Table of Contents Forecast Highlights (2020–2040) ................................................................................................1 Review of 2019 ...........................................................................................................................3 Glossary of Acronyms .................................................................................................................5 Acknowledgements .....................................................................................................................7 FAA Aerospace Forecasts ..........................................................................................................9 Economic Environment ..........................................................................................................10 U.S. Airlines...........................................................................................................................12 Domestic Market ................................................................................................................12 International Market ...........................................................................................................18 Cargo .................................................................................................................................22 General Aviation ....................................................................................................................24 FAA Operations .....................................................................................................................30 U.S. Commercial Aircraft Fleet ..............................................................................................32 Commercial Space ................................................................................................................34 Regulatory Safety Oversight Activities of FAA ....................................................................35 FAA’s Operations Forecast ................................................................................................37 Additional Factors Affecting Forecast Accuracy .................................................................39 Unmanned Aircraft Systems ..................................................................................................41 Questionnaire of Recreational/Model Registrations............................................................41 Trends in Recreational/Model Aircraft and Forecast...........................................................45 Trends in Commercial/Non-Model Aircraft and Forecast ....................................................49 Remote Pilot Forecast .......................................................................................................56 Larger UAS ........................................................................................................................59 Urban Air Mobility ..............................................................................................................61 Forecast Uncertainties ...........................................................................................................64 Appendix A: Alternative Forecast Scenarios ............................................................................68 Scenario Assumptions .......................................................................................................68 Alternative Forecasts .............................................................................................................73 Enplanements ....................................................................................................................73 Revenue Passenger Miles .................................................................................................74 Available Seat Miles ...........................................................................................................74 Load Factor .......................................................................................................................75 Yield ..................................................................................................................................76 Appendix B: FAA Forecast Accuracy .......................................................................................81 Appendix C: Forecast Tables ...................................................................................................83 Forecast Highlights (2020–2040) Since its deregulation in 1978, the U.S. com- 2019 were forecasted to fall to $53 in 2020, mercial air carrier industry has been charac- and our forecast assumes they will increase terized by boom-to-bust cycles. The volatility beginning in 2022 to reach $104 by the end that was associated with these cycles was of the forecast period. thought by many to be a structural feature of an industry that was capital intensive but Global economic conditions weakened in cash poor. However, the great recession of 2019 although the experience was consider- 2007-09 marked a fundamental change in ably different for the U.S. as compared to the the operations and finances of U.S Airlines. rest of the world. GDP growth in the U.S. Since the end of the recession in 2009, U.S. slowed from the strong rate in 2018 but re- airlines revamped their business models to mained above its estimated long-term trend, minimize losses by lowering operating costs, while in Europe, Germany and Italy flirted eliminating unprofitable routes, and ground- with recession and Asia saw high-growth ing older, less fuel-efficient aircraft. To in- China and India slow markedly. Political in- crease operating revenues, carriers initiated stability and trade wars dampened activity new services that customers were willing to but by the end of the year, those headwinds purchase and started charging separately for appeared to be lessening. In their place, services that were historically bundled in the however, the January 2020 coronavirus price of a ticket. The industry experienced (COVID-19) outbreak in China gained the an unprecedented period of consolidation world's attention and in February began ap- with three major mergers in five years. The pearing outside Asia. As of the preparation results of these efforts have been impres- of this forecast, the virus and its economic sive: 2019 marks the eleventh consecutive impacts were just emergent, and the range year of profitability for the U.S. airline indus- of possible outcomes too wide to include try. Looking forward, there is confidence that meaningfully in the forecast. U.S. airlines have finally transformed from a Global economic growth accelerates in 2021 capital intensive, highly cyclical industry to after slowing in 2019-20. Trade disputes an industry that generates solid returns on should be mending, the worst of Brexit un- capital and sustained profits. certainty should be past, Japan's tax-hike Fundamentally, over the medium and long shock should be fading, and oil prices, and term, aviation demand is driven by economic inflation generally, should be subdued. Over activity, and a growing U.S. and world econ- the early years of the 2020's, economies are omy provides the basis for aviation to grow expected to return to their long-run trend over the long run. The 2020 FAA forecast rates of growth. calls for U.S. carrier domestic passenger System traffic in revenue passenger miles growth over the next 20 years to average 2.0 (RPMs) is projected to increase by 2.5 per- percent per year. The uptick in passenger cent a year between 2020 and 2040. Do- growth since 2014 will continue into 2020 mestic RPMs are forecast to grow 2.3 per- driven by positive economic conditions in the cent a year while International RPMs are U.S. Oil prices averaged $60 per barrel in 1 forecast to grow significantly faster at 3.0 change annually). While steady growth in percent a year. System capacity as meas- both GDP and corporate profits results in ured by available seat miles (ASMs) is fore- continued growth of the turbine and rotorcraft cast to grow in line with the increases in de- fleets, the largest segment of the fleet – fixed mand. The number of seats per aircraft is wing piston aircraft continues to shrink over growing, especially in the regional jet market, the forecast. Against the marginally declin- where we expect the number of 50 seat re- ing fleet, the number of general aviation gional jets to fall to just a handful by 2030, hours flown is projected to increase by 16 replaced by 70-90 seat aircraft. percent (an average of 0.7 percent per year) during the same period, as growth in turbine, Although the U.S. economy saw solid growth rotorcraft, and experimental hours more than in 2019, economic activity around the world offset a decline in fixed wing piston hours. slowed, and labor costs rose, resulting in profits for U.S. airlines subsiding further from With increasing numbers of regional and 2016’s record levels. Nevertheless, the FAA business jets in the nation’s skies, fleet mix expects U.S. carrier profitability to remain changes, and carriers consolidating opera- steady as solid demand fed by a stable econ- tions in their large hubs, we expect increased omy offsets rising labor costs. Over the long activity growth that has the potential to in- term, we see a competitive and profitable avi- crease controller workload. Operations at ation industry characterized by increasing FAA and contract towers are forecast to grow demand for air travel and