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US Airports Suffering From Low Income, High Security Costs - 2002-01-19

The September 11 terrorist attacks involved U.S. airlines at locations within the United States, but their effects have been felt at airports around the world.

Airlines no longer operate as single entities. The two U.S. Airlines attacked by terrorists September 11 American and United are both members of larger airline alliances.

In fact, says Alex Strahl, General Secretary of the Geneva-based Airports Council International, 70 percent of today's air traffic is carried out by five global airline alliances.

And, Mr. Strahl says, all five have had to curtail air traffic in the wake of September 11.

"And in a chain reaction, our members - the airport operators - were hard hit. Many of them recorded sharp decreases in passenger and cargo traffic and equally sharp losses in aeronautical and non-aeronautical revenues," he said.

When passenger traffic falls, that means airports lose revenues on everything from landing fees to earnings at airport restaurants and parking garages. Airports Council Economic Director Paul Behnke says, passenger traffic plunged in the last quarter of 2001.

"For September 2001 versus September 2000, the worldwide drop in passenger traffic was 14.6 percent. In North America, the decline was 31.6 percent," he said.

To make matters worse, Mr. Behnke says, at a time when airport income has dropped, airport spending on security and insurance has skyrocketed.

"The average airport in our sample was spending $7 million in the short term and this is calendar year 2001 for new security enhancements alone. There were examples of airports Los Angeles spending 30 million, Paris 20 million to comply with more stringent regulations," he says.

This is causing a cashflow squeeze that is forcing most airports to postpone planned construction work and some to seek help from their governments, Mr. Strahl says.

The only hope, he says, is a return to normal, which, prior to September 11, meant continuous growth in both air traffic and airport revenues.

"Our forecast still shows that traffic will double by the year 2020. What we believe is that by the end of next year, traffic will go back to normal," he says.

That forecast, Mr. Strahl says, calls for traffic in mature markets like North America and Europe to return to pre-September 11 levels. He says it also should mean big increases in traffic at airports in Asia - Pacific, the Middle East, and Latin America.