9/11 and it's Effects on Airlines?

Believe it or not, but I used to be an airline analyst.

Here are the bullet points for you report:

1. Reduction of demand. You can quantify this by using the RPM and ASM figures from the various carriers like Delta, Continental, US Air, United and Southwest Airlines - all which are public and had data in their annual reports.

2. Rise of security - the birth of TSA, changes in luggage allowances, changes in technology and capital expenditure needs.

3. The shutdown of marketing. 9/11 was a classic price inelastic event. That is, no amount of price cutting, marketing or specials was going to get sizeable number of people flying. That's why rates were kept steady, marketing budgets were slashed and capacity was dramatically cut. The same thing happened with SARS.

4. The rise of the LCCs is independent of 9/11. This has happened steadily since the 1950's with the advent of PSA, then later with Southwest Airlines, Ryan Air then Easyjet. Rather than make the LCCs rise, it was more of a case of the incumbents falling faster than the LCCs. The incumbents racked up huge losses, which depleted their equity bases even faster. As a result, this pushed several airlines over the brink into chapter 11 bankruptcy. There were numerous bankruptcies from 9/11. This site does a pretty good job of chronicalling bankrupties around the world:

http://www.aviationexplorer.com/defunct_airlines_w...

5. Temporary effect. Airline travel is bank stronger than before 9/11. The volumes are up, prices are firm and airlines are more profitable than in recent memory.

one word, paranoia. people are just paranoid about flying.