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The Honolulu Advertiser
Posted on: Wednesday, May 21, 2003

'High' alert untimely for U.S. travel industry

 •  Hawai'i's threat level remains at 'elevated'
 •  National terrorist threat level raised

By Dan Reed
USA Today

The nation's return to orange, or "high" terror alert, threatens to complicate consumers' summer travel and undermine the beleaguered travel industry's recovery.

The government bumped up the alert status in light of recent attacks in Saudi Arabia, Morocco and Israel, and in response to new intelligence suggesting that those attacks were meant as precursors to more significant attacks, possibly in the United States.

But the timing of the change is awful for still-ailing airlines, hotels and other travel-service companies. The big summer travel season, on which the travel industry is heavily dependent for its profit even in the best of years, officially gets underway this holiday weekend. And while demand has rebounded nicely since the war's end, according to industry officials, there are still plenty of seats and rooms available.

Airline revenue — reflecting the softness of demand — is off about 25 percent from the peak year of 2000, according to Air Transport Association data. And officials there weren't expecting that to change much even before the increase in terror-alert status.

Industry experts say it's not yet clear what the effect of yesterday's decision will be.

Analyst Sam Buttrick of UBS Warburg says, "It's not clear that 'orange' does anything to demand by itself. It's what's going on in the world, and how consumers perceive it, when we go to orange status that seems to drive consumer behavior."

Carlson Wagonlit spokeswoman Becky Waller says business has been picking up recently and that "if travelers react the same way as the last code orange, bookings may not be hurt too much. Our phones didn't stop ringing the last time ... with people who were asking questions. We didn't see an increase in cancellations."

But Kevin Mitchell, chairman of the Business Travel Coalition, says some travelers will stay away now because while there's growing "cynicism, people are paying attention to these alerts."

Airline officials said yesterday that they expect to get specific instructions from the Transportation Security Administration today. Airport officials around the nation began tightening the security screws yesterday afternoon.

While code orange security measures vary, in the past they have included inspections of cars entering airports, on a random basis, or, in a few cases, on all cars.

Inside terminals, travelers can expect security procedures to be more intense and intrusive.