*) approach control (TRACON) Spokane International, WA (GEC) Charleston, WV (CRW) Huntington, WV (HTS)

1-3 Appendix J

GLOSSARY OF TERMS

Air Carrier Operations -- Arrivals and District of Columbip, and other U.S. departures of air carriers certificated areas designated by the Federal Avi- in accordance with FAR Parts 121 and ation Administration: 127. 1. Large: 1.00 percent (4,283,192 passengers and over in CY 1991). Air Route Traffic Control Center (ARTCC) -- A facility established to 2. Medium: 0.25 percent to 0.999 per- provide air traffic control service to cent (between 1,070,798 and aircraft operating on an IFR flight 4,283,191 passengers in CY 1991). plan within controlled airspace and principally during the en route phase 3. Small: 0.05 percent to 0.249 per- of flight. When equipment capabilities cent (between 214,160 and 1,070,797 and controller workload permit, certain passengers in CY 1991). advisory/assistance services may be provided to VFR aircraft. 4. Nonhub: Less than 0.05 percent (fewer than 219,272 passengers in CY 1990). Air Taxi -- An air carrier certificated in accordance with FAR Part 135 and authorized to provide, on demand, pub- Air Travel Club -- An operator certifi- lic transportation of persons and pro- cated in accordance with FAR Part 123 perty by aircraft. Generally operates to engage in the carriage of members small aircraft "for hire" for specific who qualify for that carriage by pay- trips. ment of an assessment, dues, membership fees, or other similar remittance.

Air Traffic -- Aircraft operating in the air or on an airport surface, ex- Aircraft Contacted -- Aircraft with clusive of loading ramps and parking which the flight service stations have areas. established radio communications contact. One count is made for each en route landing or departing aircraft Air Traffic Hub -- Cities and Metro- contacted by a flight service station, politan Statistical Areas requiring regardless of the number of contacts aviation services. May include more made with an individual aircraft during than one airport. Communities fall the same flight. A flight contacting into four classes as determined by the five FSSs would be counted as five air- community's percentage of the total craft contacted. enplaned passengers by scheduled air carriers in the 50 United States, the

J-l Aircraft Handled -- See IFR AIRCRAFT All-Cargo Carrier -- Au air carrIe-r HANDLED. certificctted in accordan-( e wit}h FAR Part 121 to provide schedualed air Aircraft Operations -- The airborne freight, express, and mail transpor- movement of aircraft in controlled or tation over specified routes, as w,-! noncontrolled airport terminal areas, as to conduct nonscheduled operations and counts at en route fixes or other that may include passengers. points where counts can be made. There are two types of operations: local and itinerant. Approach Control Facility -- A terminal air traffic control facility providing 1. LOCAL OPERATIONS are performed by approach control service. aircraft that:

(a) operate in the local traffic Approach Control Service -- Air traffic pattern or within sight of control service provided by an approach the airport; control facility for arriving and departing VFR/IFR aircraft and, on occa- (b) are known to be departing for sion, for enroute aircraft. At some or arriving from flights in airports not served by an approach con- local practice areas located trol facility, the ARTCC provides lim- within a 20-mile radius of ited approach control service. the airport;

2. ITINERANT OPERATIONS are all air- ASMs -- See AVAILABLE SEAT MILES. craft operations other than local operations. Available Seat Miles (ASMs) -- The aircraft miles flown in a flight stage, Airport Advisory Service -- A service multiplied by the number of seats provided by flight service stations at available on that stage for revenue airports not served by a control tower, passenger use. This service provides information to arriving and departing aircraft con- cerning wind direction/speed, favored Business Transportation -- Any use of runway, altimeter setting, pertinent- an aircraft, not for compensation or known traffic/field conditions, airport hire, by an individual for transpor- taxi routes/traffic patterns, and tation required by the business in authorized instrument approach proce- which the individual is engaged. dures. This information is advisory and does not constitute an ATC clearance. Center -- See AIR ROUTE TRAFFIC CONTROL CENTER. Air Traffic Control Tower -- A terminal facility that through the use of air/ground communications, visual Center Area -- The specified airspace signaling, and other devices, provides within which an air route traffic con- ATC services to airborne aircraft oper- trol Center (ARTCC) provides air traf- ating in the vicinity of an airport and fic control and advisory service. to aircraft operating on the movement area.

J-2 Center Radar Approach Control (CERAP) certificated in accordanc, with FAi? -- A combined air route traffic control Part 135. center (ARTCC) and a terminal radar approach control facility (TRACON). Direct User Access Terminal Swstem -- CERAP -- See CENTER RADAR APPROACH An automated pilot self-briefing and CONTROL. flight plan filing system. For pilotfi with access to a computer, modem, and touch telephone, the system provides Commercial Air Carrier -- An air car- direct access to a national weather rier certificated in accordance with data base and the ability to file FAR Part 121 or 127 to conduct sched- flight plans without contact with a uled services on specified routes, flight service station. These air cirriers may also provide nonscheduled or charter services as a secondary operation. Four carrier Domestic Operations -- All air carrier groupings have been designated for operations having destinations within statistical and financial data aggre- the 50 United States, the District of gation and analysis. Columbia, Puerto Rico, and the U.S Virgin Islands. 1. MAJORS: Air carriers with annual operating revenues greater than $1 billion, DUATS -- See DIRECT USER ACCESS TERMI- NAL SYSTEM 2. NATIONALS: Air carriers with annual operating revenues between $100 million and $1 billion. Executive Transportation -- Any use of an aircraft, not for compensation or 3. LARGE REGIONALS: Air carriers with hire, by a corporation, company or annual operating revenues between other organization for the purpose of $10 million and $99,999,999. transporting its employees and/or pro- perty, and employing professional 4. MEDIUM REGIONALS: Air carriers with pilots for the operation of the air- annual operating revenues less than craft. $10 million.

