November 01, 2001
Meetings & Conventions: Newsline newsline.gif (8042 bytes)   ANALYSTS EYE LONG-TERM EFFECTS OF LOW RIDERSHIP
Airlines Struggle to Fill Empty Seats
Despite an aggressive courtship of consumers by airlines in the month following the Sept. 11 terrorist attacks, carriers filled only 59 percent of seats in flight schedules generally running 80 percent of their former capacity, according to the Air Transport Association.

While traffic numbers have since shown a slow rise, airlines still face some old problems: high fuel and labor costs. According to the ATA, revenue has been negative for business travel since December 2000 and for personal travel since May 2001.

The dramatic drop in traffic after Sept. 11 is likely to reshape an already-suffering industry, analysts predict. In the weeks after the attacks, layoffs numbered close to 100,000.

"What is out of the airlines' control is the sense of the comfort of flying, and that's really what is depressing the traffic moving forward," said Bill Oliver, vice president of the Evergreen, Colo.-based aviation analysis firm, the Boyd Group. "The whole market is going to be depressed in the 8 or 9 percent range."

"We've never had terrorists take control of American flights before, so it's tough to gauge consumer confidence," added Bob Walberg, chief executive analyst at financial research firm, who said carriers with strong numbers, such as Frontier Airlines, Alaska Airlines and Southwest, are more likely to come out ahead once normal travel resumes.

And while the media has been focused on larger, international airlines, Walberg expects regional carriers to be hit hardest if travelers forego flying for ground transit.

One scenario, evidenced in part by the temporary shutdown of Swissair in October, is that some carriers, even those receiving federal aid, will further suspend if not completely discontinue service. "Any corporate travel manager should be very concerned about America West and US Airways," said Oliver. "If those carriers go out, you're looking at a significant amount of capacity that would go away."

Gail Bill, Northwest Airlines' meeting and incentive sales senior manager, noted, "I think we're going to have to wait until Thanksgiving to see [the real impact], because around that time we usually see huge loads on our planes."


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