The Air Transport Association has released a 36-page report outlining the economic risks a U.S. war with Iraq would place on the already beleaguered airline industry—and on the rest of the economy. Calling it a "perfect economic storm," the airline crisis has reached a point where "the prospect of a forced nationalization of the industry is not unrealistic," says the report.
"The economic risks go far beyond the airline industry," said ATA President and CEO James C. May in a press release. "The stakes for the entire U.S. economy are extremely high." And the stakes for meetings—and meeting planners—will be even higher.
Citing fears that the consequences of a war would be severe, the report says that, in the most likely scenario, a war would cause losses to the airline industry of $10.7 billion, and 2,200 daily flights would be cut, as would 70,000 additional jobs. In the worst-case scenario, the losses balloon to $13 billion, and a reduction of 3,800 daily flights and 98,000 jobs. Part of the problem is that, unlike the situation before the Gulf War, the airlines are already in dire straits: since 9/11/01, the airlines have lost $18 billion, with an additional $6.7 billion in losses projected for 2003 even without a war. In addition to fewer passengers, the airlines have been hit with skyrocketing fuel prices (up 108 percent over this time last year), and an additional $4 billion annually in government-imposed taxes, fees, and unfunded mandates.
For meeting planners, this could be a devastating blow, since flights will be reduced or cut altogether to smaller and medium-sized communities—perhaps the one your next meeting is going to. In addition, the report says that for every airline employee who is laid off, almost four tourism and hospitality workers will join the unemployment line. Should the worst-case scenario ATA outlines happen, this would mean almost 400,000 hospitality employees would get the pink slip.
ATA officials told the Boston Globe in an article today that some possible solutions include the government temporarily suspending $9 billion in annual aviation taxes, easing jet fuel prices by releasing oil from strategic reserves, and paying full freight for the approximately $4 billion security costs.
For the full report, click here .