University Times

Among the industries still reeling from the fallout of the Sept. 11 attacks is the country's airlines industry. Since four planes were downed during the terrorist attack, several airlines have cut their flights by a quarter, at least 100,000 airline workers industry-wide are expected to be furloughed in the next six months and stocks have plummeted.

"Right now, we're in a race between customer confidence in security and airlines viability," said Martin Staniland, professor and director of the international affairs division at Pitt's Graduate School of Public and International Affairs. It's too early to tell how the race will turn out, he said.

"US Airways, for example, is close to bankruptcy," Staniland said. "I think within a year there will be much more federal involvement in the industry. The airlines may go the way of Amtrak, but it depends on Chapter 11 bankruptcy results, how many airlines [will have to file] and how hard the industry is hit. Also, there could be mergers, but the Department of Justice will have to soften its position on that. I just don't know how that will all play out."

Congress approved a $15 billion bailout package Sept. 21 for the U.S. airlines, which includes $5 billion in cash assistance and $10 billion in loan guarantees, with airline stock as collateral. The legislation established the Air Transportation Stabilization Board to monitor government loans with options to buy airline stock at a fixed price. As a result, the federal government may be able to take part ownership of struggling airlines.

In an industry that has long sought government deregulation, "It is ironic that the federal government will have to become much more involved. Already the federal aid package is larger than most people expected," said Staniland, who is a consultant for the Transportation Research Board, U.S. Department of Transportation.

The Sept. 21 legislation provides that victims or survivors seeking damages can appeal to a U.S. attorney general-appointed arbiter empowered to award judgments in addition to payments awarded from insurance settlements.

"That's another issue: how the insurance suits will turn out. Right now that's not clear, although I hear there's talk of limiting settlements."

Another problem with the bailout plan is that it raises objections from European airlines, which compete internationally with several of their U.S. counterparts, Staniland said. "European stock in airlines has also declined. British Airways stock is way down right now. But I expect a recovery. For airlines that rely heavily on international flights, especially trans-Atlantic flights, the picture is less grim." Travelers within the country, especially vacationers, have acceptable alternative forms of transportation, he said.

"I do think that certain classes of travelers will need to return to the airlines. I think payloads will be picking back up and business travelers will pick up. But the debt is so high it's not clear how long the airlines can stay viable."

Staniland pointed out that several of the airlines were in dire financial straits before the Sept. 11 events. "Some of them had expansion plans and were building new aircraft without the customers to fill them," he said. Many also were facing financial restructuring and down-sizing.

One thing there is agreement on, Staniland said, is that current U.S. airlines industry security is not adequate. "We will never have perfect security," he said. But there are obvious measures that can be taken, such as securing the doors to cockpits.

International airlines security across-the-board is much better than in this country, he said. "Without sounding pro-European, I was thinking about this the other day: At London-Heathrow, flight crews don't enter the regular terminal, so you don't see pilots and others walking up to gates and punching in some numbers gaining access to planes. They're checked in at a separate facility, both before getting on and deplaning.

"And only ticketed passengers go through security checkpoints. You never see family and friends at gates. I believe that is standard throughout Europe."

In contrast, Staniland described American airport security as "sloppy." "I think what's needed is a federal force or organization for airport security, not just the GAO (U.S. General Accounting Office) dropping bags in containers and waiting to see how long before they're discovered."