"What Would War Mean for the Airlines?"

Monday, October 7, 2002

What Would War Mean for the Airlines?  
The Current State of the Airlines  
AirTravel.com

 
If the events of September 11th, 2001 are any indication of how events
can deeply affect the stability of the airline industry, then war
against Iraq could prove devastating. 

The value of airline stocks have generally plummeted. Not only did stock
values sink during the tumultuous times that have plagued the skies
since September 11th, 2001, but improved circumstances seem less likely
as the prospects of war against Iraq inch closer to a real possibility. 

Many major carriers around the globe have slashed jobs, instituted more
restrictions on tickets and the like. Some airlines have plunged into
bankruptcy or have ceased operations completely. These are difficult
times for many airlines, and the possibility of war may have grave
ramifications for the airlines. 

How could war against Iraq possibly affect the airline industry? 

   Fuel prices have greatly increased in recent weeks. War could result
in even higher fuel prices. Increases in fuel prices are often passed on
to passengers in the form of more expensive tickets. Higher prices may
dissuade some from traveling. 

   Many airlines are still recording overwhelming losses. The
uncertainty of war and its effects on the economies of different
countries could lead to more instability in the airlines and result in
more job losses, less people flying, etc. 

   Airlines are already paying huge sums for additional war risk
insurance. War could hardly decrease these costs. Additional costs to
airlines usually translate into bad news for the consumer. 

The current climate in the airline industry is not entirely promising.
In uncertain economic and political times industries such as the airline
industry are especially vulnerable because their financial viability
seems to rely on healthy, prosperous economic times. Certainly it is not
possible to foresee how war will affect the airline industry unless it
does occur, but the signs would indicate that war may result in more
precarious times for many airlines.


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