Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization-taking place in many other industries. In the wake of recent world events major airlines are facing significant losses and potential bankruptcy, the largest annual loss in the history of the industry. As a result of terrorism the industry is faced with a global economic slowdown, structural weaknesses, high fuel costs and labor problems. .
The current crisis cannot be blamed solely on the events of Sept. 11, 2001. Even before the world witnessed the disastrous hijacking of four commercial airliners, the airline industry was close to financial ruin. The terrorist attack, elimination of flights and the need for major investments in airport security have pushed the airlines into nothing short of a fight for survival. The economic aftershocks of the Sept. 11 attack is widespread; in addition to the airline industry, tourism, insurance and shipping are also sure to suffer substantial losses. .
Passenger volumes have dropped drastically among concerns about security. Airlines have already undertaken aggressive action to reduce capacity and costs, but there are still too many aircraft chasing too few passengers. Richard H. Anderson, chief executive of Northwest Airlines, said he expected the industry to lose about $ 3 billion this year, after a loss of $ 9 billion in 2002. The airlines lost $ 7.7 billion in 2001(Alexander and Goo). Two major carriers, Chicago-based United Airlines and Arlington-based US Airways, are operating under bankruptcy protection.
Air Transportation Safety and System Stabilization Act.
On Sept. 22, in the aftermath of the attacks, President Bush signed into law the Air Transportation Safety and System Stabilization Act (PL107-42), which authorized the grant of monetary assistance to qualifying air carriers to compensate for losses incurred as a result of the attacks and the grounding of aircraft (Mulitz).