Global aviation changes due to impact of September 11 events

By Raquib Siddiqi Dhaka : The incidents and tragedy of September 11, 2001 in the United States of America has left lasting impact on the global aviation. Anyone associated with aviation knew that the industry would never be the same. What was not known was how resilient the industry would be in the aftermath of the tragedy or the direction in which it would change. Situation a decade after the event shows, there can be no doubt about aviation's resilience. By 2004 revenues and traffic surpassed 2000 levels. And by 2006 aviation had returned to profitability-albeit with a weak 1.1 per cent margin. In the interim airlines dealt with SARS, additional terrorist attempts, wars, and rising oil prices. It took three years to recover the US$22 billion revenue drop (6 per cent) between 2000 and 2001. When the global financial crisis struck in 2008, 2009 revenues fell by 14 per cent (US$82 billion) to US$482 billion. This was largely recovered in the following year when industry revenues rose to US$554 billion and airlines posted an US$18 billion profit. Clearly the restructuring of the decade has left airlines leaner and more resilient in the face of crisis. Over the decade, the dimensions of global aviation have also changed. IATA expects 2011 airline revenues of US$598 billion_ nearly twice the US$307 billion of 2001. Airlines are also expected to carry 2.8 billion passengers and 48 million tonnes of cargo. That's a billion more people flying and 16 million more tonnes of cargo than in 2001. While it is difficult to isolate the impact of the events of 2001, it can be said that they were a part of a chain of events that cost the industry three years of growth. The 2008 global financial crisis cost another two years of growth. The legacy of 9.11 is felt most in airport security. Aviation is more secure today than in 2001. But this has come at a great price in terms of passenger convenience and industry costs. As we move forward, there are five major lessons in security over the last decade : n Governments must coordinate the development and deployment of security measures to ensure harmonised global standards and eliminate overlapping and redundant requirements among nations. n Governments are obliged to foot the bill for security threats which are national challenges in the same manner as they would do in any other sector. Airlines and their passengers currently pay a security bill that had ballooned to US$7.4 billion by 2010. n Passengers should and do play an important role in helping keep air travel safe. Vigilance and cooperation with authorities are crucial. n Governments need to embrace a risk-based approach to security screening. n All must accept that there is no such thing as 100 per cent risk-free security. Governments must focus on the probable and not all that is possible and avoid policies driven by knee-jerk reactions. A good place to start is by removing the hassle that comes between check-in and boarding at many airports. The vision for IATA's Checkpoint of the Future is for passengers to be able to get from curb to gate in a seamless and convenient process. For this, it is needed a risk-based approach to security powered by the enormous amount of data that collect on travellers. Combined with this will be technology that will allow most passengers to simply stroll through a checkpoint that can detect metal and harmful substances without stopping, stripping or unpacking. Parts of this vision could be realised with technology that exists today. Others are in development with a three to seven year horizon. 9.11 was the beginning of the most challenging decade in aviation history. But it is important to note that the industry was already in a weak financial position. World trade had slowed and the 'dot.com bubble' had burst the year earlier. Global airline profits had fallen from US$8.5 billion in 1999 to US$3.7 billion in 2000. US Impact n Air Space Closed : On September 10, 2001, US airports handled 38,047 flights. On September 12, they handled 252 commercial flights. One week later (September 18) there were 34,743 flights. n Passenger Traffic : US passenger traffic, measured by revenue passenger kilometres (number of travellers multiplied by the distance travelled) declined 5.9 per cent in 20012 (compared to 2000) and a further 1.4 per cent in 2002. Airlines struggled to match this decline by cutting capacity (available seat kilometers or number of seats multiplied by distance traveled) by 2.8 per cent in 2001 and a further 3.9 per cent in 2002. This was the first time since World War II that industry capacity declined for two consecutive years. After stabilising in 2003, capacity growth resumed in 2004 and continued until 2008, when it declined again owing to soaring oil prices and the global financial crisis. Capacity fell further in 2009, returning virtually to 2000 levels. Between 2000 and 2009, the US commercial aircraft fleet shrank by around 700 units. n Domestic Market : The events of 9.11?marked a permanent decline in [US] domestic airline demand. Passengers found alternatives to short-haul travel to avoid the security hassles at airports. Total US domestic capacity in 2010 was 4 per cent below the level in 2000. n Financial Performance : US airline revenues fell from US$130.2 billion in 2000 to US$107.1 billion in 2002. Losses of US$19.6 billion were reported in 2001-2002. Losses for 2001-2005 totaled US$57.7 billion. Between December 2002 and October 2005 United, Delta, Northwest and US Airways filed for Chapter 11 bankruptcy reorganisation. n Employment : In 2000, US passenger airlines employed 520,600 workers. By 2003, this had fallen 14.6 per cent to 444,700. Employment levels continued to decline each year through 2010 (378,100) before climbing in the first half of 2011 to 382,900.5 n Government Compensation : On September 23, 2001, the US Air Transportation Safety and System Stabilisation Act became law, providing US airlines with US$5 billion in compensation (for losses incurred during the 9.11 shutdown and incremental losses sustained through 31 December 2001) and US$10 billion in future loan guarantees. Global Impact n Traffic : Global passenger traffic (tonne kilometers performed) declined by 2.7 per cent in 2001. Traffic did not surpass the 2000 level until 2003. It continued to rise until 2009 when, owing to the global financial crisis, it declined 2.1 per cent year-on-year. n Revenues : Global airline revenues declined from US$329 billion in 2000 to US$307 billion in 2001 and further to US$306 billion in 2002. Revenues rebounded to US$322 billion in 2003 and then to US$379 billion in 2004. The next revenue dip was in 2009 when they fell US$82 billion to US$482 billion. In percentage terms this 14 per cent drop was more than twice the decline experienced in 2001-2. n Profitability : Airlines lost US$13 billion in 2001 and a further US$11.3 billion in 2002. The industry recorded its first post-September 11 annual profit in 2006 (US$5 billion), and earned US$14.7 billion in 2007. The following year rising oil prices and the global financial crisis plunged airlines back into the red with 2008-9 total losses of US$25.9 billion. n Bankruptcies : Within months of the attacks, Swissair and Sabena went bankrupt as the 9.11 shock pushed these financially weak carriers into collapse.