EFFECTS OF 9/11 ON THE U.S. AIRLINE INDUSTRY

The terrorist strike on the New York World Trade Center and the Pentagon on September 11, 2001, when civilian airliners were turned into guided missiles flown by suicide bombers driven by religious fundamentalism and hatred for the United States not only seared themselves into the consciousness of the American people, but into the economic and business fabric of the country, and as a result, of the world.

While the United States economy was slowing in the months before this tragic event, the aftermath of the bombings tipped the economy into a sharp turn toward depression.

The airline and travel industry were the worst hit of all industries. This is a review of the effects on industry of these attacks and an overview of responses both by government and on industry to the event.

Although a number of travel and tourism companies have reported a decrease in demand of 30% and more following the terrorist attacks, the longterm outlook for travel and tourism demand is expected to slowly brighten as consumer confidence about safety and security recover. Over the twelve months following the events of September 11, the decrease of travel and tourism demand is currently expected to total 1020% in the United States and less in the rest of the world, including Europe and Asia. (Newswire, 2001, 3)

A 10% decrease in travel and tourism demand would result in the following:

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ver. This may be explained in part by the fact that the rebound in consumer confidence followed a most uneven pattern, involving sharp updown swings lasting until the end of 1993. Similarly now, weak consumer confidence coupled with the uncertainty of safety as well as economic uncertainty, indicates that the recovery for the industry may take even longer than expected. (Interavia, 2001, 12) EMPLOYMENT: As the nation's second largest employer, with a preSeptember 11 workforce of more than 17 million people, travel, and tourism was the third largest U.S. retail industry, with $582 billion in revenue in 2000. Travel and tourism has emerged as America's second largest services export, responsible for a $17 billion trade surplus, and generated nearly $100 billion in federal, state, and local tax revenues last year. (Newswire, 2001, 6) ECONOMIC EFFECTS ON AIRLINES: The events of 9/11 accelerated and aggravated negative financial trends already evident in the airline industry. That is, the industry was experiencing major net operating losses before 9/11. (Interavia, 2001, 14) United Airlines, the world's second biggest airline, reported a $510 million loss for the first three months of 2002. The quarterly loss was Unit

Category: Business - E