Executives may now cut air travel, opt for video-conferencing

NEW YORK - The attempt by an Al Qaeda-linked Nigerian Muslim to blow up a flight at Detroit couldn’t have come at a worse time for the airline industry which is expected to suffer losses of $11 billion this year. An Indian-origin aviation businessman observed that corporate people may now prefer video-conferencing to frequent travel.

Having been bled by the 9/11 terror attacks, then high fuel costs and now the global recession, the airline industry’s hopes of improving its financial health have been delivered a big blow by the Christmas Day attack.

Since the Al Qaeda terror attacks nine years ago, the global airline industry has accumulated losses of over $50 billion.

Many North American airlines have gone out of business. Others have merged to survive. Big orders to Boeing, Airbus and Bombardier have been cancelled.

But with the worst of the current recession likely over, many North American airlines have been reporting a higher occupancy rate in recent months.

“Now this attack is a big blow. It will undo the gains made by the industry in recent months,” said an Indian-origin aviation businessman with operations across North America.

Tighter security measures introduced at airports in North America and Europe will also put additional burden on financially stretched airlines.

Long queues at airports and in-flight restrictions are bound to deter people from travelling frequently.

Ban on carry-on bags and use of laptops during the last one hour of the flight is going to be the last straw for most frequent travellers.

“People are going to cut down on their air travel because of these hassles. Which family with kids would like to travel without carry-on bags because of the needs of their kids?” asked the businessman, requesting anonymity.

Business class travel is also likely to take a big hit, he said.

“Business and corporate people in North America use flight time to dispose of work by using laptops. If they are not allowed its use for one (last) hour of a flight of just two-three or four hours, their productivity will suffer.

“Add to this the extra time these executives will lose because of security checks and long lines. So why would they fly?” he said.

According to him, corporate people may now prefer video-conferencing to frequent travel to interact with their executives in other locations.

Since business class travel accounts for a huge percentage of airlines’ revenue, any sharp drop in this segment is bound to affect their revenues even more adversely.