"Iraq War Threat Starts To Reduce Airline Traffic"

Tuesday, February 11, 2003                         

Iraq War Threat Starts To Reduce Airline Traffic
The Wall Street Journal


The prospect of war in the Middle East is starting to reduce global airline
passenger traffic, according to the International Air Transport Association.

Anticipation of a war against Iraq has caused a slowdown in tourist and
business flights, said Giovanni Bisignani, chief executive and
director-general of IATA, which represents about 98% of airlines operating
international services.

"We have seen a strong decrease in traffic immediately after Christmas and
New Year," he said following an IATA aviation conference.

"The effect of a perception of a possible problem is immediately reflected
on the number of passengers for tourist and business destinations," he said.

The association said the impact has been felt mainly in North American and
European passenger traffic. Asia bucked the trend largely because of a surge
in travel related to Lunar New Year celebrations in many parts of the
region.

A war in Iraq would send passenger-traffic levels plummeting by 15% to 20%,
based on the fall in air travel seen during the Gulf War 12 years ago, Mr.
Bisignani said. It took more than a year for traffic to return to prewar
levels, he added.

The figures come from information provided by IATA's 275 member airlines and
industry estimates.

Overall air passenger traffic edged up 0.06% in 2002 from a year earlier as
airlines cut seating capacity by 4.3%, Mr. Bisignani said. Last year,
passenger traffic was down 4% from 2000, IATA said.

IATA is negotiating with China to reroute flights from Europe into Asia over
the Caspian Sea and the Himalayas, then over Tibet toward the South China
Sea, in the event that war breaks out, Mr. Bisignani said.

The Asian-Pacific region was one of the few bright spots, with passenger
traffic growing 5.8% last year and seating capacity rising 1.1%, Mr.
Bisignani said.

He credited China's fast-growing market for driving growth in the region.
IATA forecasts traffic in China will increase 10% a year to become the
world's second-largest market for the airline industry by 2010. In China,
carriers are benefiting from "economic development that is increasing at a
breakneck speed and as a result, a lot of demand is being created for
travel," IATA spokesman Anthony Concil said.

In addition, airlines world-wide are battling spiraling airport fees and
insurance costs that have risen to $15.8 billion from $1.8 billion before
the Sept. 11, 2001, terrorist attacks, Mr. Bisignani said.


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