Yixin Chen | Chongjiao Jiang | Xueqi Ren | Catherine Zhao

What Happened on 911?

Changes in Supply and Demand in Industry

Closer Look in Industry

What Happened on 911?
Timeline of events

Time(EST): 0:00-1:00

7:59 am -

American Airlines Flight 11, takes off from Boston's Logan International Airport carring 92 people. The plane is orginally enroute to Los Angeles.

8:19 am -

Ground personnel contact FBI indicating AA Flight 11 has been hijacked.

9:03 am -

Hijackers crash United Airlines Flight 175 into floors 75-85 of the WTC’s South Tower, killing everyone on board and hundreds inside the building

9:42 am -

The FAA ground all flights over the continental US. This forces 3,300 commericial, and 1,200 private flights to be grounded in US and Canada.

10:28 am -

The World Trade Center’s North Tower collapses.

- 8:14 am

United Airlines Flight 175, a Boeing 767 with 65 people aboard, takes off from Boston; it is also headed to Los Angeles.

- 8:46 am

Mohammed Atta and the other hijackers aboard American Airlines Flight 11 crash the plane into floors 93-99 of the North Tower of the World Trade Center, killing everyone on board and hundreds inside the building.

- 9:08 am

The FAA bans all takeoffs of flights going to New York City or through the airspace around the city.

- 9:59 am

The South Tower of the World Trade Center collapses.

Flight Cancellation In September 2001

Massive flight cancellation during following days

The day of 911, all US domestic flights were cancelled or diverted. Civilian air traffic would not resume for 3 days. A total of about 4,000 flights were asked to grounded immediately. All airports were required to take in as many planes as possible.

Changes in Supply and Demand

Airport Diversion

Larger airport were easier targets for terrorist

During the 911 attack, hijackers boarded to target flights from BOS, EWR, and IAD, where both of them are internationally known large airports. These large airports, which handle millions of people each day, make it harder to detect potential attacks and thus more vulnerable to terrorist attacks, including active shooters, luggage filled with explosives, weaponized drones, and vehicle ramming, than small and medium-sized airports.

Diverting planes from large size airports to decrease "hubs"

Before 911, domestic flights were mostly departed from large-sized airports. Then after 911 attack, this pattern had changed due to security issues, as the percentage of the total number of flights departed from large-sized airports dropped, and more service was offered to flights departed from medium-sized and small-sized airports.

Industry Supply and Demand

Both Supply and Demand dropped dramatically after 911 and slowly rebounded.

The airlines’ demand were negatively impacted due to the air passengers’ loss of confidence as well as increased frustration towards stricter security measures. After the 911 terrorist attacks, the federal government founded the Transportation Security Administration to take over commercial airport security. The airport screening measures became thereby time-consuming and burdensome, with requirements of removing coats and shoes at crowded security checkpoints as well as going over high-tech scanners.

In addition, the consumer experience deteriorated as air carrier companies want to stop their losses of profits by increasing fee for luggages, cutting expenses such as food or employees. It took 3 years for customers to slowly return to airlines after the 911 attacks.

Closer Look in Industry

To get a closer look,

We were also interested in studying how individual companies were affected with 911. We first studied how individual companies changed their supply to accommodate the changes in consumer trust. Then we analyze how the profits were affected in the following years.

We found something interesting.

Passenger and Seats

We analyzed the passenger and seats of the 6 largest airline companies in 2001 including UA and AA, who got hijacked during 911. The number of passengers represents the actual number of boarding passengers and the number of seats represents the number of available seats provided by the airline. In other words, the number of passengers represents demand and the number of seats represents supply.

Growth in AA's supply and demand not expected.

After 911 attack,all airline companies had their number of passengers and seats decreased to varying degrees except AA. Actually AA made a great jump in the number of both passengers and seats, which seems strange considering that AA was directly involved in 911. We later took a look at AA's revenue report around 2001 and found the possible reason.

US Airways disproportionately affected

US Airways experienced a severe and long-lasting decrease in number of both passengers and seats. US Airways was the largest airline company at Washington National Airport which was directly involved in 911 attack. After the attack, Bush administration shut the airport down indefinitely and it was closed for more than 3 weeks. It accelerated the financial crisis of US Airways and resulted in the closure of the airline's MetroJet network, which was an important reason for US Airways's bankruptcy.


AA declared bankruptcy, due to poor purchases and post 911 travel scare

AA had a badly timed purchase of Trans World Airlines Inc. In April 2001 came just as the U.S. economy was beginning to slow, a decline that became much steeper after the Sept. 11, 2001, terrorist attacks. The aftermath of Sept. 11 left the industry and American reeling as the number of people traveling plummeted and spent the first half of the decade skirting Bankruptcy Court. Similarly, other airlines such as UA, Delta, Northwest, though some of them are not directly involved with 911, have filed for bankruptcy starting in 2002 to stay alive.

Low budget airlines, Southwest Airlines, were able to maintain profits over the years

The impact of 911 was indeed a catalyst for major airline companies’ bankruptcies. However, after looking at the stats for Southwest Airlines, we are further confirmed that a strong recovery from 911 was possible and that the companies who suffered from economic misery after 911 were mostly due to some extent of poor management. Delta, Northwest, AA and UA emerged from bankruptcy a few years later with lower pay and benefits for employees, trimmer workforces and often with better terms on airplanes, facilities and debt, successfully rebounded to make stable profits after 2010.