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War is being felt in the U.S. air industry. As business
declines, the majors are cutting service, low-cost carriers are
pushing ahead to capture market share and the U.S. government is
readying support to keep at least some of the struggling airlines
“The geopolitical uncertainty created by the war on Iraq has
significantly affected current booking levels,” said Stefan
Pichler, chairman and CEO of Thomas Cook.
Summer bookings at the giant travel firm are down by 9.2 percent
compared with a year ago.
American corporations also are slashing travel, particularly
overseas. A survey of major companies by the Business Travel
21 percent of corporations have banned international travel for
some period or until further notice;
33 percent of corporations would consider a ban if circumstances
54 percent of corporations have tightened pre-approval processes
for international travel;
48 percent of corporations already had adjusted domestic U.S.
travel policy in anticipation of war with Iraq.
And, 65 percent of companies have told employees that management
will not pressure them to travel during hostilities.
In response, airlines are cutting flights, including:
American is reducing its flying by 6 percent, trimming selected
service. It also postponed its new Los Angeles-Tokyo service for
two months and the launch of a second daily Dallas/Fort Worth-Tokyo
Delta slashed 12 percent of its capacity, although specifics
were not available at press time.
Northwest also is cutting 12 percent of its flights, mostly
those to Asia/Pacific and Europe.
United, fighting for its life in Chapter 11, said it is
reducing, but not eliminating, service to Amsterdam, Frankfurt,
London, Tokyo, Paris, Taipei and Brussels and will cut 104 domestic
flights as of April 6.
As the majors reduce flights, the low-fare carriers continue to
lay them on, sensing, perhaps, that now is the time to pick up
JetBlue shows no sign of postponing the June 26 launch of
nonstop San Diego-New York JFK service. And AirTran still plans Los
Angeles, Las Vegas, and Denver service to Atlanta.
And in Washington, Senate Majority Leader Bill Frist, R-Tenn.,
said he expects Congress to pass some kind of aid for the aviation
“It may come in the form of some reduced security surcharges,”
said Brian Streeval, an airline analyst with the Boyd Group, an
aviation consultancy in Colorado. “Perhaps the government will
cover the $2.50 security surcharge.” Streeval does not expect the
government to reduce taxes, which can represent as much as 25
percent of the price of an average ticket.
“The Air Transport Association came out and said it’s looking at
losses of $10 billion a year. I just don’t see the government
covering 100 percent of that gap,” he said.
Nor does Aaron Gellman, a professor at The Transportation Center
at Northwestern University and at the Kellogg School of
“The airlines deserve some relief from security-related costs,”
he said. “That’s the kind of help the government can provide
without courting any real international problems.”
“I think if the money goes much beyond security, it will be a
point of contention with, particularly, the European countries,” he
said, noting that they oppose subsidies.
For the time being, Gellman said he sees profitable, high-yield
“international traffic suffering quite uniformly, and very heavily.
And the domestic bookings aren’t doing as well as they did before
the war broke out.”
To be sure, there are other, far more significant reasons to
hope for a quick, successful end to the war. The fate of the U.S.
airline industry, said Gellman, “is just another one.”