GIVEN HOW OFTEN Americans fly, it is noteworthy how little public sympathy is inspired by the genuinely catastrophic plight of the airlines. Since the start of the war, domestic bookings have dropped more than 20 percent, while transatlantic bookings have dropped more than 40 percent, according to the industry. Over the past week, the airlines have laid off more than 10,000 people, and they now say that as many as 70,000 may be out of work by the time the war ends. Three airlines are in bankruptcy proceedings, and others may follow. Even Southwest Airlines, which is usually held up as a model of a well-run, low-cost carrier, has had its profits plunge. Now the airlines want help: "If this were a hurricane, the federal government would have declared a state of emergency," says James C. May, head of the Air Transport Association. More specifically, the industry wants the government to help pay for increased security, to underwrite insurance (as it has been doing since Sept. 11, 2001), to suspend some taxes and fees, and to draw down the national strategic petroleum reserve in order to bring down jet fuel prices, which are at a historical high.
So far the administration, Congress and the public have responded cautiously to these requests, which could add up to $9 billion of "relief," and with good reason. The airlines received a $15 billion bailout package after the 9/11 attacks, leading some in Congress to feel an unpleasant sense of deja vu. More important, as any frequent flier knows, the industry's woes predate both the war and 9/11. Over the past several years, airline services have declined -- pretzels have replaced meals, ticket purchase has become a bureaucratic nightmare -- while CEO retirement packages have in some cases expanded. Although there is a choice of carriers on major routes, some airlines maintain virtual monopolies on certain routes and in certain markets -- and all domestic routes are protected from foreign competition -- making it hard to understand why profits are so elusive.
True, many airlines are saddled with unwieldy union contracts, but it is their responsibility, not the taxpayers', to unravel them. Also true, airlines are especially vulnerable to the effects of this war and the terrorist threats that accompany it -- but so are hotels, theme parks and travel agents, not to mention the economy of Washington. Airlines are vulnerable to rising oil prices, but so is most of the economy. More to the point, past airline bankruptcies have not triggered economic collapse. If one more, or even two more, failed now, it's unlikely that lasting damage would result. Indeed, keeping airlines artificially alive now could prevent needed restructuring later.
Yet because four or five bankruptcies could have a powerful impact, at least on the smaller cities that rely on particular carriers, a case can be made for relief in a few limited areas. It makes sense, for example, for the government to continue, temporarily, to underwrite airline insurance. (Private insurers now charge astronomical rates.) It also makes sense, temporarily, to help with security measures required because of the war, on the grounds that airline security is an integral part of national security. No single airline deserves to be bailed out, and nothing like $9 billion needs to be spent. But it is important that the industry survive the war, if only to shake itself out afterward.