FAA forecasts air travel to double in 20 years


The proposed NextGen system was included in the bill that was recently passed by Congress to provide the FAA $59 billion in funding over the next four years.

Under the FAA's 2012 authorization, the NextGen system will receive about $1 billion per year. The system is projected to cost the FAA about $22 billion through 2025, while airlines would have to kick in another $20 billion to upgrade their airplanes’ computer systems. 
Transportation Secretary Ray LaHood said the Obama administration would continue to push for more funding for the program.

"More and more Americans are relying on air travel, and the Obama administration is committed to making sure the U.S. can meet our growing aviation demands,” LaHood said in a statement.  “Our investment in NextGen is the key to getting passengers and cargo to their destinations more safely, faster, and with less impact on the environment.”

The FAA passenger projections come amid rising gas prices, which the agency said could rise to $138 per barrel by 2032.

The agency said high gas prices could "wipe out industry profitability, put increasing pressure on airline costs, delay balance-sheet improvements and discourage expansion plans or orders for new aircraft as carriers focus on maintaining and increasing cash balances."

Gas could also cause airlines to raise fares, the FAA said.

The agency said mergers between airlines, such as the recent consolidations of United and Continental and Southwest and AirTran airlines, also played a role in airline ticket prices increasing last year.

"As a result of industry restructuring and consolidation, far fewer carriers now report traffic to the Bureau of Transportation Statistics when compared to 2001," the FAA report said. "This has had clear implications on the size of the aircraft being used and the load factors."

The full FAA economic forecast can be read here.