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Correspondence

Date

Aviation Industry Performance

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On August 4, we issued the eighth in a series of our periodic updates to our aviation performance report. The report graphically identifies trends in aviation demand and capacity, aviation system performance, airline finances, and service to small communities. The report highlights the rise in fuel costs and the impact on the airlines' efforts to improve their financial performance through control of other costs and increases in fares. The report also notes that domestic airline service to most communities, after rebounding in 2005 to 2000 levels, has begun to decline as airlines better match capacity with demand. However, service to the smallest communities did not rebound in 2005 and suffered a further deterioration into 2006.