Until airlines start seeing more competition, which looks to be years away, fares are likely to stay high, according to the Federal Aviation Administration’s annual economic analysis.
The FAA anticipates more mergers, fewer cities served, and fewer flights in coming years. Although the agency expects airline travel to double in the next 20 years, the FAA sees airline capacity diminishing in the short term.
“Imagine a carrier the size of Jet Blue coming into the system every 10 months,” said Michael Huerta, the FAA’s acting administrator. “That is the demand we are forecasting.”
Southwest (NYSE:LUV), JetBlue (NASDAQ:JBLU), United Continental (NYSE:UAL), Delta Air Lines (NYSE:DAL), American Airlines (NYSE:AMR) and US Airways (NYSE:LCC) all raised prices on many of their medium-length and long flights by $10 per round trip just in the last month due to fuel costs. Last year, Airlines raised fares about a dozen times.
The total number of people flying commercially on U.S. airlines will increase by 0.2 percent to 732 million in 2012, then to 746 million in 2013. By 2032, annual passengers are expected to total 1.2 billion.
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