FAA -- Federal Aviation Administration. Common iFR Room -- A highly automated terminal radar control facility. It provides terminal radar service in an Facility -- See AIR TRAFFIC CONTROL area encompassing more than one major TOWER. airport that accommodates instrument flight operations. Flight Plan -- Prescribed information relating to the intended flight of an Commuter Air Carrier -- An air carrier aircraft that is filed orally or in certificated in accordance with FAR writing with a flight service station Part 135 or 121 that operates aircraft or an air traffic control facility. with a maximum of 60 seats, and that provides at least 'ive scheduled round trips per week bE tween two or more Flight Service Station (FSS) -- Air points, or that carries mail. Traffic Service facilities within the National Airspace System that provide Commuter/Air Taxi Operations -- Arri- preflight pilot briefings and en route vals and departures ot air carriers communications with IFR flights; assist

J-3 lost IFR/VFR aircraft; assist aircraft Hub -- See AIR TRAFFIC HUB. having emergencies; relay ATC clear- ances; originate, classify, and disseminate Notices to Airmen (NOTAMs); IFR -- See INSTRUMENT FLIGHT RULES. broadcast aviation weather and NAS information; receive and close flight plans; monitor radio NAVAIDS; notify IFR Aircraft Handled -- The number of search and rescue units of missing VFR IFR departures multiplied by two, plus aircraft; and operate the national the number of IFR overs. This defini- weather teletypewriter systems. In tion assumes that the number of depar- addition, at selected locations, FSSs tures (acceptances, extensions, and take weather observations, issue air- originations of IFR flight plans) is port advisories, administer airmen equal to the number of landings (IFR written examinations, and advise Cus- flight plans closed). toms and Immigration of transborder flights. IFR Departures -- An I7P departure includes IFR flights that: Flight Services -- See TOTAL FLIGHT SERVICES. 1. originate in an ARTCC's area;

2. are extended by the ARTCC; or Foreign Flag Air Carrier -- An air carrier other than a U.S. flag air 3. are accepted by the ARTCC under carrier in international air trans- sole enroute clearance procedures. portation. "Foreign air carrier" is a more inclusive term than "foreign flag air carrier," including those non-U.S. IFR Overs -- An IFR flight that origi- air carriers operating solely within nates outside the ARTCC area and passes their own domestic boundaries. In through the area without landing. practice, the two terms are used interchangeably. IFSS -- See INTERNATIONAL FLIGHT SER- VICE STATION. FSS -- See FLIGHT SERVICE STATION.

Instructional Flying -- Any use of air- General Aviation -- All civil aviation craft for the purpose of formal in- activity except that of air carriers struction with the flight instructor certificated in accordance with FAR aboard, or with the maneuvers on the Parts 121, 123, 127, and 135. The particular flight(s) specified by the types of aircraft used in general avi- flight instructor. ation (GA) activities cover a wide spectrum from corporate multi-engine jet aircraft piloted by professional Instrument Approach -- A series of pre- crews to amateur-built single engine determined maneuvers for the orderly piston acrobatic planes, balloons, and transfer of an aircraft under instru- dirigioles. ment flight conditions from the beginning of the initial approach to a landing, or to a point from .hich a General Aviation Operations -- Arrivals landing may be made visually. An in- and departures of all civil aircraft, strument approach is prescribed and except those classified as air carrier approved for a specific airport by com- and commuter/air taxi. petent authority (FAR Part 91).

J-4 Instrument Flight Rules (IFR) -- Rules Military Operations -- Arrivals and governing the procedures for conducting departures of aircraft not classified instrument flight, as civil.

Instrument Operation -- An aircraft Nationals -- See COMMERCIAL AIR operation in accordance with an IFR CARRIER. flight plan or an operation where IFR separation between aircraft is provided by a terminal control facility or air Personal/Pleasure Flying -- Any use of route traffic control center. an aircraft for personal purposes not associated with a business or pro- fession, and not for hire. This in- International and Territorial Opera- cludes maintenance of pilot profi- tions -- The operation of aircraft ciency. flying between the 50 United States and foreign points, between the 50 United States and U.S. possessions and terri- Pilot Briefing -- A service provided by tories, and between two foreign points, the flight service station to assist Includes both the combination passen- pilots in flight planning. Briefing ger/cargo and the all-cargo carriers items may include weather information, engaged in international and terri- NOTAMs, military activities, flow con- torial operations. trol information, and other items as requested.

