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.
