Speech – “Steady Growth Projected for Domestic and International Air Travel Over the Next 20 Years”

by King Aircraft Title, Inc. on March 6, 2013

“Steady Growth Projected for Domestic and International Air Travel Over the Next 20 Years” Michael Huerta, Washington, DC March 6, 2013

AAAE Forecast Conference

Thank you, Chip (Barclay, CEO of AAAE), for the introduction.  It is a pleasure to be here, and I would like to express my gratitude to you and your colleagues at AAAE for hosting and arranging this conference.

We all know the importance of aviation to America and the global economy.  Aviation fuels jobs and trade, and it connects us to destinations near and far.  The forecast we released today shows that aviation will continue to experience steady, moderate growth.  We expect aviation to expand both domestically and internationally over the coming decades.
Our forecast predicts the demand for aviation over the next 20 years, both in terms of volume of operations and the number of passengers expected to fly on U.S. carriers.  This is important, because it helps us determine our infrastructure needs.

The aviation industry continues to show resilience even during difficult economic times.  Domestic and international activity of U.S. carriers increased by about one percent in 2012.  And traffic volume for U.S. carriers is expected to rise by more than 75 percent in the next two decades.  We measure this by revenue passenger miles – one passenger paying to travel one mile.
Last year, 737 million people flew on U.S. carriers, and we anticipate that number to hold steady this year.  Our future outlook shows continued positive growth.  In fact, we can expect roughly 400 million more people flying 20 years from now, an increase equal to more than today’s U.S. population.  You will hear more details later today about the specific trends, analyses, and estimates in this year’s forecast report.

I should note at this point that our forecast is an unconstrained forecast — in other words it does not take into account capacity constraints that may exist in the system.  And, unfortunately, some of those constraints are likely to be imposed as a result of the sequester.  The forecast assumed that the U.S. fiscal crisis would be resolved.
The sequester was implemented last Friday and the FAA will have to cut $637 million this fiscal year.  Almost all of our FAA accounts are involved.  Therefore, this will affect nearly all of our employees.

These cuts will need to be distributed proportionately across all budget line items in the affected accounts.  This significantly decreases our flexibility in managing the budget reductions.  However, the Airport Improvement Program – AIP – is exempt from the sequester.  So, the AIP and staff working on it will carry on with business as usual.

As you’ve heard from Secretary LaHood, we are looking at all options to reduce costs.  We have instituted a hiring freeze, and have begun to cut contracts, travel and other items.  But, to reach the large figure we need to cut, we have little choice but to make up the rest through furloughing employees.  This is not something that we take lightly.

We are sending letters to nearly all of the FAA’s 47,000 employees this week, notifying them that they will be furloughed.  We anticipate each affected employee could be furloughed for approximately one day every two weeks starting in April until the end of September.
Under a furlough action, controllers would work fewer hours, and flights to major cities like New York,ChicagoandSan Francisco could experience delays up to 90 minutes during peak hours.  This will have ripple effects throughout the United States.  Budget cuts will also delay preventative maintenance and quick repair of certain equipment.

As we begin implementation of the requirements of the sequester, we are also considering the elimination of midnight shifts at more than 60 air traffic control towers across the U.S.  And, we are contemplating the closure of a large number of the 238 air traffic control towers that have fewer than 150,000 total flight operations.  The towers on this list also have fewer than 10,000 commercial flight operations per year.

It is my hope, and the hope of everyone at the Department of Transportation that our leaders can work together to rally around the improvements that we need for our nation’s air transportation system.
We must keep in mind that this forecast is for the next 20 years.  The forecast results show that our world is becoming more and more interconnected every day.  New technologies, more open markets, and growing prosperity around the globe have spawned more air travel.  The report reflects this.  We predict higher growth in flights between the United States and other countries.
We anticipate this continued trend of growth in our international traffic, especially with AsiaandLatin America.  In the emerging economies in these regions, there is a growing middle class that has the means for air travel.  Many international visitors come to the United States for business, education, and tourism.
This growth in international traffic calls for continued collaboration with our foreign partners.  The FAA continues to work closely with other countries and regions as we all develop new technologies, share ideas, and harmonize programs.  Not only are we working with our international partners to bridge gaps in technologies, but we are also doing more in the area of safety harmonization and data sharing.  For example, under the safety agreement we have with Europe, we are able to better streamline safety oversight between the United States and the European Union.

And, there is consensus from many of our international partners that air traffic modernization is necessary.  With the expected growth in the international market, it is especially important to continue on the global path of modernization.  We all seek a safe and seamless global aviation system.
It is important that we here in the United States stay the course with NextGen, despite the fiscal challenges.  We are moving from an aviation system of ground-based navigation aids to the satellite-based system of tomorrow.  This will help us move more air traffic efficiently, while reducing flight times and emissions.  We are already seeing the benefits around the country.

With NextGen, more precise departure and arrival paths will optimize routing and operations, especially for congested metropolitan areas.

Increased use of Performance Based Navigation, or PBN, will give aircraft more freedom in the sky to choose more direct and fuel-efficient routes.  Not only does PBN give us benefits for domestic flights, it will also make those long international flights more efficient.
In metropolitanWashington, D.C, aircraft are flying new NextGen routes named to honor our troops and commemorate September 11.  These direct routes cut flight miles and reduce costly level-offs.  We anticipate fuel savings of $2.3 million per year—and even more savings across the country as more users take advantage of NextGen.

And in Seattle, as part of our Greener Skies initiative, airlines are using precision routes to shave four to eight minutes off flight times, providing projected annual savings of more than $13 million.

In Atlanta,we are using new NextGen departure routes to improve operations at the world’s busiest airport. Hartsfield-Jackson can clear an additional 10 planes per hour thanks to these invisible improvements to our highways in the sky.  This reduces the amount of time planes wait to take off.  In fact, we estimate PBN saved customers 700,000 minutes of waiting, or a total of 1.3 years waiting in line to take-off inAtlantalast year.

But under the sequester, arrivals into Atlantacould slow down.  Right now, Atlantacan handle triple arrivals, but that ability may be limited in light of air traffic controller furloughs.

NextGen brings more efficient operations in and around major metropolitan areas.  This is crucial given that our forecast predicts a higher growth rate at large airports than at medium and small ones.  These procedures save millions of gallons of fuel and reduce greenhouse gas emissions.  They will also help reduce congestion at our busiest airports throughout the country as the amount of air traffic grows.  And, consolidation of carriers may also place extra demand on major airports that are already stretched.
Forecast numbers may change from year-to-year, but the fact remains that we must modernize.  The cost of not transforming our system is greater than the cost of the actual upgrades.

Despite these uncertain political times, I am confident that the demand for aviation and its services will continue to grow, and that is why it is critical that we invest smartly. Our world will continue to be evermore interconnected, and aviation will continue to be a pillar of the global economy.  NextGen will help us meet the challenges that lie ahead.  We are seeing its benefits already, and will continue to do so in the coming years as it becomes an even more integral component of our aviation system.

In closing, let me state the obvious–even without the coming impacts of the sequester over the next few months–the U.S. aviation industry faces a number of challenges and opportunities in the next few years.  At the FAA, we recognize the choices we are making today will have impacts for decades to come.

We face some tough choices in our investment and operations of our airspace.  Let me assure you that we are committed to working with our stakeholders and employees on how we move forward.  It’s vital for us to work together to protect the great contribution that civil aviation makes to our nation.

Thank you for inviting me here to speak to you today.  I’d be happy to take any questions you may have.

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