"State of the Industry: Sept. 11 attacks forever change the way we fly"

Saturday, September 9, 2006

Sept. 11 attacks forever change the way we fly
By Chris Walsh
The Denver (CO) Rocky Mountain News 


When an unprecedented 40,000 U.S. airline flights were grounded immediately
following the Sept. 11, 2001, attacks, people got only an inkling of how air
travel would forever change.
 
It's five years later and welcome to the new frontier of air travel: snaking
security lines, struggling airlines, dizzying layoffs and mothballed airport
projects. 

Just about every business or person associated with the airline industry has
a story of change. Most of it is bad. 

We take a look at how those changes affected customers, airline employees,
airlines and Denver International Airport.

Fliers adjust to long lines, tight security

Remember when you could arrive at the airport 20 minutes before departure
and still manage to make your flight? 
Or when you could greet your family at the gate as they walked off the
plane? 

Remember when pilots didn't pack guns and when you didn't have to slip off
your shoes and jacket at the security checkpoint? 

Air travel today certainly isn't what it used to be. 

The terrorist attacks on Sept. 11, 2001, transformed the way Americans fly,
forcing passengers to adapt to a host of new policies and procedures. The
attacks also created a new mind-set for aviation security, paving the way
for recent changes such as a ban on liquids in carry-on bags, which was
enacted last month after a foiled terrorist plot in Britain. 

For many consumers, flying in a post-9/11 world has become a more stressful
and frustrating experience. 

"Remember that advertising phrase 'getting there is half the fun?' Well it's
simply not true anymore," said George Hamlin, vice president of business
consulting at Morten Beyer & Agnew, in Arlington, Va. "With rare exceptions,
flying is something to be endured." 

Some security changes in the past few years - such as a ban on sharp objects
in carry-on bags after the Sept. 11 attacks - proved temporary or were
eventually eased. But others - such as a ban on bringing lighters aboard -
were permanent. 

Many travelers now arrive at the airport two hours before departure to allow
time for unexpected delays. Airlines no longer let you check in 15 minutes
before your departure, and you must have a boarding pass to get through
security. 

The new rules are meant to keep people safe, of course. But travelers say
they're frustrating because you don't know what to expect anymore when you
get to the airport. 

"It's the whole unpredictability of security now, where you end up leaving a
customer's office an hour before you normally would have because you don't
know how long it's going to take," said Kevin Mitchell, chairman of the
Business Travel Coalition, a lobbying group. 

More significant changes could be in the works. The terrorist plot in
Britain has raised concerns about allowing electronic devices on board. The
U.S., some security experts say, may eventually ban those items from
carry-on bags. 

Aside from security, the flying experience has changed once passengers get
on the airplane. 

The days of free hot meals in economy seating are more or less gone,
although you can now buy food onboard. And forget about enjoying free
cocktails on international flights - in most cases a drink will cost you $5.
Some airlines have also stopped providing pillows and blankets, while others
have started charging for curbside check-in. 

In addition, consumers in many smaller cities lost air service as carriers
pulled back capacity. You're also more likely than before to fly on a
smaller jet. Airlines have shifted to regional planes on many routes. 

Still, several changes have benefited consumers. 

Discount carriers such as Southwest and Denver-based Frontier have expanded
rapidly since 2001, bringing low fares to more cities and helping drive down
overall ticket prices. Airlines also have introduced new consumer-friendly
technologies such as automated check- in kiosks. 

Consumers seem to be taking everything in stride. 

"A lot of the changes in the industry have actually been subtle. They aren't
a deterrent," Hamlin said. "People are finding ways to deal with all of
this."

Coveted jobs lose luster as perks, pay, security dwindle
 
Allen Ward has been a flight attendant for more than 25 years, in large part
because the position offered job security, benefits and flexibility.
 
But many of the reasons why Ward entered - and stayed - in the profession
have evaporated in the past five years. 