International Flight Service Station (IFSS) -- A central operations facility Radar Air Traffic Control Facility in the flight advisory system, manned (RATCF) -- An air traffic control fa- and equipped to control aeronautical cility, located at a U.S. Navy (USN) or point-to-point telecommunications and Marine Corps (USMC) air station, uti- air/ground telecommunications with lizing surveillance and, normally, pre- pilots operating over international cision approach radar and air/ground territory or waters, providing flight communication equipment to provide ap- plan filing, weather information, proach control services to aircraft search and rescue action, and other arriving, departing, and transiting the flight assistance operations. airspace controlled by the facility. The facility may be operated by t+. FAA, the USN and the FAA, the USN. or Itinerant Operations -- See AIRCRAFT the USMC. Service may be provided to OPERATIONS. both civil and military airports

Large Regionals -- See COMMERCIAL AIR Radar Approach Control (RAPCON) -- An CARRIER. air traffic control facility, located at a U.S. Air Force (USAF) base, utilizing surveillance and, normally, pre- Local Operations -- See AIRCRAFT OPERA- cision approach radar and air/ground TIONS. communication equipment to provide approach control services to aircraft arriving, departing, and transiting the Majors -- See COMMERCIAL AIR CARRIER. airspace controlled by the facility. The facility may be operated by the FAA, or the USAF. Service may be pro- Medium Regionals -- See COMMERCIAL AIR vided to both civil and military air- CARRIER, ports.

J-5 Radio Contact -- The initial radio in revenue service. Revenue passenger call-up to a flight service station by miles are computed by summation of the enroute aircraft; a complete inter- products of the revenue aircraft miles change of information and a termination flown during a flight stage, InuiLipiied of the contact. by the number of revenue passengers carried on that flight stage.

RAPCON -- See RADAR APPROACH CONTROL. Revenue Ton Mile (RTM) -- One ton of revenue traffic transported one mile. RATCF -- See RADAR AIR TRAFFIC CONTROL FACILITY. RPM -- See REVENUE PASSENGER MILE.

Registered Active General Aviation Aircraft -- A civil aircraft registered RSPA -- See RESEARCH AND SPECIP1L with the FAA that has been flown one or PROGRAMS ADMINISTRATION more hours during the previous calendar year. Excluded are aircraft owned and operated in regularly scheduled, non- RTM -- See REVENUE TON MILE. scheduled, or charter service by commercial air carriers and aircraft in excess of 12,500 pounds maximum gross Secondary Airport -- An airport re- takeoff weight, and owned and operated ceiving approach control service as a by a commercial operator certificated satellite to a primary approach control by the FAA to engage in intrastate com- facility, or one at which control is mon carriage, exercised by the approach control facility under tower en route control procedures. Research and Special Programs Adminis- tration (RSPA) -- The Research and Special Programs Administration of the Supplemental Air Carrier -- An air car- U.S. Department of Transportation. rier certificated in accordance with Responsible for the collection of air FAR Part 121, and providing nonsched- carrier traffic and financial data on uled or supplemental carriage of pas- Form 41 that was collected formerly by sengers or cargo, or both, in air the Civil Aeronautics Board. transportation. Also referred to as nonscheduled or charter air carriers.

Revenue Passenger Enplanements -- The total number of passengers boarding Terminal Radar Approach Control aircraft. Includes both originating (TRACON) -- An FAA traffic control fa- and connecting passengers. cility using radar and air/ground communications to provide approach control services to aircraft arriving, de- Revenue Passenger Load Factor -- Rev- parting, or transiting the airspace enue passenger-miles as a percent of controlled by the facility Service available seat-miles in revenue passen- may be provided to both civil and mili- ger services, i.e., the proportion of tary aircraft. A TRACON is similar to aircraft seating capacity that is actu- a RAPCON (USAF), RATCF (USN), and ARAC ally sold and utilized. (Army).

Revenue Passenger Mile (RPM) -- One Total Flight Services -- The sum of revenue passenger transported one mile flight plans originated and pilot

J-6 briefs, multiplied by two, plus the scheduled operations over a specified number of aircraft contacted. No cred- route between the United States it is allowed for airport advisories. (and/or its terri-tories) and one or more foreign countries.

Total Cperations -- All arrivals and departures performed by military, gen- VFR -- See VISUAL FLIGHT RULES. eral aviation, commuter/air taxi, and air carrier aircraft. VFR Tower -- An airport traffic control tower that does not provide approach Tower -o See AIR TRAFFIC CONTROL TOWER. control service.

TRACON -- See TERMINAL RADAR APPROACH Visual Flight Rules (VFR) -- Rules that CONTROL. govern the procedures for conducting flight under visual conditions. Also used in the United States to indicate U.S. Flag Carrier -- Air carrier weather conditions that are equal to or holding a certificate issued by the greater than minimum VFR requirements. U.S. Department of Transportation, and Used by pilots and controllers to in- approved by the President, dicate type of flight plan. authorizing the carrier to provide

J-7