Business was bad enough before Sept. 11, airline and airport officials told state legislators Tuesday. But a subsequent drop in revenue leaves the industry facing its bleakest outlook to date, they said.
House Taxes Committee members said they would consider a number of things to help the airline industry but also questioned some recent financial decisions.
“At this point, we’re gathering information,” said Rep. Tim Wilkin, R-Eagan. “Our researchers are now going to look into what we can do to get the industry back on its feet.”
Northwest Airlines President Douglas Steenland said that prior to Sept. 11, the company had been implementing cost reduction strategies to offset a decline in business travel.
“That problem pales in significance to the effects we’ve seen since Sept. 11,” Steenland said. “Our hope is that the effects of Sept. 11 will reach an equilibrium. Once we see the bottom of this problem, we hope to improve.”
Sun Country Airlines President and CEO David Banmiller said his airline had also seen problems prior to the attacks on Washington, D.C. ,and New York.
“Since Sun Country started scheduled service in June 1999, we have lost money,” Banmiller said.
The Metropolitan Airports Commission had also noticed revenue losses in the last quarter, said Jeff Hamiel, MAC executive director. Operations at Minneapolis-St.Paul International were down 1.1 percent before Sept. 11, he said. Revenue since the attacks have been down between 30 percent to 40 percent.
Committee members questioned Hamiel about some financial decisions, such as a $20 million expense for construction of the Hiawatha line of light rail transit beneath the airport.
“Why would you borrow $20 million for a project that brings in no revenue?” said committee chairman Ron Abrams, R-Minnetonka.
The LRT project is scheduled to run from downtown Minneapolis to downtown St. Paul, to the Mall of America and beneath the airport.
Members also questioned security measures the project coordinators have taken.
“(The LRT) project is being continued,” Hamiel said. “But it’s also being scrutinized.”
“(Sept. 11) has dramatically altered how we’ll operate from this day forward,” he said.
Where to go from this point is an issue the airlines, MAC and the House are looking into finding answers for.
Northwest officials said their goal is to boost passenger traffic and rehire laid-off employees.
“We want to recall the employees who were let go,” Steenland said. “The length of this crisis will dictate the shape of the airline industry in the future”
Wilkin said he doubts taxes will be raised to help the airlines, and most aid will likely come in tax relief.
“Every bit we can do at the state level will help,” he said, “It’ll help keep people in jobs.”
Maggie Hessel-Mial covers the environment and transportation and welcomes
comments at [email protected]