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21 Impact of Increasing Fuel Prices this percentage increase was assumed to apply for the 2012 and 2017 projection years. The baseline model projections for 2007 were estimated using costs that were based on late 20062007 fuel prices. The operating costs for the air taxi modes were based on avi- Overall Travel Growth ation gasoline (or "avgas," which is used in piston aircraft) As described earlier, the baseline forecast assumed a constant and jet fuel prices of $2.45 per gallon while automobile op- per-capita trip rate for the domestic United States, and overall erating costs were based on a pump price of $2.94 per gallon. growth in travel trips is therefore proportional to population Given the volatility in the price of oil, it is difficult to project growth. Census-specific growth projections were used from the future costs and prices for the 2012 and 2017 forecasts. Since AGS dataset; across the entire sample, the corresponding pop- late 2007, the world price of oil swung wildly upward during ulation is projected to grow by about 1.1% annually from 2007 the first half of 2008 and then plummeted dramatically in the to 2012 and by about 1.4% annually from 2007 to 2012. second half. For projection purposes in 2012 and 2017, costs for the air taxi modes were re-computed assuming an average price of Projected Mode Shares $3.35 per gallon for both avgas and jet fuel. This is equal to the and Trip Totals U.S. Department of Energy's (DOE's) jet fuel price average for Table 17 shows the projections of mode shares and trip to- the first eight months of 2008 and equates to an overall oper- tals given all of the inputs and assumptions described above. ating cost increase from 2007 of about 3.8% for the low-cost The forecast projects that VLJs may capture a small but sig- piston mode and about 6.5%7.0% for the turboprop and nificant percentage of the relevant market over the next 5 to light jet modes. For the automobile mode, the average cost per 10 years. This is due primarily to the assumption that low-cost mile was re-computed assuming an average pump price of per-seat services will become available in several regions in the $3.61 per gallon, again based on the DOE's estimates for the country. Similarly, the assumption that low-cost piston ser- first eight months of 2008; this equates to an overall operating vices will spread leads to significant gains for that mode as well. cost increase from 2007 of 8.8%. These gains in market share come largely at the expense of the Changes in oil prices would also be expected to influence automobile mode and, to a lesser extent, of commercial air commercial air fares. For the commercial air mode, the lat- travel. Without reading too much into the data, these results est available fare data from the DB1B ticket sample were are generally consistent with the observation that automobile obtained for the second quarter of 2008; a comparison with traffic in particular may be quite responsive to large increases FY2007 fares showed an average fare increase of 6.0%, and in fuel prices such as those that occurred in mid-2008. Table 17. Estimated air taxi annual trips and market shares.* Annual Trips (000) M ode 2007 Actual 2007 Projected 2012 Projected 2017 Projected Automobile 18,690 18,538 16,644 17,648 Comm ercial Air 18,523 18,621 20,060 20,120 Air Taxi Piston 695 729 1,268 1,505 Air Taxi Prop 73 106 134 173 Air Taxi Light Jet 278 265 297 369 Air Taxi VLJ 0 0 1,969 3,419 TOTAL 38,259 38,259 40,372 43,235 Market Shares M ode 2007 Actual 2007 Projected 2012 Projected 2017 Projected Auto 48.9% 48.5% 41.2% 40.8% Comm ercial Air 48.4% 48.7% 49.7% 46.5% Air Taxi Piston 1.8% 1.9% 3.1% 3.5% Air Taxi Prop 0.2% 0.3% 0.3% 0.4% Air Taxi Light Jet 0.7% 0.7% 0.7% 0.9% Air Taxi VLJ 0.0% 0.0% 4.9% 7.9% TOTAL 100.0% 100.0% 100.0% 100.0% *Note: Figures and percentages may not add to totals due to rounding.