January, 2002

The 11 September events and Air Travel

Khaled Abdel-Aziz Al-Gohary

The 11 September attack against the United States has had consequences on the US and international economies and has caused disturbances in fields that seem to have no direct relationship with the incident. The use of civil aircraft as a weapon in these attacks left the international air travel industry one of the most inflicted of all.

Some estimates suggest that US airlines lost a billion dollars daily as a result of the recession caused by the attacks. The crisis increased with the sharp downfall of shares in US airlines immediately after the incident. A number of airlines laid off thousands of employees in the United States and Europe. Officials of US airlines officially informed the US Congress that their losses amounted from about $10 billion to $12 billion during the current fiscal year, marking the biggest loss in the history of the commercial air industry. To minimise their losses, companies have been compelled to reduce their flights by as much as 50 per cent.

Losses were huge and some companies, such as Swissair, halted flights totally and dismissed many employees. Employees of industrial aircraft companies were also affected, and US and Western companies have had to shoulder huge unemployment grants.

In this context, some US airlines announced that they may lay off more staff in the coming period, and that the whole US flight system would face grave threats if no serious counter-steps were taken. Airlines asked for governmental aid of $24 billion to rectify their deteriorating financial position. The aid includes collateral of $11.2 billion, tax exemptions of $7.8 billion and direct grants of $5 billion.

The crisis in the airline industry is inseparable from the total impact of the events on the international economy. The domino effect also hit insurance and reinsurance companies, as well as the travel and tourism industries and others.