Airlines to face more fare losses

The crash of American Airlines flight 587 could not have come at a worse time for the airline industry.

Whether the crash was due to mechanical failure or an act of terrorism, nervous Americans are reviewing their travel plans.

Airlines, still reeling from the devastating financial impact of the terrorist attacks two months ago, are contemplating another sharp drop in business.

"I honestly believe we're going to have fewer airlines by the end of the year," said Darryl Jenkins, head of George Washington's University Aviation Institute.

American Airlines chairman Donald Carty said the crash came at a difficult time for the nation, the industry and American Airlines. Shares in American Airlines' parent, AMR, dropped more than 12 per cent following the crash.

American Airlines lost a record $US414 million ($980 million) in its third quarter, the biggest quarterly loss in its history.

Since September 11, the American airline industry has cut about 100,000 of its 1.2 million jobs and reduced its capacity by 20 per cent. To stem losses, several big carriers, including American, United and Delta, have closed airport clubs and ticketing offices, and eliminated meals on some flights.

Aviation experts predicted that yesterday's crash would intensify travellers' fears of air travel just before next week's busy Thanksgiving holiday and the Christmas season.

Airline consultant Morton Beyer told the Washington Post that he expected airline traffic to decline between 5 per cent and 10 per cent between now and early next year.

Typically, airline traffic falls dramatically in the 10 days to two weeks after any US airline crash. But the effect of yesterday's crash could last longer because it added to the idea that air travel was not secure right now, said Kevin Mitchell, chairman of the Business Travel Coalition in Radnor, Pennsylvania.

The psychological damage to a traumatised public might be worse if the accident was tied to terrorism or a breach in security. The US National Safety Council reports that the odds of dying in a plane crash are one in 391,000. The odds of dying in a car accident are far greater, at one in 6200.

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