Terror threats cloud air-travel recovery

Worried passengers and airport delays could hamper an industry that doesn't expect to return to profitability until 2005.

Fly the jittery skies.

With heightened security, the sudden cancellation of flights, and now the crash of an Egyptian charter jet in the Red Sea, think of it as a new motto that the still-troubled airline industry is dreading.

Since Christmas Eve, almost a dozen flights have been canceled as a result of the intelligence concerns. Some security analysts contend that should make travelers feel more confident because it's evidence that security measures are working. Others are less sanguine, noting the terror alerts can have an unnerving psychological effect.

The weekend crash of the charter jet full of tourists that killed 148 people is also clouding the once-friendly skies. Almost immediately, Egyptian officials blamed technical problems. But the timing of the accident added yet another layer of insecurity.

Indeed, even some seasoned travelers admit they're now tenser on flights than at any time since Sept. 11 - in part because explanations and rumors are flying about just why those flights were canceled. They range from mismatched names on the terrorist watch list to reports that intelligence chatter indicates specific threats about the British Airways flight to Saudi Arabia. That flight will be canceled again Monday.

"It just gets spookier and spookier," says Richard Gritta, an aviation expert at the University of Portland in Oregon. "This may be an attempt by the terrorists to divert attention from another target, but there's also a psychological advantage to what they're doing. They're crippling the freedom to fly, which is impacting the airlines, which make up a major headline industry in our economy."

For the airlines themselves, this was not the best way to start the new year - which they're banking on to be better than last year. After losing $11 billion in 2002, the nation's carriers cut their losses almost in half to between $5 billion and $7 billion in 2003, depending on how the various bankruptcies are factored. Despite the war in Iraq, the outbreak of the SARS virus, and stubbornly high fuel prices, passenger traffic recovered enough to slow the flow of red ink.

While industry leaders are not looking to become profitable again until 2005, they'd very much like cut their losses in half again in 2004. With the economy looking up and corporate profits rebounding, they're optimistic - provided there's not another attack.

While it's too early to calculate the impact of the holiday threats and cancellations, John Heimlich, an economist at the Air Transport Association, says the key is how individuals interpret the security activity.

"If the reason some people are avoiding flight is some perception of security risk, [all of the extra security activity] will help," he says. "But if the reason they're avoiding it is because there's so much unpredictability in the system - how long it's going to take and whether I get there or not - then it wouldn't be true."

Many travelers, like Dan Brown who just arrived home to Washington from a holiday in Mexico, are taking the security precautions and concerns in stride.

"I'm just going to live my life. You can't let fear about what may happen keep you sitting at home," he says.

The airlines are hoping that kind of mentality grows throughout 2004. And many security analysts agree that's a good attitude for travelers.

"I don't think individual travelers should be worried at all. Air travel is as safe as ever," says Andrew Thomas, a professor of international business at the University of Akron in Ohio and author of "Aviation Insecurity." "But as stakeholders in aviation, whether as taxpayers, citizens, or people who utilize the industry, we know what impact an attack on the system would have on the economy, the political system, our psyche, and the war on terror: It would be totally disconcerting."

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