His pension plan has been terminated. He's suffered through two recent
salary and benefit cuts. Many of his colleagues have left as part of massive
layoffs. And the legendary perks of the position - free flights - are
disappearing. 

"It's not just that some things are changing; they're going away
completely," said Ward, who works for United Airlines and volunteers with
the Association of Flight Attendants. "It's becoming something else,
something most of us didn't sign up for." 

Ward is one of thousands of flight attendants, pilots, mechanics, baggage
handlers and other airline workers who have dealt with major on-the-job
changes since Sept. 11, 2001. Uncertainty and job insecurity have become a
fact of life, and the situation will likely stay that way for the
foreseeable future, experts say. 

Major carriers such as United, American and Delta have shed nearly 170,000
full-time equivalent jobs since 2001 as they downsized, shipped work
overseas and consolidated operations, according to data from the Air
Transport Association, an industry trade group. 

"Mechanics are telling their sons to run as fast as they can in any other
direction away from aviation maintenance," said Steve MacFarlane, assistant
national director of the Airline Mechanics Fraternal Association. "It used
to be a very stable, good-paying job. Now, because of outsourcing, it's very
unstable." 

The news isn't all bad: Low-cost airlines have grown rapidly in recent
years, hiring workers and sheltering their employees from some of the
turmoil. But the number of new workers they've hired is only a fraction of
the number who have been let go, and all airlines have had to cut costs. 

Workers at larger, "legacy" carriers in particular have had to adapt to a
world where longer hours and job insecurity have become commonplace. 

"Productivity levels have changed to the point where employees are working
longer and harder and, in many cases, for less money," said David
Castelveter, a spokesman for the Air Transport Association, a Washington,
D.C.-based industry group. 

Fatigue is now a common complaint. Flight attendants, for example, are
taking more shifts just to generate as much income as they did five years
ago, Ward said. 

Workers at larger carriers have taken huge pay and benefit cuts to help keep
their employers alive, and some make the same amount they did in the early
1990s. 

"Giants like United found they had to turn to employees for major
concessions to survive," said Gary Chaison, professor of labor relations at
Clark University in Worcester, Mass. "There's a new sense of uncertainty and
insecurity." 

Employees at some major carriers have had to cope with the uncertainty
surrounding a bankruptcy. 

There also have been unprecedented changes in retirement benefits. During
its bankruptcy, United received court approval to terminate its pension
plans, meaning current workers no longer accrue those benefits. Many
retirees now receive less than what they were promised. 

And it's become difficult for airline workers to capitalize on their
employee flying benefits. They have to fly standby, and often there's no
room on flights. 

"I'd have to say that the excitement of being able to work in this industry
is gone," Chaison said. 

There are several hopeful signs for workers, though. Larger carriers have
started to hire again, and most airlines were able to generate profits in
the last quarter.

Industry battles back after 9/11, but tough road ahead

Tens of thousands of layoffs. Chapter 11 bankruptcies and billions of
dollars in losses. Shriveling stock prices, widespread cost cuts and soaring
fuel bills.
 
The U.S. airline industry has battled through one of the most tumultuous
times in its history since the Sept. 11 attacks, facing one challenge after
the other and bleeding more than $35 billion since 2001. 

"There's really no comparison to any other period," said Evergreen aviation
consultant Mike Boyd. "Airlines have had to totally rework how they operate
in the last five years." 

Although airlines were struggling financially before the infamous date, the
attacks accelerated the industry's problems and created a host of new
worries and challenges. 

Air travel slowed considerably after 9/11, throwing the industry deep into
the red. The resulting economic downturn made the situation worse. As
airlines adjusted to the new realities, they were hit with soaring fuel
costs, which have contributed heavily to recent losses. 

More than 20 airlines have filed for bankruptcy in the past five years,
including heavyweights such as United and Delta. In addition to massive job
cuts, airlines dumped more than 800 planes as they scaled back capacity and
reduced their bloated cost structures. 

