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9/11 didn't change everything

On the occasion of the fifth anniversary of 9/11, there's been a flurry of articles trying to come to grips with the relationship between that horrific event and the ensuing implosion of the airline industry.

No sector of the U.S. economy was as battered as the airlines. Some pertinent data points cited in a piece inTheStreet.com:

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During the six years from 1995 through 2000, airlines were consistently profitable, earning $23 billion, including a record $5.4 billion in 1999.

Between 2001 and 2005, the industry lost $35 billion.

Since August 2001, about 155,000 airline industry employees have lost their jobs, a reduction of 29%.

Legacy airlines have cut 816 mainline jets from their fleets, a reduction of 23%.

The story of 9/11's effect on the airlines probably needs to be told. But it tends to obscure the "real" story, which puts the airlines' recent travails into a longer-term perspective.

For all the focus on the effects of 9/11, the story of the airlines' meltdown at the turn of this century should be traced back to the Airline Deregulation Act of 1978. The period following deregulation has been a long, agonizingly slow process of adaptation to the new free-for-all operating environment.

The events of 9/11 accelerated the pace of that evolution, certainly. But the airline business today, warts and all, has its roots in deregulation, not in terrorism.

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