FAA to examine health of air cargo industry

“To navigate the volatile operating environment, mainline carriers will continue to drive down their costs by better matching flight frequencies and/or aircraft gauge with demand,” said the authors of this year’s FAA Forecast.

By ·

When the 36th Annual Federal Aviation Administration’s (FAA) Forecast Conference convenes in Washington next week, shippers should expect to hear that profitability for U.S. carriers will hinge a stable environment for fuel prices.

“To navigate the volatile operating environment, mainline carriers will continue to drive down their costs by better matching flight frequencies and/or aircraft gauge with demand,” said the authors of this year’s FAA Forecast.

Analysts also noted that airlines must delay deliveries of newer aircraft and/or ground older aircraft, while pressuring regional affiliates to accept lower fees for contract flying.

At the same time, the 2010-2030 forecast predicts that aviation will continue to grow over the long term, despite current global economic conditions.

The report begins by observing that since 2000, U.S. airlines have dealt with the impacts of 9/11, the bankruptcy of four network carriers, record high fuel prices, the most serious economic downturn since the Great Depression. Furthermore, there was the heightened concerns about a
pandemic that turned into reality in 2009.

The level of activity and demand in the long term, however, is not expected to snap back to levels published in the previous FAA forecast. The most significant factor preventing recovery to prior forecast levels is the blow to the economy from the Great Recession.
“The recession led to an erosion of wealth, double-digit unemployment, declining corporate travel budgets, and close-fisted consumers, all of which contributed to a softening of demand,” said analysts.

A bright spot is on the horizon, however, they said. After four straight quarters of decline, the U.S. economy resumed growth in the fourth quarter of 2009, albeit driven by government stimulus packages that are winding down.

Brian Clancy, managing director, Logistics Capital & Strategy, LLC, will be addressing next weeks’ forum on the “Cargo” panel. From his perspective, the “value density” of goods will determine whether a recovery is under way.

“Some goods must really be shipped by air,” he said in an interview, “but that might not mean a sustainable trend will get underway. Drill bits for the oil industry, for example, and aircraft spare parts will remain a part of this mix. But just-in-time delivery for a great many other commodities has tapered off.”

http://www.faa.gov/


About the Author

Patrick Burnson
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
Reduce Order Processing Costs by 80%
Sales order automation software will seamlessly transform inbound emailed and printed purchase orders into electronic sales orders that can be automatically processed into your ERP system with 100% accuracy.
Download Today!
From the June 2016 Issue
In the wildly unstable ocean cargo carrier arena, three major consortia are fighting for market share, with some players simply hanging on for survival. Meanwhile, shippers may expect deployment shifts as a consequence of the Panama Canal expansion.
WMS Update: What do we need to run a WMS?
Supply Chain Software Convergence: Synchronization Realized
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Optimizing Global Transportation: How NVOCCs Can Use Technology to Operate More Profitably
Global transportation isn't getting any easier to manage, especially for non-vessel operating common carriers (NVOCCs). Faced with uncertainties like surcharges—but needing to remain competitive when bidding against other providers—NVOCCs need the right mix of historical data, data intelligence, and technology support to make quick and effective decisions. During this webcast you'll learn how Bolloré Transport & Logistics was able to streamline its global logistics and automate contract management.
Register Today!
EDITORS' PICKS
Details Key to Cross-border Ease
Ever-changing regulations are making it risky for U.S. companies engaged in cross-border trade...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....

Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...
Port of Oakland launches smart phone apps for harbor truckers
Innovation uses Bluetooth, GPS to measure how long drivers wait for cargo