Washington Readies Support for U.S. Carriers

Mineta says airlines are 'very critical' to the health of U.S. economy

By: Jerry Chandler

With observers saying the U.S. airline industry could be on the brink of collapse, in part because of the Iraqi war, the federal government appears to be set to try to save it.

“We will be ready to move very quickly if the need arises,” said U.S. Transportation Secretary Norman Y. Mineta.

As the U.S.-imposed deadline on Iraqi President Saddam Hussein neared, Rep. James L. Oberstar, D-Minn., was set to introduce legislation including federal loan guarantees to cover rising jet fuel prices.

The government realizes airlines are “very critical” to the health of the U.S. economy, Mineta said. But there also is another reason spurring congressional action.

“Every single member of Congress is a stakeholder,” said Kevin Mitchell, Business Travel Coalition president. “They don’t want to see service eliminated to any of their mid-size and small communities.”

An Air Transport Association report, “The Perfect Economic Storm,” states that a war of no more than 90 days still will lead U.S. airlines to slash some 2,200 of their approximately 16,000 flights per day and terminate another 70,000 employees. More than 80,000 airline employees already lost their jobs since the Sept. 11, 2001 terrorist attacks.

Just before the invasion, a number of domestic and international carriers announced cuts, including:

" British Airways suspended service to Israel and Kuwait;

" El Al suspended 15 percent of its service;

" And, effective April 6, Continental will cut its service from Newark to London and Paris by half as well as cut one of its two daily flights from Houston to London.

More schedule reductions are expected in coming days.

“There’s continuing fear of hand-held surface-to-air missiles,” said Bob Agnew, president of Morten Beyer and Agnew, a respected aviation consulting firm in Arlington, Va. “I think the traveling public is nervous.” “This doesn’t bode well for United,” Agnew said.

Much like military leaders in the Middle East, BTC’s Mitchell has created war scenarios.

Assume the war is short, that fuel prices fall (or are underwritten by Congress), that economic giants such as GE and IBM make significant capital investments and the stock market rallies. Then, Mitchell said, “there’s a 20 percent chance” the airline industry can avoid disaster.

Pessimistically, should the United States become embroiled in a lengthy conflict that involves violent resistance and a long-term occupation of Iraq, should oil prices stall at new highs and should terrorists hit the United States again, “then we’re looking at the collapse of the industry,” he said.