REPORTS BY ALEXANDER CAMPBELL, ANDREW DOYLE, DAVID FIELD, MURDO MORRISON, STEWART PENNEY AND GRAHAM WARWICK
Pearl Harbour, Hiroshima, the fall of the Berlin Wall: no single incident in the 20th century matched the impact that last September's terror attacks on the USA had on the world's collective conscience. Yet unlike these events, 11 September scarcely changed history's broad march. The already faltering US economy wobbled, spluttered back and has dipped again, but it has not collapsed; the War on Terror saw the Taliban's quick defeat and al-Qaeda's emasculation, but, so far, no more concerted terrorist assaults on the West; life for most - outside a few dangerous regions - has continued as before.
The same could be said for aerospace. A year ago - with that image of the final moment of United Airlines flight 175 before it slammed into the Twin Towers - our front cover predicted 11 September would be the day aviation changed forever. Yet how much has altered? Two European flag carriers have collapsed and at least three major US airlines are in serious financial crisis. But all were in trouble long before 11 September. Passenger revenues are down, but no more so than in the slump of the early 1990s. Some airlines, such as UK low-cost carriers Ryanair and Easyjet, have had a bumper year.
Airport and on-board security has been tightened, especially in the USA. But loners like would-be shoe bomber Richard Reid and alleged hijacker Kerim Chatty aside, there have been no serious threats to passenger aircraft. The massive hike in US defence spending has boosted the embattled defence industry, forced into consolidation after the end of the Cold War. But Washington's move has not been matched by other countries, even its closest ally, the UK.
In manufacturing, Boeing has been the biggest victim, its strengthened position in defence nowhere near making up for the massive cuts in capacity and workforce it has had to make in its Seattle commercial aircraft factories. In Europe, the post-11 September slump was the final straw that persuaded BAE Systems to axe one regional aircraft, the RJX, and for financiers to halt their backing for another, the stillborn Fairchild Dornier 728.
In these pages we look at the effect the downturn of the past 12 months has had on airlines and airline security; defence aviation; and business and general aviation.
Air transport: USA
No business sector was worse affected by 11 September than US airlines. "One year later, most still endure weak demand, low ticket prices, labour costs and mounting debt," says credit rating agency Standard & Poor's. US Airways last month sought Chapter 11 bankruptcy protection and United Airlines faces the same fate.
Despite huge job lay-offs and the grounding of hundreds of aircraft, losses among the US carriers have mounted. A drop in oil prices after the attacks and bail-outs from the government's stabilisation board helped airlines limp through the first three quarters after 11 September; now, with the failure of the economy to revive in the second half of 2002, deep-rooted financial problems are hitting home. Standard & Poor's Philip Baggaley says most airlines were losing money before 11 September and their current travails cannot be blamed on stay-at-home travellers. "A lack of consumer confidence actually had little to do with the airlines' financial woes during 2002, and has held up surprisingly well to date, although recent economic weakness and declines in the stock market may change that," he says.
Union intransigence over pay cuts will not help airlines struggling to stay solvent. US airline history is littered with bankruptcies, crises and casualties of poor cost control. Although long-term passenger growth and economic recovery will see the sector revive, only a miracle will prevent some big names going under in the next 18 months.
Air transport: Europe
Although the transatlantic market was affected extremely badly by the drop in passenger confidence after 11 September, Europe generally has not been hit as badly as the USA. But several flag carriers, including British Airways and Lufthansa, have had to make drastic cuts, and swallow a lot of pride, to stay competitive. This has ensured their survival. Others were not so lucky. Troubled Sabena and once blue-chip Swissair went out of business weeks after the attacks.
Despite the region's reputation for social economics, governments have been less generous than the USA in propping up ailing carriers, with most compensating airlines only for the four-day closure of US airspace. The flag carriers' difficulties have helped low-cost carriers such as Ryanair and the now-merged EasyJet and Go to continue their unbridled expansion. A host of new services from major airports such as Paris Orly and London Gatwick, and a move into the German market, proves these airlines are serious about overturning the traditional hegemony of Europe's flag carriers.
