Airline President Addresses New Industry Issues

June 24, 2002
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GRAND RAPIDS — By 3 p.m. Sept. 11, Northwest Airlines officials knew all their planes were safely on the ground and that none of its flights was part of the attacks on New York and Washington.

They also knew that the U.S. commercial aviation industry, which employees 1.2 million and serves 670 million passengers annually, would shut down completely.

“We had absolutely no idea what was going to happen next. The next couple of days were extraordinarily intense as the details of what had led to those fatal moments unfolded,” Douglas Steenland, president of Northwest Airlines, recalled at an Economic Club of Grand Rapids luncheon last Monday.

He said the industry had to survive because it’s a fundamental part of the American economy and way of life, contributing more than 10 percent of the GDP in tourism, business transportation, and freight and mail delivery.

By the end of September, the industry’s revenues had plunged by 60 percent.

Of more than 100,000 the airline industry lost after the terrorist attacks, 12,000 were Northwest employees. And like other carriers, Northwest reduced its overall level of service by 20 percent.

“As a result of these actions, we’ve positioned ourselves to be financially strong,” Steenland said. “Today we have over $2.7 billion in cash on hand. Both in an absolute number and in proportion to our size, we have more cash than any other U.S. carrier.”

No one can tell what will happen to the weaker airlines, Steenland said, but the most important measure of an airline’s current financial stability is its cash on hand.

Northwest began significant cost-cutting earlier this year in reaction to the slowing economy. By Sept. 11, it had reduced expenses on an annualized basis by $1.7 billion.

Looking ahead, the airline is anticipating the January 2002 opening of the $1.2 billion, 2 million-square-foot Northwest/KLM Midfield Terminal at the Detroit Metropolitan Airport.

Steenland has been Northwest’s president since February. He previously served the airline as executive vice president-chief corporate officer and general counsel. Before joining Northwest in 1991, he was a senior partner at a Washington, D.C., law firm.

Steenland said the industry’s decline is expected to continue well into the second quarter even through Congress responded quickly to support the industry with $5 billion in stabilization funds and $10 billion in loan guarantees.

In the weeks after Sept. 11, he the Federal Aviation Administration (FAA) and the airline industry integrated new security measures, expanding the computer-assisted passenger prescreening system (CAPPS) program to include closer scrutiny of carry-on bags and a longer list of prohibited carry-on items.

Steenland outlined other measures put in place since Sept. 11, among them:

  • Airlines now receive a daily list of potential suspect passengers from federal agencies that they must crosscheck with passenger lists.

  • Cockpit doors have been reinforced.

  • Every plane is subject to a daily security sweep and search prior to takeoff.

  • National Guard members are posted at airports nationwide.

  • Many domestic flights now have federal air marshals.

“I assure you there are numerous other security measures taking place behind the scenes that I am not at liberty to detail,” he said, adding that airplanes still remain the safest mode of travel.

The country may soon see passage of an aviation security-screening bill that would bring security-screening functions, which Steenland describes as “an essential law enforcement function,” under federal control.

As to the federalization of security-screening personnel, Steenland said that’s up to Congress to decide.

There’s clear consensus on two fronts as to what’s next for aviation security, he said.

First, the aviation security bill will spur rapid implementation of new technology using machine-readable biometrics, such as handprint and retinal scans.

“The concept is the more you know about someone — the more ways you can verify their identity — the greater your ability to evaluate their potential risks,” he said.

“In a system that processes more than 670 million passengers annually, where the vast majority of travelers pose no threat, a one-size-fits-all approach to screening is not the most effective, or the most efficient or economical way to go.”

Second, something the public probably won’t even see is the improved integration of information generated by law enforcement and federal security agencies in airport security.

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