Too Soon to Tell; London Attacks May Not Hurt Air Travel

Thursday's terrorist bombings in London pose a new threat to one of the airline industry's few bright spots: service to Europe.


As the airline industry struggles to make money amid record-high oil prices, Thursday's terrorist bombings of subway cars and a bus in London pose a new threat to one of its few bright spots: service to Europe.

The summer travel season is typically the strongest time of the year for the major carriers, and they've been counting on heavy traffic on profitable overseas routes to offset steep losses in the winter months.

Airline officials and industry analysts said Thursday that while it's too early to know any long-term effects, the attacks probably won't result in a substantial decrease in travel to Great Britain and other European cities.

"There may be a short-term dampening of travel," said Henry Harteveldt, a travel industry analyst with Forrester Research in San Francisco. "But in the long term, I don't think the damage will be too bad."

Travel agents reported few cancellations Thursday in the wake of the bombings. Terry Denton, of Carlson Wagonlit Travel/Main Street Travel in Fort Worth, said one customer changed the travel plans of four girls who were scheduled to depart Thursday for London.

But for the most part, things were quiet. "We're not hearing much," he said.

Most of the major carriers have been boosting service over the Atlantic during the past year, because it remains one of the few markets that hasn't been penetrated by low-fare rivals like JetBlue Airways or Southwest Airlines.

Fort Worth-based American Airlines is one of the nation's top carriers to the United Kingdom,

Flights to the U.K. generated about 6 percent of American's operating revenue last year, according to Jamie Baker, an airline analyst with JPMorgan Securities. Overall European operations contributed about 14 percent, according to Standard and Poor's. Last month, American's traffic to Europe was up 5 percent from June 2004 and up 21 percent over June 2003.

American Chief Executive Gerard Arpey was in London with several of the airline's top executives Thursday. Company officials said none of the executives were near the bombing sites.

Increased revenue from travelers to and from Europe is desperately needed as the airlines struggle with high fuel prices, with crude oil over $60 a barrel.

American spokesman Tim Wagner said it was too early to tell Thursday whether the attacks had affected bookings. The airline has implemented a "customer comfort policy" to help nervous travelers make decisions, he said.

Under that plan, passengers flying to London can change their travel plans without penalty through the end of July, he said. They can also use the value of their London ticket toward a different destination without having to pay a fee.

Amy Ziff, editor-at-large for Southlake-based Travelocity.com, said she expects the effect of the bombings to be short-lived. London is Europe's No. 1 tourist destination, she said, and with European travel up 20 percent this summer from a year ago, it's unlikely that travelers will cancel trips to the city.

"The big issue now is informing customers of what's going on," Ziff said. Most hotels and airlines are being lenient about making changes to travel plans, she said, although travel businesses are more likely to quickly accommodate reschedulings than outright cancellations.

Still, Ziff said, "it takes a few weeks to see the real impact" of such an event. But even if travelers cancel trips, she said, it would likely bring lower prices on flights that would be snapped up by bargain-hunters.

"That's what happened in Bali" after terrorists bombed a popular tourist nightclub in 2002, Ziff said. In that case, roughly as many travelers were drawn in as frightened away, she said, either to show support for the afflicted destination or to take advantage of the lower prices.

Terry Trippler, an analyst for Cheapseats.com, an Internet travel company, said Americans are less spooked by terrorism than they were before Sept. 11, 2001.

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