By: Nan Shellabarger Date: February 28, 2006 Federal Aviation Administration FAA Forecast

2 Federal Aviation Administration February 28, 2006 Agenda 2005 Review Assumptions Forecast Overview

FAA Forecast 3 Federal Aviation Administration February 28, 2006 Review of 2005 Traffic growth strong RPMs up 8.0% –Domestic +6.9%, International % Passengers up 7.1% –Domestic +6.6%, International % Real yield decline Domestic down 4.8% International up 1.1% Workload Growth En-Route Traffic up 2.8% –Commercial + 3.7%, Non Commercial + 0.3% Tower Ops down 0.1% –Commercial +3.7%, Non Commercial - 2.6% –OEP 35 Commercial + 3.9%

FAA Forecast 4 Federal Aviation Administration February 28, 2006 Assumptions External Environment –Economic growth about 3% per year –Higher Oil Prices in near term Industry –Domestic capacity shrinks in FY 2006 DL and NW in bankruptcy – shrink 10% to 20% AA, US announced reductions –RJ fleet growth slows in near term Production of 50 seat RJs stopped At least 107 aircraft to be grounded in FY 2006 Significant 70/90 seat aircraft demand

FAA Forecast 5 Federal Aviation Administration February 28, 2006 Domestic Capacity Trends Source: Official Airline Guide (OAG)

FAA Forecast 6 Federal Aviation Administration February 28, 2006 Assumptions cont. Industry –Domestic Yield Increases in 2006, then resumes long run decline –Y/Y turned positive in May 2005 and is increasing –Tight capacity with current demand => prices up –Competition and productivity increases drive long term decline –Load factor increasing Domestic above 78% by 2017 International approaching 80% by 2017

FAA Forecast 7 Federal Aviation Administration February 28, 2006 Domestic Yield Trends Source: Air Transport Association (ATA)

FAA Forecast 8 Federal Aviation Administration February 28, 2006 Forecast Overview FY Slow growth in 2006, rebound in 2007, return to historical trends after that Demand continues to grow Passengers: +3.1% per year –Domestic +2.9%, International + 5.0% RPMs: +4.1% per year –Domestic +3.6%, International + 5.5% Load Factor Higher Domestic: 78.1% in 2017 International: 79.4% in 2017 Aircraft size continues to shrink Domestic seats/mile falls until 2011

FAA Forecast 9 Federal Aviation Administration February 28, 2006 Forecast Overview FY Real Yield continues long term decline Domestic: - 0.8% per year International: -0.8% per year Cargo continues to grow System 5.2% per year; Domestic 3.2%, International 6.3% General Aviation fleet and activity rising New products stimulate growth Workload continues to increase En-Route Aircraft Handled + 3.0% per year –Commercial + 3.2%, Non-Commercial + 2.4% Tower Ops: + 2.0% per year –Commercial +2.4%, Non-Commercial + 1.8%

FAA Forecast 10 Federal Aviation Administration February 28, 2006 System Enplanements : 0.3% : 3.9% : 3.4% Actual Forecast

FAA Forecast 11 Federal Aviation Administration February 28, 2006 System Enplanements Actual Forecast Avg. Annual Growth Mainline Domestic: 2.5% Regional Domestic: 4.2% International: 5.0%

FAA Forecast 12 Federal Aviation Administration February 28, 2006 System Revenue Passenger Miles : 1.5% : 4.8% : 4.3% Actual Forecast

FAA Forecast 13 Federal Aviation Administration February 28, 2006 System Revenue Passenger Miles Actual Forecast Avg. Annual Growth Mainline Domestic: 3.1% Regional Domestic: 6.7% International: 5.5%

FAA Forecast 14 Federal Aviation Administration February 28, 2006 System Load Factor : 0.5 Points : 0.2 Points : 0.1 Points Actual Forecast

FAA Forecast 15 Federal Aviation Administration February 28, 2006 Domestic Aircraft Size : -1.4 Seats : -0.6 Seats : 0.1 Seats Actual Forecast

FAA Forecast 16 Federal Aviation Administration February 28, 2006 Domestic Real Yield : 0.4% : -1.0% : -0.9% Actual Forecast

FAA Forecast 17 Federal Aviation Administration February 28, 2006 Cargo RTMs Actual Forecast Avg. Annual Growth Domestic: 3.2% International: 6.3%

FAA Forecast 18 Federal Aviation Administration February 28, 2006 Total General Aviation Fleet : 1.0% : 1.8% : 1.4% Actual Forecast

FAA Forecast 19 Federal Aviation Administration February 28, 2006 Total General Aviation Flight Hours : 2.5% : 3.1% : 3.2% Actual Forecast

FAA Forecast 20 Federal Aviation Administration February 28, 2006 General Aviation Flight Hours Actual Forecast Avg. Annual Growth Piston: 1.8% Turbine: 6.4%

FAA Forecast 21 Federal Aviation Administration February 28, 2006 En-Route Aircraft Handled : -0.6% : 2.7% : 3.4% Actual Forecast

FAA Forecast 22 Federal Aviation Administration February 28, 2006 FAA and Contract Tower Operations : -0.4% : 2.7% : 2.2% Actual Forecast

FAA Forecast 23 Federal Aviation Administration February 28, 2006 Forecast Risks Terror attacks/Pandemic Impact of high oil prices Mainline carrier financial woes Growth of VLJ’s and impact on workload Sufficient Capacity

FAA Forecast 24 Federal Aviation Administration February 28, 2006 Forecast Summary Slow growth in 2006, rebound in 2007, return to historical rates afterwards Demand continues to grow in line with economy Real yield continues to fall Aircraft continue to get smaller Workload gets higher