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But 9/11 and the recession changed everything. At first, it was not so much the fear of a terrorist attack as the worry of being stranded far from home that crimped air travel. Long waits at security checkpoints took their toll. Companies sought alternatives--driving and taking Amtrak; doing business by phone and e-mail or via better-quality and lower-cost videoconferencing technologies--and found they weren't so bad, especially since they helped cut costs. When they did fly, business travelers and their bookers joined leisure travelers in seeking the best deals on the Internet, even if that required planning trips further in advance. And firms learned to rely more on private charters or fractional jet ownership for their top executives, who had been the airlines' most lucrative customers.
The result: business travelers, who make up just 10% to 15% of all passengers, accounted for only 23% of total airline revenues in 2001, down from 35% in 1999, according to a McKinsey & Co. report. At the same time, total domestic passenger traffic has been falling at an annualized rate of 7%, after growing 4% annually for the previous decade. "Four-figure business fares are like heroin to the airlines. They're addicted to them, but they're bad for their health," says Richard Aboulafia, an analyst for the Teal Group, an aerospace and defense consulting firm in Fairfax, Va.
Even when the economy starts to grow again, it's hard to see business-travel revenue returning to its boom-time levels. The economy, after all, is unlikely to be cruising along at the breakneck pace of the '90s. Overall, business travel has fallen more than 20% since 2000, according to the Business Travel Coalition. As many as 80% of road warriors surveyed by the coalition plan to trim air travel even more this year, and nearly three-quarters think some of the cutbacks will be permanent. Phil Condit, CEO of Boeing, has said that at least 10% of the peak business-travel demand could be gone forever. No wonder the S&P Airlines Index is off 37% this year, double the decline in the broader stock market.
When the Federal Government set up the Air Transportation Stabilization Board (ATSB) last fall to help prop up the ailing airlines with $10 billion in loan guarantees, many credit-strapped CEOs licked their chops in anticipation of yet another big, fat government handout. But this time, at least so far, Uncle Sam hasn't turned into Uncle Sugar. Trying to impose some much needed discipline on the free-spending flyers, the Stabilization Board has required stringent cost-cutting measures as a condition for its help--and hasn't been shy about turning down such requests, as it did with National and Spirit airlines last week and may soon do with United (though sources tell TIME the board has agreed to let United amend its application with more drastic cost-cutting proposals).