The fallout ...
When hijackers ploughed two passenger jets into New York's World Trade Centre, they not only brought down a US landmark, they also brought down the world of flying as we know it. TTN reports
Flying will never be the same again.No more fancy silverware for passengers in the first and business class of most of the world's airlines. No more speedy check-ins by airport kerbsides as authorities step up security procedures. And no more of many of the small conveniences that passengers worldwide, and especially in the US, had become used to as part of modern air travel. On September 11, hijackers of US airliners not only brought down New York's World Trade Centre, they also delivered a body blow to the world's already struggling airline and tourism industry. Fewer flights, higher fares and tough security procedures in air and at airports are expected to be the order of the day for travellers. Already, major airlines including British Airways, Emirates and Cathay Pacific have banned the use of metal knives as part of their catering service. Only plastic knives for diners now. Airlines have also advised passengers to factor in extended check-in time of more than three hours before flight and to further limit cabin baggage which has come under tighter security scrutiny. Governments and airlines are looking at various options for tighter security including armed air marshals, tougher cockpit doors and stricter customer profiling at airport check-in counters. A sharp rise in war risk premiums in what one industry official said would be "hundreds of per cents" is set to raise the cost of these measures which will further add to the burden facing the world's airline industry. London insurers cancelled all war and terrorism cover in order to raise their premiums and governments have been forced to step in to provide insurance guarantees to keep airline in the air. Rupert Atkin, Chairman of Lloyd's War Risk Committee, said airlines would face severe increases in war cover for the aircraft themselves. "It's fair to say that it's hundreds of per cent," Atkin said. The present cost of cover is regarded as commercially confidential. Airlines buy separate insurance to cover both the aircraft and the passenger liability against war or terrorist attack. "Passenger liability will be done on a per-head basis and will go up from nothing to $1.25 per capita," said one leading Lloyd's underwriter. The shipping market has also been hit by underwriters withdrawing war-risk cover for vessels calling in the Middle East and East Mediterranean. Insurance companies themselves have taken a huge hit from the attacks, with losses forecast in billions of dollar; Lloyds putting its own losses at more than $1.8 billion. Executive business travel, which delivers a significant slice of airline profits, is expected to take a nosedive. Already in the aftermath of the September 11 attacks, this sector has taken a beating in the Middle East and elsewhere in the world. Several multinational companies are reported to have advised their executives to cut back on travel, especially on US-owned airlines. "Multinational corporations particularly do not want to take chances and top-level executives are rescheduling their business trips," said one official. "It is basically a case of better safe than sorry." The global airline industry which had already forecast a significant decline in growth this year due to concerns over the health of the world economy, went into a tailspin after the attacks. A Salomon Smith Barney survey of 17 major airlines outside the US early last month had found their average forecast for traffic growth had dropped to 5.3 per cent from the previous year's figure of 6.7 per cent. Since the attacks, the slump in air travel - by as much as 40 per cent in the US and Europe by some estimates - has resulted in sweeping job cuts, sharp reductions in flight schedules with many smaller carriers facing bankruptcies and a plunge in share prices as investors run for cover. Airlines and their key suppliers like aeroplane manufacturer Boeing and avionics maker Honeywell have announced more than 100,000 lay offs and industry executives say the multi-billion dollar bailouts announced by the US and European Union are unlikely to ease the industry's pain in the short term. American carriers also said wide exposure to lawsuits, especially for the airlines whose planes were hijacked - American Airlines and United Airlines - would frustrate the industry's ability to raise needed capital and prevent them from buying insurance. Richard Anderson, chief executive of Northwest Airlines Corp, cited a letter from Morgan Stanley at a congressional hearing that said there would be no help from Wall Street for major carriers until uncertainty over industry liquidity was eliminated. A top airline industry body predicted that the total number of passengers making international flights over the second half of 2001 could fall by up to 16 per cent in the wake of the attacks, but the trend remained totally uncertain. The International Air Transport Association (Iata) said it had had to tear up its traditional passenger and air freight traffic forecasts because of the crisis. "We're completely in the dark," Iata Director Peter Morris told an industry conference in Budapest. Mark Heuchan, assistant director at Iata's forecasting unit, said international freight traffic would be even harder hit, and could drop by as much as 25 per cent in the second half of 2001, and by 13 per cent for the year, after a provisional first-half fall of 2.5 per cent. Many tourism officials have predicted dire consequences for the industry worldwide, warning that the attacks could lead to "fundamental shift in the way we behave as tourists". The immortal footage of passenger jets being used as weapons of mass destruction is likely to have a lasting impact on the confidence of tourists, said one expert. And a US survey by market research firm Yesawich, Pepperdine & Brown shortly after the attacks found that not only would business travellers take fewer overseas business trips in the future, almost 60 per cent of leisure travellers would also take fewer overseas trips. Any boycott by western tourists would have serious repercussions for some of the world's poorest economies - many of which are becoming increasingly dependent on tourism. There could also be serious repercussions for Middle Eastern economies, which have increasingly attempted to promote themselves as safe and idyllic destinations. Nations such as Jordan and Lebanon which were already facing the effects of the ongoing uprising in occupied Palestinian territories, face further gloom. Hotels, travel agencies, tour operators throughout the Gulf and the wider region have reported cancellations of bookings from travellers in Europe and the US. "We have had 252 cancellations in the past three days. All these tourists had booked tour packages for desert safaris," Samir Tabbah, managing director of Desert Adventures Tourism in Dubai, said soon after the attacks. Shujjat Yar, director business development for Le Meridien Dubai said: "We have had some cancellations. As travellers from certain places have been advised not to travel during this period, they have either postponed or cancelled their bookings. But we are sure that visitors will regain confidence in Dubai as it is the safest destination in this part of the world." In Bahrain, Skal International Bahrain vice-president Mohammed Buzizi said that although travel within the Gulf had not been affected, there was reluctance among Bahrainis to go to America and Europe. He said that while leisure trips were mostly hit, business trips were also being cancelled. Buzizi said international events and conferences were being postponed or cancelled all over the world. But in a silver lining to this gathering cloud of doom and gloom, the World Tourism Organisation (WTO) said it was maintaining its longer term growth projections. WTO secretary general Francesco Frangialli said that while it could be several years before global tourism recovers from the air attacks on the US, the longer-term outlook remained upbeat. "We shall come back on track in one to two years," he said in Seoul. Frangialli said his organisation maintained its projection for international tourist arrivals to top one billion by 2010 and over 1.5 billion trips abroad by 2020. "We're on a trend of rapid growth," he said. The WTO said during the first eight months of 2001, global tourism was on track for an increase of 2.5 to 3 per cent and barring widespread new developments, it predicted growth this year should come in at between 1.5 to 2.0 per cent.