"Airline industry recovery will take at least two years, panel says"

Friday, July 18, 2003

Airline industry recovery will take at least two years, panel says
By MIKE RICE
The Kansas City (MO) Star


It will take two to five years for the airline industry to recover from the
economic slowdown, local airline and airport officials said Thursday.

Those officials were part of a panel that discussed the industry and the
future of Kansas City International Airport at a luncheon held by the Platte
County Economic Development Council.

"Our industry is highly dependent upon the economy coming back," said Kevin
Farley, director of sales for Midwest Airlines. "If it comes back strong two
years from now, I think there is potential" for recovery.

If the recovery takes longer than two years, the panel said, airlines and
other aviation industries will have to keep costs down. They stopped short
of giving gloomy predictions.

"I'm going to be -- and want to be -- optimistic," said Mary Kay Gribbons,
the local general manager for American Airlines.

The industry's battered condition has been readily apparent at KCI, where
monthly passenger numbers have been below those of the previous year's
corresponding month for 21 consecutive months. The average number of daily
departures has fallen from 297 in September 2001 to 218 this May.

KCI was hit hard, not just by the Sept. 11, 2001, terrorist attacks, but by
last year's bankruptcy and shutdown of Vanguard Airlines, a Kansas
City-based carrier that was the second busiest at KCI.

And on Wednesday, American Airlines announced that it will eliminate all
eight daily departures from KCI to St. Louis, beginning Nov. 1. The airline
is cutting its hub operation at Lambert-St. Louis International Airport by
half.

Also, American Airlines is reviewing its three main overhaul bases,
including the former Trans World Airlines base at KCI. A decision to close
any of those bases could come in the fall.

To aid recovery, Kansas City aviation director Russ Widmar said, the airport
needs to proceed with its capital projects. They include $257 million in
terminal renovations, the economy parking lot on the airport's outskirts and
a consolidated rental car facility.

"We have to be prepared for when passenger traffic is back to the way it was
in 2000, which was our peak year," Widmar said. "We know we have a proven
demand here in Kansas City."

Farley said business fares will have to increase to meet rising costs. And
Gribbons said a highly skilled and educated work force will be important.

Jane McAtee, the area marketing manager for Southwest Airlines, added that
the airline is concerned about "excessive taxation." She said taxes account
for 20 to 30 percent of a fare.

"We need to be well aware and informed about these (tax) issues because they
are affecting the industry," she said.

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