In 2004, it was reported that domestic airlines lost more than $7.5 billion. Airlines aggressively slashed costs as more than 125,000 employees were laid off. All of this occurred when oil prices reached a record high and average fares dropped to record lows. In fact, the airlines' unanticipated fuel costs resulted in about $6 billion of their total losses.
This year will be another challenging year for airlines and airports. The risk of airline bankruptcies still remains. Airlines will continue to face high fuel prices and costly pension liabilities in low-revenue-yield markets. Airlines will continue to struggle in providing low cost or maximizing efficiencies in producing a passenger seat. The current proposed budget for the Federal Aviation Administration (FAA) by the administration cuts $600 million from the FAA's grant program, which is used to support airports like the Greater Peoria Regional Airport. Nor does the administration request any funding for the Small Community Air Service Development Program, a program specifically designed for communities like Peoria to attract air service. And, finally, the proposed budget requests increases in security fees.
With all of these challenges, aviation industry organizations forecast 2005 as a strong year of growth for passengers. The US Airlines and Airports Forecasts currently project a 5 percent increase in total passengers, with domestic passengers increasing by 4.2 percent and international passengers increasing by 11.2 percent. Airlines are slashing fares-a 30 percent price reduction since 2000-and eliminating restrictions with hopes that we all travel more. Passengers still will see benefits in a competitive, low-fare environment.
With this uncertainty, it's more important than ever to support your local airport and airlines. In 2004, we worked hard to provide competitive fares with good schedules and great destinations through such connection points like Las Vegas and Dallas-Fort Worth.
In 2005, we'll work even harder to ensure your airport is the preferred airport for central Illinois. We value your business and need the partnership and support from every business and individual. Please continue to give us feedback at [email protected] on how we can be of better service for your travel needs. It'll take all of us to ensure that Peoria has great air service with multiple destinations. We can't afford to lose all of the gains of 2004. IBI