Sunday, 11 September 2011

10 Years: How 9/11 changed travel


10 Years: How 9/11 changed travel

By Bill Poling
Ten years ago, when terrorists flew hijacked airliners into the World Trade Center's Twin Towers and the Pentagon, most of us said, thought or heard the phrase, "This changes everything."

Left unspoken was the realization that this wasn't ordinary change. It was momentous and cataclysmic. Spoken aloud, the emphasis was never on "changes." It was on "everything."

But at various points during the last decade, many of us came to realize that not everything changed.

Moreover, not everything that changed after 9/11 changed because of 9/11. This is a lesson the human race in general and Americans in particular must learn after every transforming event, including the Bomb, Sputnik, the Kennedy assassination, wars and natural disasters. The agents of change are legion.

Al-Qaida did not and could not "change everything."

As early as September 2002, just a year after the attacks, the Congressional Research Service, in a report to Congress, concluded that in terms of the broad national economy, "9/11 is more appropriately viewed as a human tragedy than as an economic calamity."

As numerous economists have pointed out in the years since, the overall economy showed remarkable resilience. Gross domestic product growth was slowed only temporarily, and while the Dow Jones Industrial Average lost nearly 700 points when the stock market reopened after the attacks, it gained 5,000 points over the next six years, reaching its all-time high in October 2007 when it topped the 14,000 mark.

The events of 9/11 can hardly be blamed for what happened next.

The Government Accountability Office forewarned in a 2002 report, "As the attacks become more distant in time, it may be less easy to disentangle their economic effects from other events that would have occurred anyway."

But the conventional wisdom about the national economy doesn't apply to every segment of the economy. For the travel industry, and most particularly the airline industry, the economic impact has been far more severe and more pervasive.

In August 2001, the month just prior to the attacks, U.S. airlines boarded 56.3 million passengers for domestic service, a number that plummeted to just 30 million in September. And for two anxious days after the attacks, the passenger count was zero. It would take three years for carriers to once again reach the 56 million mark.

In 2001, the U.S. airline industry had just enjoyed six consecutive years of profitability, their best streak since the 1960s. But they were about to lose money in seven of the next 10 years, ultimately racking up $74 billion in losses between 2001 and 2010. The three profitable years of that decade would offset that cumulative loss by only $30 billion.

WTC GROUND ZEROOf course, the airlines were buffeted by many forces, including general economic conditions, spikes in fuel prices and slumps in demand caused by war, epidemics and natural disasters.

Some of these were indirect effects of 9/11; some were not. More certain is that two lingering effects of 9/11 have stayed with the airlines and, by extension, with the broader travel industry: the "hassle factor" and the diversion of resources. And they remain with us today.

The hassle factor is obvious. Escalating airport security procedures have added time, inconvenience and anxiety for passengers while complicating airline and airport operations and adding to their costs. As a result, the cost-benefit equation for short-haul travel became seriously skewed, and many air travelers rediscovered Amtrak, the interstate highways and the bus.

But the hassle factor is merely one facet of a larger problem that the Congressional Research Service identified in its 2002 report when it asserted that "the lasting economic effect of 9/11" would actually be the economic effect of our response: "Large amounts of resources are and will be committed to making production, distribution, finance and communication more secure in the United States. Resources that could have been used to enhance the productive capacity of the country will now be used for security."

That is clearly true of travel. A dollar spent for security, even if it is well-spent, has to come from somewhere. And if it is spent on security, then it can't be spent on anything else.

But it is not only dollars that were diverted by our response to 9/11. Our energies and political priorities shifted.

We went to war in Iraq and Afghanistan, and the long-term impact of these military ventures might well overshadow the direct economic effects of the 9/11 attacks themselves.

To the chagrin of the inbound travel industry, government programs designed to attract visitors took a back seat to those designed to detain and inspect.

At last, after 10 years that the U.S. Travel Association termed a "lost decade," these trend lines are finally turning. Even before the assault on Osama bin Laden's hideout, a consensus had emerged to wind down our military presence in the Middle East.

And the passage of the Travel Promotion Act and the creation of the Corporation for Travel Promotion signaled a new recognition by the government of the value of welcoming and accommodating international visitors.

As for the hassle factor, airport security screening will never end, but the Transportation Security Administration, itself a creature of 9/11, has begun to introduce a risk-based assessment of "trusted travelers."

Air travel might never be the same, but the economic effects of the 9/11 attacks have faded, and the political effects will diminish, as well. What makes that day a day of "human tragedy" is that personal memories will outlast them all.