The 9/11 attacks were a blow to the confidence of airline passengers as well as to the airline industry. In the immediate aftermath thousands of jobs in the airline industry were cut as passenger travel spiraled down. The US airline industry has suffered a great deal since the attacks.

The bankruptcy of US Airways, bankruptcy filings by smaller carriers like Midway Airlines; job cuts by American Airlines and the declaration by United Airlines that it too may face the possibility of going bankrupt indicates a disturbing trend in the US airline industry.

The underlining problem is that airlines have not been able to meet the necessary revenues amid a weak economy. Low passenger traffic, following the September 11th attacks has been a burden on the bigger airline carriers. The attacks, followed by increased security and delays as a result of enhanced security measures has also taken a toll on the volume of passengers taking domestic fights.

In addition to the above the industry has been plagued by labor strife and competition from smaller airlines like Spirit and America West with their low airfare strategy are affecting businesses of the bigger airlines.

The airlines are now trying to meet the revenue declines by cutting costs and working on their expenses. American Airlines announced in August 2002 that it was cutting 7,000

The Government established a $15 billion rescue fund for the industry, partly cash and partly in loan funds. US Airways has been successful in getting a guarantee from the government. Other airlines have been unsuccessful and have been told by the government to make “broader and deeper” cuts before the government can bail them out.

Airlines have had a mixed record of surviving bankruptcies. In the early 90’s five airlines went into bankruptcy and only three emerged. The question is where the industry goes from here. With the established airlines holding a greater market share within the industry many analysts believe the short term forecast does not look optimistic. Historically smaller airline carriers have shut down once they declare themselves bankrupt unlike bigger more established ones that tend to run.

With the major passenger airline carriers re-organizing themselves, there seems to be a question mark as to who would emerge out of these bankruptcies. In the meantime passengers like you and me would just have to wait and see what happens as the bigger airlines restructure themselves.

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