Airlines Cautious on Alert Impact: State Department Alert's Impact on Carriers, Tours Remains Muted

Updated August 2, 2013, 6:54 p.m. ET

By  SUSAN CAREY   And  JACK NICAS

The Wall Street Journal 

 
The U.S. world-wide travel alert raises the specter of the global travel industry's biggest fear—but the alert's impact on airlines and hotels is likely to be muted for now.

The State Department on Friday warned travelers that al Qaeda and affiliated groups may try to carry out terrorist attacks this month in the Middle East, North Africa and beyond. The alert didn't cite any specific threats to air travel but noted "the potential for terrorists to attack public transportation systems and other tourist infrastructure," and pointed out that they have targeted "subway and rail systems, as well as aviation and maritime services."

The State Department regularly issues travel alerts for specific countries around events such as protests in Egypt or elections in Mali, or even for the Caribbean around hurricane season. But the U.S. rarely issues alerts that specifically warn of potential terrorist attacks, particularly for such a broad region.

The advisory "is fairly strong," said William Daly, who heads the New York office of Control Risks Group LLC, a global consultancy specializing in political and security risk. "It suggested quite a bit of caution. Maybe the information is not specific or granular, but it's quite compelling."

Despite the scope of the warning, travel professionals and hotel and airline analysts said it should have little impact on travel. Such advisories "make people more careful, which they should. But it doesn't cause people not to go anywhere," said Paul Ruden, a senior vice president of the American Society of Travel Agents. "If the State Department meant 'Do not travel,' they would have said, 'Do not travel.' "

Actual events can seriously crimp travel—such as the first Kuwait invasion or, especially, the Sept. 11, 2001, terror attacks, which sharply reduced air travel for several years, said Richard Aboulafia, a global aviation analyst at the Teal Group. "I don't think you're going to see anything significant related to this [among airlines], unless something does happen," he said.

In August, three U.S. airlines have just 217 flights scheduled to the Middle East and none to North Africa. Investors in those U.S. carriers—United Continental Holdings Inc., Delta Air Lines Inc. and US Airways Group Inc. —were far from panicking Friday. Shares were barely down for Delta and US Airways and slightly up for United.

The Middle East is a busy region for air traffic, but a huge portion of the passengers are stopping there to connect to other destinations. Dubai, Doha and Abu Dhabi are some of the largest transfer airports in the world. Middle Eastern airlines dominate the market, flying more than 80% of the 16.9 million seats scheduled to fly to the region this month.

In the past, U.S. airlines have issued travel waivers for passengers scheduled to fly to regions affected by travel alerts. By late Friday, however, Delta, United and US Airways said they weren't offering waivers. US Airways flies to Tel Aviv; Delta flies to Tel Aviv and Dubai; and United flies to Tel Aviv, Dubai, Kuwait, Doha and Bahrain. All three said they were monitoring the situation but declined to comment further.

Deutsche Lufthansa AG  said it hadn't yet seen many cancellations or a big decrease in bookings, partly because summer is a low season for Middle East and North African destinations. The German airline said at this time of year, only 7% to 10% of its passengers from the U.S. are destined for connections to the Middle East.

Noam Matas, owner of a tour operator that offers trips to Biblical destinations in Israel, Jordan, Egypt, Turkey and Greece, said he had 12 groups in the region, but that his company hadn't received many inquiries from people concerned about their friends and families on the trips. "It takes a day or two until the news kicks in," Mr. Matas said. "If it continues in the news, we'll get people calling us on Monday."

Several U.S. universities with campuses in the Middle East or students studying there said they had already contacted students about the travel alert. Michigan State University said that all seven of its students studying in the region had been contacted, apprised of the alert and directed to additional resources.

Douglas R. Laird, president of Laird & Associates Inc., which advises airports, governments and airlines on security, said that issuing travel alerts are "a double-edged sword. The government is damned if they do, damned if they don't."

Mr. Laird said passengers should expect to see advisory messages at check-in and at the gate before boarding if they are traveling to a destination covered by the State Department's alert. He said the U.S. airlines' directors of security, who have government security clearances, would likely have been briefed by government security officials.

At Carlson Rezidor Hotel Group, owner of the Radisson hotel brand, head of security Chris Gernentz immediately began pushing emails around the security group after the alert was issued Friday morning, particularly to check whether the company had its own executives out on business travel and to check on hotels in the affected regions.

"Our first priority is for our guests," said Carlson spokeswoman Molly Biwer. "If it's going to hurt our business, of course we'd be concerned. But it's too soon to know that."

Source:  http://online.wsj.com