FAA: Airline Demand Will Nosedive, Recover

The government is predicting a 7.8 percent drop in the number of passengers boarding planes in 2009 compared to 2008, but sees a brighter picture over the horizon.

The Federal Aviation Administration said in a forecast that the major air carriers will see an 8.8 percent drop in demand, returning them to 1995 passenger levels.

Regional carriers and cargo carriers are also expected to see declines in demand, but won't suffer the steep drop of the major passenger passenger carriers; that moves the average percentage decline for all carriers to 7.8 percent.

Last year FAA predicted the U.S. airlines would reach a billion passengers a year by 2016. Today's forecast pushes the one billion figure out to 2021. But there's good news too: The FAA forecasts demand to grow grow at an average annual rate of 2.3 percent starting next year.

The International Air Transport Association also posted some new, grim statistics: February passenger demand worldwide was off 10.1 percent and North American carriers recorded a 12 percent drop, compared to the same month last year.

"Gloom continues. The sharp drop in February passenger traffic shows the broadening scope of the crisis," said Giovanni Bisignani, IATA's CEO.