Turbulence in the Airline Industry Through the Years

Airlines have seen trouble before, sometimes terrible trouble, and survived.

ByRICK SEANEY, CEO of <a href=http://www.farecompare.com/ target="external">FareCompare</a>
September 28, 2012, 3:09 PM

Sept. 28, 2012&#151; -- It's too soon to know how bankruptcy is going to shake out for American Airlines but the airline is not having a good month. Last week alone, American chalked up more than 300 canceled flights and more than 4,000 delayed flights.

The airline blames dissatisfied workers, specifically, a sharp increase in sick calls by pilots, plus crews writing up more last-minute, flight-delaying maintenance orders. The pilots deny any job action, and blame poor mangement. Passengers are caught in the middle of what one pundit calls a "shambles." The airline is in trouble.

But, airlines have seen trouble before - sometimes, terrible trouble - and out of the ashes (in some cases, literally), carriers can emerge triumphant, or they may lie down and die. Others lurch from catastrophe to catastrophe, barely hanging on.

A brief history of airline troubles - and a couple of things you should know.

For more travelnews and insights view Rick's blog at farecompare.com

There was no bigger airline tragedy than the horror of 9/11. Nearly 3,000 dead, an immediate suspension of all flights, and then … an eerie quiet. Even when planes returned to the skies, hardly anyone wanted to fly. You almost had a cabin to yourself, or so it seemed. It also seemed as if airlines had begun to die. That they didn't is testament to their willingness to make very tough choices.

United probably should have passed away. Like American, two of its planes were used as weapons of terror in the 9/11 attacks, and turning a profit was going to be nearly impossible. But United and the other major airlines resurrected themselves by doing the hard work of cost and capacity cutting, and dropping perks like meals. It was a good thing, too, as these measures, which included United's bankruptcy declaration in late 2002 and its later merger with Continental, helped see them through the financial crises and crazy oil prices later in the decade, which in turn led to our current era of airline fees.

Yes, there was a government bailout for the airlines after 9/11, but for a total of just $15 billion (per ProPublica). I say "just" because it pales in significance to the 2008 bailouts received by such entities as Fannie Mae/Freddie Mac ($400 billion), Citigroup ($280 billion) and even the auto industry ($25 billion).

In any event, terror can help kill off an airline (at least one teetering on the brink) as we saw in the 1988 bombing of Pan Am flight 103 over Lockerbie, Scotland. Thomas Petzinger's excellent airline history "Hard Landing" (1995) describes how fear ultimately helped finish off the iconic carrier:

"In the Pan Am building cries of sorrow [over the Lockerbie bombing] rang through the hallways. And then, on the reservations line, there was silence. In a matter of hours the airline lost half its transatlantic bookings. In the days ahead more reservations disappeared. Nearly a half-billion dollars' worth of business went away, and there were no new reservations to replace them."

Pan Am limped along until 1991 when it declared bankruptcy and sold off its assets. But let's talk about something more pleasant: There hasn't been a successful terror incident on a U.S. aircraft in the past decade. Say what you will about the TSA, but I believe the agency has helped at least a little in keeping us safe, along with other government mandates such as locked doors on airplanes. The biggest help of all? Passenger awareness: We are the ones who truly make us safer in the skies (and thanks again to the folks who tackled and took down the Underwear Bomber).

Sadly, you don't need terrorists to get an airline in trouble; all that's required is mechanical problems, pilot error, controller miscommunication, bad weather or any combination thereof. I've heard of no maintenance difficulties reported by either the KLM 747 or the Pan Am 747 that smacked together on the Canary Islands' Tenerife back in 1977 but the rest of the ingredients for disaster were in place.

The result: the worst aviation disaster in history, which killed 583 people. Plus another blow for the already fading Pan Am, and it sure didn't do KLM any good. The latter ultimately merged with Air France in 2004.

But don't be afraid to fly. You probably already know it's safer than driving, but did you also know that the accident rate for 2011 (latest figures available for Western-built aircraft) was the lowest in aviation history? It bested the figures for 2010, which had previously held the best safety record ever. Do I have to say it? Flying is safe.

Of course, Mother Nature sometimes makes things interesting. I've written about the damage and injuries extreme turbulence can cause, but airlines sometimes run into unexpected trouble like the craziness that was Eyjafjallajokull. That's the Iceland volcano that began erupting in April of 2010 and wound up creating the worst air travel disruption since World War II, shutting down most of Europe's largest airports and stranding thousands of travelers around the world.

It obviously hurt airlines, too, although Europe's discounter Ryanair tried to avoid paying passengers for hotels and such. Said its colorful CEO Michael O'Leary, "Why exactly are the airlines expected to be reimbursing people's hotels, meals and everything else when the governments are the ones who made a balls of this?"

Even more unpredictable than nature, and sometime worse for airlines, is labor strife. Never mind the current situation with American, go back to 1998 when Northwest Airlines and its pilots couldn't come to terms: The carrier had to quit flying for two whole weeks. Or go back just two years, when Spirit Airlines appeared to laugh off threats from its pilots to take to the picket lines; headlines had Spirit executives saying, "We'll keep flying." They didn't. Talks quickly resumed.

By the way, American says it's sorry for any inconvenience due to its delayed and canceled flights and says it's taking steps to ease the impact - by cutting its flight schedule.

The opinions expressed by Rick Seaney are his alone and not those of ABC News.

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