Air transport: Asia
Asia's airlines recovered from 11 September relatively quickly with passenger numbers already back to pre-attack numbers. However, travellers are making shorter trips and many are avoiding transpacific journeys. October and November were the worst months, with year- on-year passenger numbers falling more than 15%. In January, the Association of Asia Pacific Airlines (AAPA) warned that the region's carriers faced a "serious if not catastrophic situation". In hindsight, this appears to have been too pessimistic. Figures from the AAPA, which represents 17 major airlines, showed that in May members carried 4.9% more international carriers than a year before (although revenue passenger kilometres were only up 3.7%, indicating that people were choosing to holiday and do business in Asia rather than the USA). Cargo traffic is also booming, raising hopes that strong passenger recovery might be around the corner (see feature on p39).
Security
The Lockerbie bomb in 1988 jolted UK and other European authorities into tightening airport security. The huge flaws in the system exposed by 11 September showed the USA was significantly behind. The image of poorly paid, under-trained security staff chatting about last night's ball game as terrorists strolled on to aircraft terrified the country into drastic action. Within two months of the atrocities a plan to put airport security under federal control had been passed, creating the Transport Security Administration and two deadlines: by 12 November this year, so-called federalisation will be complete; and by 31 December explosive detection systems (EDS) will be installed at 429 airports, able to screen all checked-in baggage. This has meant the hiring and training of 70,000 screeners and 21,000 EDS specialists. Airlines and airports have called the deadlines unrealistic without serious disruption to the whole air transport system and further alienation of passengers.
The USA has also led the rest of the world in adopting measures to make it impossible for hijackers to take control of the aircraft by fortifying cockpit doors and requiring them to be kept locked in flight. Advice to crews in a hijack situation has changed from remaining passive to taking action if necessary. Outside the USA, the International Civil Aviation Organisation has revised its Annex 17 standards for security systems and practices, and the European Civil Aviation Conference has agreed new measures based on the new Annex 17. Flight school students - most of the 11 September terrorists learned to fly in Florida - are also subject to increased scrutiny. Whatever al-Qaeda plans next, the aim is that never again will it be able to commandeer passenger aircraft and use them as missiles.
Defence aviation
In the immediate wake of 11 September, many predicted a huge increase in defence spending. Yet only the USA - with a budget one- third higher than last year - has gone down this path. The attacks did lead directly to the war in Afghanistan which saw three key future areas put to the test: long-range strike, special forces and unmanned air vehicles (UAV).
Washington would like the ability to strike anywhere in the world from the continental USA with minimal notice. The Northrop Grumman B-2 almost provides that capability - the stealth bomber was flown from Whiteman AFB, Missouri, to Afghanistan, returning via Diego Garcia in the Indian Ocean after a 40-44h journey, where the crew was changed with the engines still running. Although the US Air Force wants to speed missions up, and is looking at programmes such as the Quiet Supersonic Platform, the ability to strike worldwide from the USA with a manned aircraft offers distinct advantages over submarine and ship-launched cruise missiles.
Special forces are seen as key to force projection on the ground in modern warfare, where the guerrilla enemy is often scattered and integrated with local communities. Such forces, including the elite Delta Force and the UK's SAS, are lightly-armed, highly mobile and better trained than the average infantryman. Their increasing use will require greater numbers of helicopters for infiltration and extraction, in addition to logistics support.
UAVs played a vital role in Afghanistan, including the armed version of General Atomics' RQ-1 Predator. However, issues still remain, including the time taken to interpret and communicate data from the UAV's sensor to the shooter. Afghanistan has been expensive in terms of UAVs: as well as losing several tactical air vehicles, the USAF lost two Northrop Grumman RQ-4A Global Hawks. Given the programme is still in development, the experience gained from throwing them into real combat was tempered by the cost of replacing them.
Business aviation
Many expected business aviation to gain from the drop in confidence in air transport, but this has proved wishful thinking. Charter companies and fractional ownership programmes are thriving. But orders and used aircraft values across the market are down. In the first half of 2002, business jet deliveries fell from 396 to 357 aircraft compared with the same period in 2001, while turboprop deliveries almost halved from 204 to 111, according to the General Aviation Manufacturers Association.
Reaction to the US corporate scandals has also made the case more difficult for exclusive, luxurious executive travel. The impact of the security backlash has hit the sector, with many operators denied access to major airports. The National Business Aviation Association convention is normally where aircraft makers vie with each other to throw spectacular launch celebrations and announce the biggest orders. This week's event in Orlando is likely to be a muted affair, falling as it does on the anniversary of the attacks. The USA is in no mood to party.
Source: Flight International
