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Terrorist attack cost US airlines $1 billion a day
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| 13 September 2001 |
Conservative estimates of the cost to US airlines of the now-concluded moratorium on flights in the USA was around $1 billion a day, according to the International Air Transport Association (IATA).
US Transport Secretary Norman Mineta re-opened US airspace to commercial flights from 11.00am EDT today, but only on a case-by-case basis, with each operator having to satisfy more stringent security measures. If the total ban had continued IATA spokesman William Gaillard told Janes.com that, with the related run-down in services experienced by Canadian and Mexican airlines, the cost to all North American carriers would have reached $10 billion in a week.
The IATA was already predicting that, even before the terrorist attack, the world’s airlines were likely to make a loss on international services of $2.8 billion this year.
American and United also face a huge raft of lawsuits brought by relatives of those who died in the crashes; in the USA, airlines are generally deemed to be responsible for security, and over the next few weeks airlines and airports will be trying to ascertain exactly where the blame for the security breaches will be placed.
Beyond the next few weeks the tragedies in New York and Washington are likely to push the world's airlines – and aircraft manufacturers Boeing and Airbus – into the kind of recession experienced in the early 1990s.
The world's airlines now face a number of recessionary pressures:
• A fall-off in the US travel trade, which will particularly affect European carriers with major investments in transatlantic services, such as British Airways, Lufthansa, KLM and Swissair. Middle East services will also be badly affected.
• Increased costs in the form of fuel hikes and more security expenditure (Transport Secretary Mineta, for example, has called for the elimination of curbside check-in). Although most European carriers will not have to bear the costs of increased security, it is likely that FAA teams will be targeting airports in the Middle and Far East which they consider insecure, pushing up airline and airport operating costs there.
• A general uncertainty within the travel market, which will encourage air travellers to stay at home.
• Increased costs as a result of disruption to international schedules and the unravelling of the global hub and spoke system as US airlines re-plan their schedules to allow for longer security checks.
These are just some of the more pressing short-term issues. Ultimately, the speed and strength of the airline recovery will depend on what action the US government takes to secure domestic and airline services and what new costs will be imposed on US airlines. Low-cost carriers and new entrant airlines are likely to be the most at risk in the next few months.