Crash, Scares May Mean Travel Dip

After enjoying a summer of heavy, and profitable, travel demand, the airline industry has hit a patch of turbulence that could cause some uneasy fliers to reconsider taking to the skies.

Several weeks of security-related incidents, including a diversion of a US Airways flight Monday after a threatening note was found on board, have put concerns of airline terrorism back in the spotlight.

And the crash Sunday of a Comair flight near Lexington, Ky., that killed 49 people broke a nearly five-year stretch without a major domestic airline crash.

"For some people who are on the fence in terms of their comfort with flying, the incidents we've seen could potentially get some of them to stay home, or opt for driving at least a portion of the distance," said travel analyst Henry Harteveldt of Forrester Research.

The good news for the airlines is that the bulk of the summer leisure-travel season has passed, analysts say. Safety and security concerns tend to affect tourists more than business passengers, which will likely minimize the effect on the industry.

And regular fliers have become used to security-related hassles at the airports, said airline consultant Darryl Jenkins.

"These things drive you batty, and everyone hates them," he said. "But people adapt and plan for them and at the end of the day, they're just a pain in the rear, but you deal with them."

Investors appeared unconcerned Monday, bidding up airline stocks as oil prices declined. Shares of AMR Corp. (ticker: AMR) of Fort Worth, parent company of American Airlines, rose 52 cents to close at $19.92. Southwest Airlines (LUV) of Dallas climbed 34 cents to $17.29 per share. And Houston-based Continental Airlines (CAL) was up $1 to $23.96 per share.

The latest round of problems for the industry began Aug. 10, when British authorities said they had thwarted a plot to blow up passenger jets between London and the United States.

The Transportation Security Administration banned most liquids and gels in airline cabins, resulting in an unexpected surge in checked baggage and longer security lines at some airports.

In subsequent days, a spate of scares made the news, as several flights were diverted because of disruptive passengers or suspicious objects, like utility knives, found on board.

An American Airlines flight from Manchester, England, to Chicago was diverted Friday to Bangor, Maine, after authorities on the ground reported a threat.

Then came Sunday's crash of Comair Airlines Flight 5191, the worst airline accident since 2001.

"Certainly, this is a distraction that the airlines don't need right now," said airline consultant Stuart Klaskin of Klaskin, Kushner & Co.

Most analysts, however, said the airlines, including American and Southwest, are unlikely to suffer a long-term decline in passengers from the recent news.

"Really, I think these things are a blip," Jenkins said. "The thing that drives travel is the economy, and that's what you need to watch."

Traditionally, passenger travel dips somewhat after highly publicized plane crashes, Jenkins said.

In some cases, it can be serious -- the 1996 ValuJet crash in the Florida Everglades nearly killed that company.

It changed its name to AirTran, brought in new management and moved its headquarters from Atlanta to Orlando, Fla.

In this case, however, the big airlines are unlikely to suffer because Comair is a little-known regional carrier that provides feeder service for Delta Air Lines.

"When you buy the ticket [on Comair], it says Delta, but when the plan crashes it's Comair," Klaskin said. "So from that perspective, the major airlines are somewhat distanced from this."

Jenkins said the crash could spur some sales in coming weeks.

"Usually after the bad coverage stops, the airlines will do some sales and bring people back," he said. "If the story runs its course quickly, most of the passengers will come back."

Copyright: The Fort Worth Star-Telegram -- 8/30/06


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