Analysis: How 9/11 and its fallout reshaped travel

Ian Taylor asks if Covid may have a similar impact on restrictions and growth

Saturday marks two decades since the terror attacks in the US. Ian Taylor looks at how the fallout from that day reshaped travel restrictions but did little to slow global growth in tourism

The 20th anniversary of September 11 will be marked in ways no doubt not intended when President Biden confirmed the US withdrawal from Afghanistan.

The attacks by hijacked aircraft on New York’s Twin Towers and the Pentagon killed almost 3,000 people and triggered a 20-year war after the US and Nato invaded Afghanistan and in 2003 went to war in Iraq.

The impact on travel was far less deadly, but the legacy of the attacks provides pointers to what we might expect as the world learns to live with Covid-19.

The immediate impact was stunning, with US aviation grounded. Within days, industry leaders were warning of failures. Iata chairman Leo Mullin warned the US government: “At least three of our major members are on the brink.” The increase in insurance premiums alone threatened to bankrupt the sector.

The US Department of Transportation (DoT) subsequently reported: “It took until July 2004 for the industry to match and surpass pre-9/11 levels.”

In the event, there were no major US airline failures. But over four years, every major US international carrier bar American Airlines passed through bankruptcy protection. Employment in the sector fell by 28%, or 150,000 jobs.

The DoT reported in 2005: “Today’s airline industry presents a different picture than prior to September 11, with more passengers flying low-cost carriers, fewer empty seats and a smaller workforce. Available seats only recently reached pre-9/11 peaks. In contrast, air passenger travel reached its pre-9/11 peak in July 2004 and continued to grow.”

In Europe, Belgian carrier Sabena collapsed in November 2001 after part-owner Swissair failed to offer a bailout. Swissair followed, taking down France’s second-largest carrier Air Liberté, which it part-owned. However, Swissair-Sabena had been struggling for years. Out of the failures, Swissair subsidiary Crossair emerged as Swiss and Sabena gave way to Brussels Airlines – both now part of the Lufthansa Group.

Impact in UK

You would be hard-pressed to claim 9/11 had a dire impact on UK outbound travel. ONS figures suggest a mere slowdown in growth of outbound holidays between 2000 and 2004.

Overseas holiday numbers rose from 36.7 million in 2000 to 38.7 million in 2001 and to almost 40 million in 2002, then passed 41 million in 2003 and reached almost 43 million in 2004.

UK airport passenger numbers rose from 168 million in 1999 to 180 million in 2001 (+7%) and 199 million in 2003 (+10.5%) also suggesting no great detriment. This was despite the international tension through 2002 as the US and UK prepared for an invasion of Iraq, launched in March 2003.

There was a dip in European air traffic in this period, with the number of commercial flights falling from 8.7 million in 2000 to 8.5 million in 2002.

UK data for overseas business travel suggests the source of the decline, with outbound corporate trips falling 11% between 2000 and 2003, reflecting the impact on transatlantic traffic. Indeed, ONS data suggests there was no overall growth in corporate trips in the decade to 2009.

A dip in overseas visitors to the UK is also clear between 2000 and 2003, reflecting the loss of US travellers post 9/11.

But a more severe impact was anticipated. The Air Travel Trust (ATT) report for the year to March 2002 noted the months following September 11 were “some of the most demanding in recent years” and had “a significant effect on the level and timing of bookings, with a consequent impact on the viability of some Atol holders”.

By March 2003, 23 Atol holders had folded, double the previous year’s total. However, the ATT pointed out the increase was still one of the lowest failure rates since 1989 and “only brings the rate back to the level of the mid-to-late 1990s”.

The next year, to March 2003, saw just nine failures – a new low despite the build-up to the invasion of Iraq.

There was one notable exception. MyTravel, or Airtours as it was known until 2002, was the UK’s second-biggest travel group. Its fortunes plunged spectacularly in 2002 amid a series of profit warnings but also, crucially, the exposure of serious irregularities in its accounts. The group’s share value collapsed. Its £1.3 billion debt dwarfed its value and it was saved only by the CAA declining to pull its Atol and by wiping out its creditors by swapping its debt for equity.

The group downsized and restructured over several years but never recovered and those running it were grateful to merge with Thomas Cook in 2007.

Twelve years on, MyTravel returned to haunt Thomas Cook when in May 2019 Cook was compelled to report a £1.5 billion half-year loss owing to a £1.1 billion impairment in the value of MyTravel which it had retained on the books. The group subsequently went into liquidation.

Impact worldwide

The global picture was not too different to the UK, outside the Americas. The UN World Tourism Organisation (UNWTO) noted: “Tourism enjoyed exceptional years in 2000 and 2001. International arrivals declined 0.5% in 2001, the first year of negative growth since 1982 . . . less than was feared after September 11.”

The Americas suffered a 6% drop in arrivals and the US an 11% fall. But Europe saw less than a 1% decline, although UK arrivals fell 9% reflecting a near cessation of transatlantic travel.

The following year, the UNWTO noted “2002 was certainly not easy” but reported: “International tourist arrivals grew 2.7% . . . although uncertainty continued to play a major role under the threat of new terrorist attacks and the looming Iraq conflict.

“These adverse conditions resulted not so much in a decrease in overall volume, but in the reinforcement of shifts in demand towards trips to familiar destinations closer to home. Consumers adopted a wait-and‑see attitude resulting in pressure on prices and late bookings. Many sectors went through a difficult time, in particular airlines and sectors more dependent on long-haul traffic.”

Arrivals to the US were down almost 7% year on year in 2002. But Asia and the Pacific saw 8% growth, Europe 2% and the UK 6%.

Asia suffered a downturn of its own in 2003 due to Sars, but the UNWTO could report: “International tourism experienced a spectacular rebound in 2004.”

Security measures

Heightened security is the abiding impact of 9/11 on travel, although this can’t be attributed solely to the attacks on the day. Airport security screening was introduced in 1974 after a spate of aircraft hijackings. There had been 159 in US airspace alone by the end of 1972.

The standard check-in query, ‘Could anyone have interfered with your baggage?’, followed a thwarted bomb attack on an El Al flight from London in 1986. That, however, did not stop a bomb bringing down a Pan Am Boeing 747 on route from London to New York over Lockerbie in 1988, killing 270.

The US led the aviation security response to the 2001 attacks, establishing the Transportation Security Administration (TSA), limiting carry-on bags and banning items such as scissors and knives. An attempt by a ‘shoe bomber’ to bring down a Paris-Miami flight in December 2001 saw random inspections of passengers’ shoes added.

In 2006, UK authorities foiled a plot to blow up US-bound aircraft using liquid explosives in carry-on bags, triggering a ban on liquids, gels and aerosols. The ban was later changed to allow small quantities of liquids in a single plastic bag.

An attempt to detonate ‘underwear’ explosives on an Amsterdam-Detroit flight in 2009 led to the first advanced imaging technology or ‘full body scanners’ being introduced in the US in 2010.

In 2015 the TSA demanded enhanced screening and random searches at airports with direct flights to the US in response to a growing threat of concealed improvised explosive devices. In 2017, it went further, initially banning laptops and devices bigger than phones in cabin baggage on flights from the Middle East and then requiring these be screened separately.

There appears little prospect of any of the major security requirements being withdrawn. The pandemic threat appears similarly likely to remain with us, bringing screening requirements of its own. We may just have to live with these and expect refinements rather than removal.