March 31, 2009

FAA predicts sharp decline for airlines

The Federal Aviation Administration said the recession will slow U.S. air travel more than the shock of the Sept. 11, 2001, terrorist attacks.

The agency said U.S. airlines will see a 7.8 percent drop in travelers in 2009, CNN reported Tuesday.

The FAA said large airlines would see the worst of the decline with an 8.8 percent drop in passengers. Regional airlines will experience a 4.5 percent drop. Cargo business will likely decline 2.8 percent, the report said.

The dynamic does not favor a reduction in prices, however. As airlines reduce flight capacities to adjust to the downturn, there will be fewer flights, which will drive price increases.

I think business travel is down, Transportation Secretary Ray LaHood told CNN.

I think leisure travel is down, and I think people are just deciding if they don't need to fly, he said. If they can drive, that will be the alternative. But it's all as a result of a very lousy economy that all of us are facing.