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On the Homefront: The Airline Industry

April 2, 2003 at 12:00 AM EDT
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BETTY ANN BOWSER: If you want to know why so many Americans aren’t flying these days, don’t go to the airport. Talk to Jamie Angelich of Denver instead. She just canceled a much- anticipated vacation to Washington, D.C., with her husband and ten-year-old son. The Angelich family is staying home because America has gone to war.

JAMIE ANGELICH: I have a son, and he’s my only child, and why would I risk taking him somewhere where there could be something that happens? And, you know, he’s savvy enough to even know that. He even says, “Well, it’s a good thing we live in Denver, mom, because, you know, if we lived in Washington, or New York, or these big cities, they’re probably big targets.” You know, he realizes that.

SPOKESPERSON: Please report all unattended baggage…

BETTY ANN BOWSER: The war in Iraq has made things worse for the airline industry that was already reeling with financial problems. Just this week, American Airlines narrowly avoided filing for bankruptcy, and U.S. Airways emerged from Chapter 11, after cutting a billion dollars in costs.

AIRLINE STAFF PERSON: Gate 39 is your departure gate out of Denver, it is on time today…

BETTY ANN BOWSER: One survey shows 19 percent of all American companies have canceled international business travel until the war is over. Things are so bad, that the airlines are losing about $1 million an hour, in a year where a $7 billion deficit was already projected.

Across the board, the major carriers have cut their flight schedules 5 to 12 percent, and eliminated more than 10,000 jobs.

TRAVEL AGENT: Okay, when do you want to go?

BETTY ANN BOWSER: But it isn’t just the airline industry that is suffering. The entire travel business is singing the blues.

SPOKESPERSON: Denver to Lyon…

BETTY ANN BOWSER: At Navigant, a national travel firm in Denver, bookings are down more than 10 percent.

TRAVEL AGENT: You said the children are both under four.

BETTY ANN BOWSER: The company had already downsized its staff after 9/11, but now it’s having to make additional cuts.

EDWARD ADAMS: As transaction levels fall, we are modifying working hours and asking folks to sacrifice. And the biggest challenge is just managing morale and keeping the folks up to speed, in terms of how we’re managing on a day-to-day basis.

BETTY ANN BOWSER: Jim May is the airline industry’s chief lobbyist. He says the federal government needs to step in and alleviate some of the pain.

JAMES MAY: If this were a hurricane, the federal government would have already have declared an emergency and FEMA would be on the way out.

BETTY ANN BOWSER: May wants Congress to come up with billions of dollars to cover some of the increased security costs imposed since 9/11. He says it’s not an industry bail out.

JAMES MAY: I don’t think the airline industry deserves help when it comes to the long-term problems of the industry. I think the airline industry does deserve help when it comes to the specific consequences of hostilities in Iraq, which are events well beyond its own doing. We can’t control those events, and so it is only in that area that we’re looking for economic cushion or relief.

BETTY ANN BOWSER: Yesterday, the House Appropriations Committee approved $3.2 billion in temporary relief for the industry. The Senate Appropriations Committee approved $3.5 billion. But a number of legislators were angry with the airline industry, saying it had created most of its problems, not the war. Wisconsin Congressman David Obey is the ranking Democrat on the House Appropriations Committee.

REP. DAVID OBEY: I think we need to face the fact that in reality, they are “Let’s pretend capitalists.” I mean, the fact is, that they are coming into the federal government once every two or three or four years asking for yet another bailout. Whether this is passed or not, this is the last time that this member is going to vote to contribute a dime to that industry.

BETTY ANN BOWSER: Republican Congresswoman Anne Northup was critical of the multimillion dollar bonuses some airline CEO’s have received.

REP. ANNE NORTHUP: In no way does this industry show any responsibility that they deserve this sort of saving again and again. First of all, we do see bonuses that are outlandish when these companies are making so little.

BETTY ANN BOWSER: The current relief package has a provision that would outlaw excessive pay bonuses for airline executives. Flight attendants were lobbying for industry relief today on Capitol Hill. Thousands of airline employees like themselves have been laid off. But they also support a clause that would limit airline executive bonuses. Sara Dela Cruz works for United.

SARA DELA CRUZ: It’s difficult to come to work when you know your friend is sitting at home running out of their unemployment benefits and unable to find another job in this economy while our CEO’s across the industry are taking bonuses.

BETTY ANN BOWSER: Before it’s over there could be a fight over how much the airlines get. The White House said today as the current package now stands it contains too much money.