Swine flu fears may hammer travel industry

— -- For an ailing global travel industry, swine flu couldn't have erupted at a worse time.

"It has the potential to paralyze travel," says Roger Dow, president and CEO of the U.S. Travel Association, which represents all segments of the U.S. travel and tourism industry. "Certainly if it gets out of hand," it will be catastrophic.

There are signs the situation is speedily getting out of hand. The U.S. government Monday urged Americans to cancel travel to Mexico if not essential, began setting up border checks and said a travel advisory would stay in effect as long as flu was detected. The European Union's top health official cautioned people not to travel to areas where the flu has hit. Other nations began taking precautions, such as checking passengers for signs of fever.

"This is kind of the one-two-three-four-five punch," says Jan Freitag, a vice president at the hotel-tracking firm Smith Travel Research. "You have a global recession; business travel has been severely curtailed; leisure travel is curtailed because people are not sure they're going to have jobs; you have a lot of new hotel supply in the pipeline; and oops, now we have the European Union suggesting that travel to the United States is a mistake."

Androulla Vassiliou, the European Union's health commissioner, initially suggested avoiding all non-essential travel to Mexico and the United States. She later softened her warning, stressing she was speaking only for herself, not the entire 27-nation EU, and that it was an advisory, not a ban, that applied only to hot spots.

Still, her comments added to fears that the outbreak would hit an ailing industry on the verge of the summer travel season.

They also revived memories of the 2002-03 outbreak of the severe acute respiratory syndrome epidemic in Asia. SARS prompted a plunge in air travel and cost the global economy $33 billion in 2003, the International Air Transport Association estimated then.