The Daily Interview: Airlines Could Be Headed for a Grounding

The U.S. airline industry will be crippled if the government does not provide relief on an order never before seen in the private sector, says Scott Gibson, a senior vice president with Simat, Helliesen & Eichner, a company that provides consulting to the airline industry.

Scott Gibson Senior Vice President, Simat, Helliesen & Eichner

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Gibson, who testified before the House Transportation Committee this week, says that not only does the government need to provide immediate relief and loan guarantees to the airline industry, it also will have to underwrite insurance for cataclysmic events and restore public confidence in air travel by helping to police commercial travel. Even if these measures are taken, Gibson says, the crisis facing the airline industry is so great that it's almost certain a number of airlines will go out of business.

TSC: What did the House Transportation Committee ask you as you testified before them Wednesday?

Gibson: They are looking at a bill to help the airline industry. This is such a cataclysmic event, akin to an act of war, that it threatens the entire airline industry. Government has an essential role here to keep this key infrastructure business up and going. Were they not to do that, I don't think there is any other party out there who could help preserve this industry.

Aside from financial aid, which needs to happen very quickly, the first thing that the government needs to do is to restore confidence in the air transport system, and that may involve federalization of security and other measures. That is the most essential thing. Absent that, this business is dead.

TSC: Do you believe that the $24 billion that the airline industry is seeking from the government is sufficient?

Gibson: They are now seeking nearly $18 billion. None of us knows for sure. All of us are making projections based on past events -- the Gulf War, Pan Am 103. While they help give us an indication, none of them are comparable to the events that happened last week. Certainly the airlines' traffic results since the system started up again are much more depressed than one might have expected.

TSC: What about the $5 billion that President Bush is giving to the industry in immediate cash? Is that sufficient? ...