Travel group warns of multiple US airline failures

24 June 2008 23:43  [Source: ICIS news]

WASHINGTON (ICIS news)--The collapse of several US airlines due to unsustainable fuel costs is a serious possibility in the second half this year and could easily accelerate a widescale US economic decline, a travel group warned on Tuesday.

 

The Business Travel Coalition (BTC) said it will present testimony on Thursday this week before a US House panel that “without immediate action to bring down fuel costs, we face the economic equivalent of a major blackout later this year or early next” as airlines are forced to shut down some or all of their routes and operations due to fuel costs.

 

“Fast-approaching airline liquidations will cripple the US economy that depends on affordable, frequent intercity air transportation,” the coalition said in a report that will accompany its congressional testimony.

 

“Multiple liquidations among legacy US airlines - now a serious possibility - would have a wide-ranging impact on many facets of the US economy,” the coalition said.

 

“The airline industry stimulates so much economic activity, much more than may people currently understand,” said coalition president Kevin Mitchell. “Airline networks are an integral part of the transport grid that supports the US economy.”

 

Mitchell said that the coalition’s study of airline shutdown consequences indicate that liquidation of just one major air carrier would put as many as 75,000 people out of work immediately with payroll losses of as much as $6bn (€3.8bn).

 

The shutdown of an airline or two would have much broader economic impact, however.

 

“The failure of one large airline would disrupt the travel of 200,000 to 300,000 passengers per day and thousands of tons of goods,” Mitchell said, adding that surviving airlines would not have capacity to absorb the flood of passengers.

 

“Failure of multiple airlines would paralyze the country and our American way of life,” he warned.

 

The coalition, formed in 1994 by major US manufacturers and service industries that rely on air travel to do business nationally and globally, said the flow of human capital that is essential to commerce would be severely disrupted.

 

Mitchell said the coalition will make specific energy recommendations in later congressional testimony, but he said that with oil at $130/bbl “all options have to be on the table, and we have to look at access to the energy resources we have”, referring to development of US offshore energy reserves now closed to drilling.

 

($1 = €.64)

 

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