A Shock That Wore Off

By Keith L. Alexander
Washington Post Staff Writer
Friday, August 11, 2006

Just as the nation's airlines were experiencing their strongest resurgence since the Sept. 11, 2001, terrorist attacks, Britain's announcement yesterday that had it foiled a transatlantic bombing plot sparked concern that nervous air travelers might once again start canceling trips.

But analysts and airline executives said this terrorism scare is not expected to have a lasting impact. Airline shares were down sharply yesterday morning but had largely recovered by the end of trading.

Calyon Securities Inc. analyst Ray Neidl said he didn't foresee a great deal of traveler cancellations in the near term, but if passengers do cancel flights through the Labor Day weekend, the industry may be forced to offer fare sales to boost passenger levels.

"We're going to have to monitor the operations during the next few days, but it's unlikely there will be any long-term implications," Neidl said.

Shorter flights, such as the New York shuttle, were most at risk of losing customers who may opt to catch a train or drive rather than deal with security lines and the fear of flying. The shorter-haul flights along the East Coast had the biggest drop in passengers after the Sept. 11 attacks and were the last routes to return to normal.

"If you have to spend two or three hours waiting for a flight, it might be quicker to drive," said analyst Helane Becker of Benchmark Co.

Many carriers yesterday were in wait-and-see mode on the status of their daily operations as they sought to regroup. Some added staff members to help with congestion. Delta Air Lines called in employees to work overtime at several of its hubs, including Hartsfield-Jackson Atlanta International Airport. Delta spokeswoman Gina Laughlin said the airline would consider using the additional employees today and through the weekend.

Airlines were encouraging travelers to arrive at airports at least an hour earlier than usual -- two hours for domestic flights and three hours for international flights -- to allow time for security.

Northwest Airlines, United Airlines, US Airways and Delta all reported average flight delays of about 20 minutes yesterday, though some United and US Airways international flights had delays of as much as two hours.

American Airlines, the world's largest carrier, canceled three of its 16 daily flights yesterday from London to the United States. The airline also canceled three of its London-bound flights from Chicago, Boston and New York's John F. Kennedy International Airport. American canceled about 1 percent of its 3,900 daily domestic flights.

"We're nowhere near the number of cancellations we thought we might have," said James May, president of the Air Transport Association. "Hopefully, we will be back to full capacity and an efficient system within the next day or so."

American Airlines spokesman Tim Wagner said he expected the airline to return to a "pretty normal schedule" today.

Yesterday, British Airways canceled one of its three London flights out of Dulles International Airport and one of its three London-to-Dulles flights. British Airways spokesman John Lampl said the airline hoped to operate about 75 percent of its flights between the United States and London today. "We're hopeful all of our Washington service will operate," he said.

Most airlines operating international flights will allow travelers to change their flights without paying a fee as long as they act by Sept. 1.

If travelers do shy away from flying, it could cut into airlines' improving financial performance. UAL Corp., parent of United, recently reported second-quarter profit of $119 million, its first quarterly profit in six years. US Airways reported earnings of $305 million, and American's parent, AMR Corp., had profit in the quarter of $291 million.

After falling as much as 5 percent yesterday, airline shares bounced back. UAL declined 31 cents, or 1.3 percent, to $25.52. Continental Airlines was down 35 cents, or 1.4 percent, to $23.86. US Airways' stock dropped 26 cents, or 0.6 percent, to $40.52.

Bill Connors, executive director of the National Business Travel Association, said many of his 1,600 managers reported that few members were canceling upcoming business trips. Connors said the biggest concern among his members was how to prepare and equip travelers for the new security requirements.

"At some point, you want to make sure that the restrictions aren't so onerous that you cannot conduct commerce conveniently," he said. "But I don't think we're there yet."

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