Airlines are aloft again, but still far from full

Reagan National Airport reopens, but it may be years before the industry recovers.

Slowly and cautiously, America's commercial airlines are getting back on their feet - although, with a far more security-conscious stance than ever before.

The number of passengers taking to the skies is steadily climbing. And airlines are working to entice more, slashing fares and loosening restrictions. Some financial analysts are even recommending certain airline stock to bargain hunters.

But nothing is more symbolic of the damaged industry's efforts to get back to business - and how difficult that is proving - than the touchdown today of the first commercial flights at Washington's Reagan National Airport. It is the last of the nation's major airports to open after the Sept. 11 attacks. But only a handful of flights will be scheduled, and those will operate under unprecedented security restrictions.

"Still, it's a huge step in the right direction," says Clint Oster, an aviation economist at Indiana University in Bloomington. "Keeping it closed was sending the wrong message. It wasn't encouraging people to get back onto airplanes."

While people within the industry note positive trends, such as growing passenger loads, few are willing to predict how long it will take to get back to pre-Sept. 11 levels of air travel. Others believe it could be years before the airlines fully recover from the unprecedented shutdown of the nation's airspace and, more important, the shredding of what one aviation analyst calls the "facade" of security at American airports prior to the attacks.

"My gut feeling is that it will take the public some time to understand the reality of the newly tightened security," says Richard Gritta, an aviation expert at the University of Portland in Oregon. "In the past, we had the perception of being safe, but the reality was very different. I think, as people see there's more security, they'll be more comfortable about flying." But that alone may not be enough to put the airlines on secure footing anytime soon.

Even before the attacks, several major airlines were in the red.

The economic slowdown had put the breaks on business travel - which accounts for only 8 to 10 percent of passengers, but traditionally produces 40 percent of airlines' revenues. With the economic recovery also kicked back on its heels, business travel continues to lag. In a bid to win back such high-yield passengers, United led the pack by cutting business fares as much as 50 percent and eliminating the Saturday-night stay on select flights.

It will take time to determine whether such efforts will be effective. Immediately after the attacks, many companies, like Morgan Stanley, issued a moratorium on all business travel, unless a client requested it. Now, they're leaving it up to employees' discretion. Many other companies are forgoing commercial airlines altogether, opting instead to charter private planes.

"Charter operations can't get enough planes in the air because people have bailed out of the commercial airlines," says Matthew Roden, who is in business-jet sales. "There's a sense the new security measures aren't measuring up to the rhetoric."

The airlines are doing everything in their power to counter that impression. They routinely tout the tightened security at all airports and the introduction of more federal air marshals in domestic skies.

They're also continuing to press hard for a full federal takeover of airline security. This week, United and American Airlines also announced they were redesigning their cockpit doors and reinforcing them with steel to make forced entry more difficult.

"There is so much at stake here," says Joe Hopkins, spokesman for United Airlines. "It's not just the airline industry, but many others that are linked to it, like the convention business. It's really one of the most critical industries we've got in terms of linking sectors of our economy together."

In a bid to ensure their own financial survival, the airlines are cutting back their flight schedules dramatically and laying off more than 100,000 people. The federal financial bailout, $5 billion in direct grants and $10 billion in loan guarantees, has helped ensure their liquidity and warded off, at least for now, any bankruptcies among the major carriers.

And there are hopeful signs. The number of passengers continues to steadily increase. On Sunday, Sept. 16, immediately after the attack, only 533,000 passengers took to the skies, according to the Air Transport Association (ATA), the major carriers trade association. This past Sunday, 946,000 people flew.

However, that's still down about 20 percent from a comparable Sunday a year ago. The ATA's Michael Wascom also points out that most of those passengers bought their tickets before the Sept. 11 attacks. The airlines are currently analyzing advance purchase ticket sales for the rest of October, November, and December. That analysis could be available as early as next week, and is expected to be a better barometer of the airlines' future health.

"As far as how long it's going to take them to come back, I don't have a crystal ball," says George Hopkins, an aviation expert at Western Illinois University in Macomb, Ill. "But, boy, everybody hopes its going to be soon."