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Just days after the tragedy, CEOs from the industry's major players gathered before a congressional hearing, pleading for an immediate US$ 24 billion government bailout to ensure solvency. When asked how soon this money was needed, one CEO turned to his left, then to his right, and looking more like someone who had lost his shirt at the dog track than a captain of industry, said, "Like...Friday." Friday was two days away.
Following the immediate bailout, the next challenge for carriers will be branding safety.
The industry is already facing a massive security re-haul. Airlines generally feel that security responsibilities should fall solely on the government, while those in the security industry are lobbying for only partial government control. Congress is still debating the extent of the government's role, though all agree that it should be significant. The presence of US Marshals on flights is certain to increase, and that will mollify some fears. But the reality is that Marshals won't be present on all flights. Securing the cockpits is also a certainty, but that will take time. There is also unanimous agreement over the need to redesign ground safety. Retraining security detail, and restructuring their pay scale to ensure credible candidates, will be instrumental to re-branding air travel. Unfortunately, none of these enhancements can be done with the snap of a finger. They will all take time, no matter how concerted the effort of the airlines and the government.
Meanwhile, the industry is treading water, knowing well that it won't be able to do that forever. Until safety can be assured, the dearth of customers is likely to last.
The fallout hasn't been limited to the US. In Prime Minister Tony Blair's stirring address to the Labour Party on October 1, he spoke of the politics of globalization, saying, "Our self-interest and other mutual interests are inextricably woven together." That interdependence in the era of globalization is underscored by September 11th's effect on the international airline industry. Before the war on terrorism, the global industry had been pinched by recession fears, as business travel had dramatically slowed. Now, in the face of uncertainties over a prolonged offensive against terrorists and the countries with whom they're allied, carriers from South America to South Asia are absorbing reverberations from the US market.
Swissair grounded all flights on October 2 because it lacked cash to pay for fuel and landing fees. Air Canada, AeroMéxico and Virgin Atlantic have reduced capacity by 20 percent. British Airways has cut 7,000 jobs, eliminated routes and taken twenty planes out of service. Asiana is selling planes and other assets to bolster liquidity. Belgium's Sabena, in deep trouble before Sept. 11, is planning dramatic restructuring that could cost pilots up to 1,400 jobs. Like their counterparts in the US, carriers throughout Europe are calling for immediate state assistance, even though the EU bans such subsidies.
The international airlines with the biggest exposure to the US market are most affected. Air France, Aer Lingus and Alitalia are all cutting intercontinental routes.
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The global crisis is the most significant since the Gulf War in 1991. What frightens experts is the nature of this new war. Well-established terrorist cells exist throughout Europe. Amid the crush of speculation, some are saying that multiple military deployments will be necessary. Though US aversion may serve as the linchpin for terrorists' motivations, they're not known to be keen on Europe or other democratic pockets in the world. Given NATO's and the UN's support, it's safe to say that its not just Americans that the terrorists will try to target. These factors are leaving many to wonder if and when the international skies will ever enjoy the safety they did before Sept. 11.
Whether or not the industry will be able to assure safety is the "$64,000 question right now," according to Bill Oliver, vice president of the Boyd Group, an airline industry consulting firm based in Evergreen, Colorado.
"The airlines can only go so far with safety. It's really up to the US government to take decisive steps to truly improve security and rebuild consumer confidence," says Oliver.
The initial measures, like banning curbside baggage check-in at airports, were "really of little value," explained Oliver. "That's a harsh statement. But most travelers are seeing through these first measures. Real changes must occur at the airport, and the fact is that it's beyond the airlines' ability to implement those changes."
Oliver says that trained law enforcement personnel manning security checkpoints will be necessary. He, like most others familiar with the industry, also suggests state of the art technology that could manage access to the aircraft operating areas. "These are true security improvements that will translate to the consumer. Taking plastic knives away from coach passengers and banning finger nail clippers just really fans the flames of insecurity."
American Airlines is launching a campaign attempting to assure the public that travel is safe. Undoubtedly, it will be the first of many. As Oliver sees it, the reality is that any single airline is only as safe as the system it operates in. "Airlines alone are somewhat constrained in what they can do," added Oliver.
The decisive government action that Oliver and other experts call for is imminent. To what degree the consumer will absorb the cost of those changes remains to be seen, though all agree that no expense should be spared. For the time being, airlines have announced discounts on advanced purchases for business fares. While those are certainly welcomed, some analysts feel they're somewhat superficial, and that slashing all business fares -- advanced or not -- is necessary.
A coordinated global industry effort to enhance security -- and brand safety -- could be of great use. Many European countries have airport security systems in place that far surpass those in the US. We can all watch ex-heads of state board commercial flights in an effort to campaign for the safety of flying, but the reality is that those images are not nearly as lasting as the suffering we witnessed on September 11.
One of the more salient consequences of that harrowing day: US fighter jets stand ready to shoot down hijacked aircraft in the future. It's been said that the world will never be the same. Flying may not either, and the branding of it certainly won't. In the new world of air travel, arriving on time has taken a back seat to arriving in one piece. [8-Oct-2001]
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Nick Thornton is a freelance writer based in Stamford, Connecticut.
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Aug 20, 2001
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Brand on the Horizon -- Ron Irwin
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Kellogg may be number two in the cereal wars with General Mills, but as Avis taught us, being number two sometimes means trying harder.
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Jul 2, 2001
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Sick of Ads? -- Nick Thornton
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The Italians and Canadians are breaking new ground in the quest for acceptable ad space. But is a hospital a healthy place to build your brand?
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Jun 25, 2001
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Brands Get the Blame -- Ian Cocoran
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Is all publicity good publicity? Studies show that people do buy with their conscience, and brand owners are proactively starting to take notice.
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Apr 9, 2001
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A 'Real' Steal -- Edward Young
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Intellectual property protection is becoming big business in China where no brand is safe from replication.
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Mar 5, 2001
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Smoke & Mirrors -- Nick Thornton
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Are tobacco transnationlists sinners or saints? Your view may depend on the tobacco marketing laws in your country.
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