HighLight Heading
June 2002
Effects of 9-11 impact transportation and economy
Participants viewed poster displays between sessions.
Tim Anderson, Skip Krawczyk, Mike Marti (session moderator), and John DeCoster
In the session "Impacts Within Transportation Since 9-11," panelists representing different transportation sectors agreed that post 9-11 changes in security are going to be a challenge to implement and pay for, and that while air transportation may be more secure as a result, other potential targets remain vulnerable.
Tim Anderson of the Metropolitan Airports Commission (MAC), which operates Minneapolis-St. Paul International Airport (MSP), said one major fallout from that day was the negative impact of fewer fliers on airport revenue. Like other airports, MSP makes its money from user fees such as concession sales, rents, and landing fees. Consequently, the 20 percent decrease in air traffic meant a substantial drop in revenue for the airport, necessitating measures such as deferred construction projects and cuts in facilities maintenance and administrative costs, among other measures. Eight months later, Anderson said that revenues are starting to rise again except in the retail area. This is significant, he said, because "What happens in the airline industry has a ripple effect," in that it impacts the overall economy.
Since the events of September 11, airports have also been the target of substantial changes proposed by the federal government regarding security screening, which has led to the creation of the Transportation Security Administration (TSA). The agency took over security in February 2002.
How new TSA security requirements will be funded is a major issue, Anderson said. So far, personnel costs alone are estimated at about $8.6 billion. And when air traffic returns to pre 9-11 levels, Anderson wonders if the money it will take to serve the increased number of travelers will be there. Another concern of his is how to meet the 100 percent baggage-screening requirement by the end of the year. The airport may be forced to hastily implement a system that "won't be the right system [and] we'll have to fix it," he added.
Like others in the industry, Anderson expressed some misgivings about the extent of the efforts focused on air travel security. "We are desperately preparing for the next battle, and it won't be at airports," he said, "…but that's where we're spending our money."
Following Anderson, John DeCoster of Northwest Airlines (NWA) addressed similar issues from the airline perspective.
Prior to September 11, the industry was already suffering due to the nation's recession, and afterwards, the financial picture went from bad to worse. NWA dropped their capacity by about 20 percent per day, which brought levels down to those of 1998. The airline worked with MAC on cost-control methods in order to maintain its cash position. "There were some forecasts that we could have been out of cash by the end of the year," DeCoster said.
And like the airport, NWA has been challenged by the new security requirements as well. What security will cost "is the biggest black hole we've seen," DeCoster said.
"No one wants to be politically incorrect by saying we don't think [some requirements] are necessary, but some of it is treating symptoms," he said.
With the TSA overseeing the processing of passengers, DeCoster is concerned that people making decisions may not understand how airports work or how airlines work, he said.
DeCoster said that results of a survey showed the public would be more likely to fly if airport processing times were decreased. As a result, NWA is trying to focus on better serving passengers by enhancing self-service devices, adding new check-in devices, and working with MAC to get rid of traffic and lines. "Fortunately, we're getting a lot of business back," he said.
DeCoster hopes that new processing requirements and the use of CTX scanners (which use technology similar to medical CT-scanners to detect explosives) for each piece of luggage won't further hurt business. He said that the time estimates for such processing range from 30 to 45 seconds to 3 to 5 minutes per passenger. "That's a scary thing, because it's going to drive the passengers away from us." That, in turn, will have a major impact on the airline industry and consequently " will change the way we live," he added.
Speaking about post-911 effects on the logistics industry, Skip Krawczyk, president of Transport Distribution Services, Inc., explained how the genesis of his business was taking freight to the northeastern United States, one of the hardest areas to deliver to. Since September 11, trucks going into Manhattan have had to wait in long lines at checkpoints. His firm has also had to tighten requirements for transporting hazardous materials and for hiring, but generally, Krawczyk said he has not seen the same precautions in the shipping industry as those undertaken for air travel since September 11. He also sees no indication that cargo will be examined in a way similar to airline luggage.
"For now, all we can do is ask if something looks kind of fishy and if it does, check it out," he said. If anything, the events of 9-11 have prompted more questions than answers. "How much can we do, and how much money do we spend? How do we stop suicide bombers? Where's our next target?" Krawczyk asked. Potential terrorists, he said, will look for weak areas.