- The Washington Times - Tuesday, December 18, 2001

Recession and the war on terrorism are still hurting the airline industry as it moves into the Christmas travel season, but signs of recovery are on the horizon.
Domestic and international air traffic dropped sharply in November compared with a year ago, the Air Transport Association reported yesterday.
However, from now on, the finances of the airline industry will turn on the progress of the U.S. economy, unless there is another act of terrorism, industry analysts said.
"They will improve when the economy comes back," said Darryl Jenkins, director of George Washington University's Aviation Institute.
The number of domestic airline passengers was down 19.5 percent in November from a year earlier, according to the ATA, the trade association representing major airlines. The number of seats filled dropped to 68.2 percent, 2.5 points lower than November 2000.
Nevertheless, the November figures represent an improvement from a month earlier. October passenger traffic was down 23 percent, and only 62.7 percent of seats were filled.
The gradual improvement should continue into 2002, airline-industry analysts predict.
The first six months of 2002 will remain slow for airlines because of general economic conditions, analysts say. Afterward, an economic turnaround predicted by the Treasury Department could revive finances for airlines.
Continental Airlines is predicting a profit in the second quarter of 2002.
Southwest Airlines said yesterday it plans to add nine flights and take delivery of two Boeing 737s in February, the first fleet additions since September 11. The low-fare airline held on to more of its customers than many other major airlines.
"As a consequence, we feel it appropriate to cautiously resume our growth with these new aircraft, beginning Feb. 4," said Southwest Chief Executive James Parker.
Despite the optimism, fewer passengers and higher costs mean major airlines like United and American continue to lose millions of dollars almost daily.
"In the short run, costs have gone up for the airlines, but fares have gone down to get more people on the planes, so you just end up losing a lot more money," Mr. Jenkins said.
Adding to the higher costs are increased security measures, including higher-paid baggage screeners and more explosive-detection equipment.
These costs could fluctuate, depending on new Transportation Department security requirements expected in coming months, Mr. Jenkins said.
"It depends on how it is implemented," he said.
Among the changes will be a bigger role for the federal government in monitoring security, rather than leaving the job to private contractors.
Airlines are still hoping the $15 billion bailout and loan guarantees approved by Congress in October will rescue them.
America West Airlines has offered the government the option to buy 10 percent of the company in exchange for a $10 billion loan guarantee. The airline's offer is the first application to the Air Transportation Stabilization Board, which is administering the federal assistance.
Other airlines are watching to see what conditions the board places on its aid. Carriers face a June deadline to apply for the money.
The airlines also hope the traditional upsurge in business during the Christmas holidays will bring some financial relief.
The AAA forecasts that travel by airline, train or bus will be down by 20 percent compared with last year's Christmas holiday season.
"That 20 percent is almost exclusively related to air travel," said Jerry Cheske, AAA spokesman. "The good news is that over Thanksgiving, the prediction was that air travel would be down 27 percent. We are seeing more people return to the airways."
For travelers who do plan to fly, this is one of the best Christmas seasons to find bargains. Normally, airlines offer few sales around Christmas because of the large number of travelers. This year, some are using low fares as incentives to win back customers.
Examples include Southwest Airlines' extension of its $198 coast-to-coast round-trip fares till Dec. 29 for travel made through June 7. United Airlines and American Airlines extended leisure-fare sales.

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