The September 11th attack
Airline industry's comeback falters as strikes begin

Associated Press

NEW YORK — The U.S. air strikes on Afghanistan could prove harmful to the fragile airline industry just as carriers were beginning to lure back travelers with tighter security and lower fares.

Preliminary industry data show worldwide demand for air travel rose all week until Sunday, when the United States took its first retaliatory military action since the Sept. 11 terror attacks in New York and Washington.

"In the immediate future, people are going to be wary of flying," said Bob Abrams, a travel agent at Valerie Wilson Travel Inc. in New York. "But I've seen this stuff go away in a month. Thanksgiving is going to be a bellwether. It's the biggest travel day of the year."

The near-term uncertainty was reflected on Wall Street, as airline stocks were mixed. Shares of the six largest U.S. carriers have staged a mild comeback in recent weeks, but remain 25 percent to 56 percent below pre-attack levels.

U.S. airlines have laid off more than 90,000 employees in the past month and received a $15 billion government bailout that is expected to prevent all but a few from going bankrupt by next summer.

Travel demand grew incrementally last week before taking a noticeable slip Sunday, according to the Air Transport Association, a Washington-based trade group for the largest carriers.

Year-to-year comparisons showed demand — as defined by passenger revenue miles, or one paying passenger flown one mile — fell 31 percent Oct. 1, 29 percent Thursday, 24 percent Saturday and then crept back up to 30 percent Sunday.

The decline in demand between Saturday and Sunday could partly be explained by the fact that airlines dropped the Saturday night stay requirement last week as a way to attract business travelers.

Even so, "there's obviously something going on here," said John Heimlich, an economist for the industry association.

War-related hiccups are not new to the industry, analysts said, citing the similar ups and downs in air travel and airline stocks during the Gulf War a decade ago. Back then, the nation also was suffering an economic downturn.

David Stempler, president of the Air Travelers Association in Washington, said: "it doesn't take too much to get people uneasy about travel."

Before Sept. 11, airlines were having difficulty filling seats because of the country's poor economic outlook.

The problem worsened after the attacks spurred fears among the traveling public about aviation security. The industry cut capacity by 20 percent, but domestic flights were still half empty at the end of September.

The industry's situation began improving as carriers offered fare incentives to business and leisure passengers.

Shares of airlines ticked upward during late September and the first week of October.

But now, with President Bush's military response to terrorism under way, industry watchers said the comeback once again may slow.

On the Web
www.aa.com

www.ual.com

www.delta.com

www.nwa.com

www.continental.com

www.usairways.com

www.air-transport.org