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Tuesday, 13 November, 2001, 11:19 GMT
Further blow to troubled airlines
Different aircraft on the tarmac
Airlines have already been hit by the 11 September attacks
The crash in New York is the latest blow for the troubled airline sector, still reeling from the impact of the 11 September terrorist attacks.

In early trading on Tuesday, shares in airlines clawed back some of the ground lost on Monday.

Even if the crash is found to have been an accident rather than an act of terrorism, analysts say it will likely heighten passenger nerves about air travel.

More than 100,000 jobs have already been cut worldwide by airlines, with many more expected to go even before Monday's air crash.

Public opinion

The fear is that Monday's crash will be an added deterrent to passengers already nervous about flying following the 11 September attacks.

"It is the public perception of what safety is that matters," Flight International's David Learmount told the BBC's World Business Report.

"The airline industry has been getting safer since the day it was born and it continues to get safer every year."

Air Transport Intelligence's Chris Kielgard believes the effect will be short term, because in "many cases [in the US] there is no alternative but to fly".

Thanksgiving weekend

Unfortunately for American Airlines, this short -term effect will likely discourage people from travelling this coming Thanksgiving weekend - usually a big earner for these airlines.

"It is the single most travelled weekend in the year on the US airlines," Mr Kielgard told the BBC's World Business Report, pointing out that Thanksgiving travel had already been forecast to be heavily lower prior to Monday's crash.

The news prompted the Travel Industry Association of America to postpone by a week a $20m advertisement campaign to boost tourism.

This highlights the uncertainty of how the crash will be received by potential travellers.

Recovery time

The question is what the long-term impact of the crash will be and whether it will add substantially to the airline sector worries since 11 September.

Overall, air traffic remains about 25% below levels seen before 11 September.

Boeing chief executive Phil Condit believes that it could take between 28 and 42 months for commercial airline traffic to recover from the attacks.

Impact on American Airlines

The influential US rating agency Standard & Poor's believes that the crash will cause a decline in passenger traffic for American Airlines and possibly other airlines.

"The severity of the effect on American's traffic will depend on what the cause of the incident is determined to be," a statement from Standard & Poor's said.

It added: "An extended period of uncertainty regarding the cause would also depress passenger traffic."

Hilary Cook, director of investment strategy at Barclays Stockbrokers, highlighted the key issue for airlines.

"The problem is when are people going to start flying across the Atlantic again," she told the BBC's World Business Report.

Damage already done

American Airlines - the world's biggest airline in terms of passengers carried - and many others had seen sales fall prior to the 11 September attacks as the US economy slowed.

For many the events of recent months can be seen as the straw that broke the camel's back.

"What we are seeing is the acceleration of a process which has gone on for about 10 or 15 years...

"A lot of airlines have simply run out of money... Consolidation is inevitable," the International Air Transport Association's Tim Goodyear told the BBC's World Business Report.

Last week, the Belgian airline Sabena became the first European flag-carrier to go bankrupt, and analysts think it is unlikely to be the last.

Airlines that do survive will likely be slimmed down versions of their former selves.

Many argue that what government help there has been - a $15bn bail-out in the US and limited aid in Europe - simply hasn't been enough.

"The response of governments in Europe is simply that they don't care," Tom Jenkins, executive director of the European Tour Operators' Association, said.

 WATCH/LISTEN
 ON THIS STORY
IATA's Tim Goodyear and analyst Chris Kielgard
discuss the effects of Monday's crash on the airline sector
Flight International's David Learmount
"It is public perception of what safety is that matters"
The Aviation Institute's Daryl Jenkins
"If we can find out what happened, all the better"
Airlines around the world are cutting staff after the terror attack

US airline crisis

UK and Europe

Aerospace industry

Travel and tourism

Global impact

WAR AND TERROR
See also:

12 Nov 01 | Americas
12 Nov 01 | Business
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