- The Washington Times - Friday, March 1, 2002

Airline passengers can find good deals from airlines positioning themselves for the lucrative summer travel season.
But the generosity of the airlines is tinged with desperation this year. The summer may be the last hope for some airlines to battle back from the economic devastation caused by the September 11 terrorist attacks.
"As an industry, we're destined to lose a few billion this year no matter what," said John Heimlich, research director for the Air Transport Association (ATA), which represents major airlines. "I think there are individual carriers whose years could turn on the summer."
Airlines traditionally bring in the most revenue during June, July and August.
Consumers can expect sales and increased frequent-flier miles as the bait for their business. United Airlines, for example, is offering round-trip flights for June between Washington and Los Angeles for $290. Delta Air Lines and US Airways are offering round-trip flights between Washington and Orlando for $148.
So far, most airlines continue to suffer month-to-month losses. Major airlines carried 6 million fewer passengers in January than a year earlier, a 14.2 percent drop, according to the ATA.
In its annual report filed yesterday with the Securities and Exchange Commission, AMR Corp. parent company of American Airlines, the nation's largest said the attacks continue to devastate the airline industry.
"Given the magnitude of these unprecedented events, the company expects that the adverse impact to the company and to the airline industry as a whole will continue to be significant in 2002," the company said.
AMR posted a $798 million loss in the fourth quarter of 2001, compared with a profit of $47 million a year earlier. Revenue dropped 22 percent to $3.8 billion.
As airlines prepare for tough competition this summer, Mr. Heimlich said they are trying to cut costs, win concessions from labor unions, concentrate their flights only on the most profitable routes and offer sales as an incentive to passengers.
United is adding 127 flights and recalling 1,200 flight attendants in April as it prepares for the summer.
"We have a financial recovery plan in place," said United spokesman Joe Hopkins. "I would say we need a strong summer not just United but the whole industry collectively."
Even with the added flights in April, United will be flying slightly more than 1,800 daily flights, which is down from the nearly 2,400 daily flights before September 11.
Mr. Hopkins expects airlines to focus on increasing the number of passengers, even if profit margins are lower.
"It's always a matter of supply and demand," he said. "There are some good bargains available right now for travel in the summer."
The carriers refuse to give too much detail about their summer marketing campaigns, saying they do not want to give away information to competitors. However, they acknowledge that the competition will be intense.
American Airlines plans to start advertising for the summer this month.
This year, however, the airlines must also contend with "the hassle factor" more than in the past. Passengers will be inconvenienced to a greater degree because of long lines at checkpoints, security searches and bag-matching required by new Federal Aviation Administration rules.
"Especially with respect to short-haul travel, I would expect it to have some mitigating effect on the recovery," Mr. Heimlich said. "Within a certain trip distance, people have choices. They can take a train or drive a car."
Although federal loan guarantees are expected to keep major airlines in business, some of their regional subsidiaries might close, industry analysts said.
Ray Neidl, an airline industry analyst for the Wall Street investment firm ABN-AMRO, said this summer will determine whether airlines "reach the final stages of the recovery from September 11."
The federal government's guaranteed loan program offers only limited protection, he said.
"I don't think anybody's going to be going bankrupt this year unless it turns out to be a horrible summer," Mr. Neidl said.
However, airlines will need to juggle competing forces to win back customers.
"The hassle factor has to be kept to a minimum while at the same time keeping the security precautions up so people feel comfortable with the system," Mr. Neidl said. "It's a fine tightrope to walk, but it's one of the challenges the industry faces." Airlines are concerned the hassle factor could hurt them at a sensitive time for their finances.
"The summertime is always important," said Sonja Whitemon, American Airlines spokeswoman. "We're nowhere near where we thought we would be this year so it's especially important to us."

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