"The last five years has really forced airlines to become leaner, to get
their expenses in line to be more competitive with each other," said David
Castelveter, spokesman for the Air Transport Association. 

Airlines also have worked to increase efficiency, employing more regional
jets and trying to reduce the time it takes to unload and board planes so
they can fly their planes more each day. 

Discount carriers were hit with the same challenges, but they were better
equipped to adapt to the changing environment because of their low-cost
structure. 

"Low-cost has become more of the standard (for the industry) in some
respects," said John -Heimlich, chief economist for the Air Transport
Association. "Consumers in many parts of the country have plentiful access
to some kind of low-cost network." 

The industry as a whole now appears to be turning a corner as carriers begin
to post profits again amid a resurgence in air travel. And some experts
think airlines have learned valuable lessons. 

"In the past, airlines would restructure and make changes during downturns,
but then they would go back to a high-cost structure when the economy
recovered," said Alan Sbarra, a principal in San Francisco-based aviation
consulting firm Roach & Sbarra. 

"I don't think they will allow that to happen this time." 

Still, plenty of challenges lie ahead. 

Airlines are just barely eking out profits. Another economic downturn or
terrorist attack could send the industry into a tailspin. And the direction
of fuel prices likely will play a huge role in whether the industry is able
to recover. 

"We're at a point in our economic expansion where airlines should've been
coining money the last two years," said Kevin Mitchell, chairman of the
Business Travel Coalition. "Instead, we have two large carriers in
bankruptcy and, aside from a nice summer quarter, balance sheets are still a
mess. The threat is in the next downturn."

Busy DIA lands on solid ground after surviving turbulent times
 
Denver International Airport's future looked pretty grim in the days and
months following the Sept. 11, 2001, attacks. 
Airlines rapidly scaled back flights, and consumers left the skies in
droves, leading to a 33 percent decrease in passenger traffic in September
of that year and 20 percent dips in each of the next three months. 

The airport found itself having to swing the cost-cutting ax, slashing $150
million in projects, enacting a hiring freeze and eliminating $23 million
from its operating and maintenance budget. 

"Anything we could to do to slash costs we did," said Turner West, who is
DIA's manager and at the time of the attacks was deputy manager. 

In addition to slumping air travel, DIA had to accommodate the newly created
Transportation Security Administration, and that added $10 million to the
airport's costs. 

The situation worsened when United Airlines, which accounted for roughly 70
percent of all passengers who traveled through DIA, filed for bankruptcy in
late 2002. The company teetered on the edge for more than three years. 

"The United bankruptcy was a very sobering moment," West said. "We were very
concerned about what would happen to them" and, in turn, to the airport. 

But the events of Sept. 11, coupled with the resulting turmoil in the
industry and United's bankruptcy, helped DIA diversify its revenue stream
and reduce its reliance on one major carrier. 

DIA bolstered efforts to open its land to oil and gas drilling, and it
focused more on increasing revenue from such areas as concessions. 

That's allowed the airport to lower costs for airlines from $15.28 per
enplaned passenger in 2001 to $12.90 last year, according to airport data. 

The lower cost has helped bring in more service. 

While United Airlines was cutting back during bankruptcy, locally based
Frontier grew tremendously. The carrier now is responsible for about 20
percent of all passenger traffic. 

This year, DIA was finally able to land discount giant Southwest Airlines,
which returned to the city in January after a 20-year absence. The carrier's
arrival helped lower fares dramatically on some routes, generating more
passenger traffic overall. 

Today the airport is busier than ever, on pace to smash its record for
passenger traffic set last year. 

DIA's financial health appears solid. Revenue is up significantly, and the
airport is making enough money to pay the interest on its debt and refund
some to tenant airlines. 

The Fitch ratings service has upgraded DIA's bonds several times and
currently rates them an A-plus. 

Still, the airport's near-term challenge is coping with growth, and another
downturn could again diminish air travel significantly.

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