Slow to Grow, With Less Risk: Airports, scrambling over security, now face a different airline industry.

by John F. Infanger , Editorial Director SARASOTA, FL – It will be several years before the U.S. airline industry returns to traffic levels seen in 2000, according to analysts speaking at the Forecast: 2003 airline forecasting conference...

"We do make this point not to criticize the government," says Hallett, but rather to raise awareness to how even well-intentioned government acts can have a negative impact. Taxes on air transportation, she says, are really "consumption charges."

Hallett calls for government funding of air security and placing an emphasis on customer service to get passengers back onto airplanes. At the same time, she calls for continued assistance by the federal government to cover war risk insurance, and for the creation of the Department of Homeland Security to help consolidate costs.

Interestingly, Buttrick of UBS Warburg disputes the burdens of taxation on the industry, pointing out that it’s the carriers that benefit most. Ticket taxes pay for air traffic control; PFCs pay for infrastructure; and new taxes pay for security.


Looking at airport planning, Boyd says managers can continue to expect reductions in turboprop service and access challenges for smaller communities. Continuous hubbing, recently introduced by American Airlines, will have an impact at select hubs where a carrier has a large origination and destination market, and could actually have a favorable impact of more frequent service to some smaller communities via regional jets.

Airports seeking new airline service must focus on demographics, says Boyd. For example, businesses with connections to the auto industry may have a need for service to Northern Mexico. Also, identify "lost cause" markets that can waste marketing dollars, he says.

Travel banks, which show a community commitment, can help, but require a strong business segment. However, they can divert revenue from incumbent carriers.

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