This month's terrorist attack on New York City and Washington was also an attack on our economy, and it hit some sectors of that economy especially hard. Among the American institutions still reeling from the blow is the airline industry, and Congress and the president must lose no time in crafting an aid package to keep a vital transportation system and employment center up and running.
Airline revenues stopped as the Federal Aviation Administration shut down the skies for two days last week, and liability questions loom for the lines that lost hijacked planes. Airline stock prices have plummeted. Commercial airlines on life support prior to the attacks are now being read the last rites.
Already beset by record-setting labor contracts and skyrocketing fuel costs, airlines also face a future that now includes travelers much more reluctant to travel by air. Increased security is comforting, but the psychology of air travel has become more challenging.
Already, people have lined up at the Amtrak stations, and not because they were stranded following the attacks. More travelers also are expected to opt for the road in the coming weeks.
Of course, fear eventually will fade. But left in its wake will be a devastated airline industry. Several carriers already have announced deep flight-schedule reductions.
Continental Airlines has announced that 12,000 employees must go. US Airways announced that it will cut 11,000 jobs and the parent of American Airlines said Wednesday it would lay off at least 20,000 employees. Boeing has announced it will lay off as many as 30,000 airplane workers by the end of next year.
The Air Transportation Association fears 100,000 airline employees will likely lose jobs eventually as industry downsizing and restructuring proceeds. Jobs in airline support industries also will be impacted. Massive layoffs would be a major blow not only to the airlines, but to the national economy.
Experts put airline losses from the airport shutdown and initial air travel nervousness at $1 billion, and predict a multibillion-dollar annual loss for the industry. There's little doubt this will be the worst financial year in aviation history.
Congress should act quickly to ensure the continued viability of the airline industry. That includes a cash infusion to make up the shortfall caused by last week's horrible attacks, and a new aid package to replace an airline bailout bill, shelved over the weekend, that would have provided $2.5 billion to cover lost revenues and another $12.5 billion in credit lines for struggling air carriers.
The key to doing this job right, however, lies in providing enough aid to compensate the industry for its terrorism-induced losses without simply subsidizing companies that were foundering financially for other reasons. Failing airlines shouldn't be artificially saved, but struggling ones ought to be shielded from the financial impacts of this act of terrorism. One option the government might consider is footing the bill for tighter security measures and aircraft modifications to counteract hijacking attempts.
Outright aid ought to be crafted to allow recovery from an extraordinary event, and not as a general bailout that would interfere with market forces. Such aid is more than justified by the vital infrastructure role air transportation plays in the national economy.
House Speaker J. Dennis Hastert has said that aiding the airline industry is a top priority this week. Congress should treat it as such. The airline industry is facing its worst crisis, and the results will certainly have a ripple effect across this nation. Sound decisions now could keep disruption, not only to the airlines but to the economy, at a minimum.