Airline towns feel pinch of industry woes

PEACHTREE CITY, Ga. -- This tree-lined Atlanta suburb bears little resemblance to Rust Belt communities, but the "For Sale" signs posted outside $250,000-and-up homes betray the fact that like factory and mill towns, this area is suffering amid the decline of its major industry.

Layoffs at the major airlines, particularly at Delta, have hit hard, forcing employees to cut their spending and, in some cases, move away.

Furloughed Delta pilot Grady Boyce is doing without the luxuries that drive economies in airline towns: No more movies, no eating out, no expensive gifts.

"First time you get furloughed, you figure you're not going to be out that long," said Boyce, 34, who has been off the job a year. "It takes a while to settle in. You go through depression, a whole cycle of getting over the shock. It's really a bummer for the people it affects."

The lingering effect of the Sept. 11 terrorist attacks continues to weigh on the industry -- Delta and Northwest reported heavy losses in the first quarter, gave gloomy outlooks and have laid off thousands of workers. Delta has laid off 16,000 employees since the attacks and has 1,116 pilots on furlough, the pilots' union says.

The war in Iraq and the SARS virus in Asia have slowed international travel even more. And the struggling economy has prompted deep travel discounts.

All that trickles down to the communities the airlines' employees call home.

Revenue dropping

In Peachtree City, an upper middle-class community of 35,000 about 30 miles south of Atlanta and close to Hartsfield International Airport, one in 20 households has some connection to the aviation industry.

Sales tax revenue has dropped 3 percent in the past year, and small restaurants and mom-and-pop shops that relied on the airline employees are hurting.

Chris Clark of the Fayette County Development Authority said his office helped 187 small businesses last fiscal year that were looking to downsize or were on the verge of closing. That number has swelled to 255 so far this year in part because of Delta's problems, he said.

"We've seen some stores change their hours, a few close, some look to other areas," Clark said.

Bloomington, Minn., is going through similar problems because of its concentration of Northwest employees from nearby Minneapolis-St. Paul International Airport. In March, Northwest cut its work force by 4,900.

There's no denying the impact the airlines' woes have had on the local economy, said Bob Hawbaker, a senior planner in the community of 85,000 people next to Minneapolis-St. Paul International Airport.

"It's critically important to business to have good airline transportation in and out of the city," Hawbaker said. "That and the interstate highway system are the economic engines of Bloomington."

Boyce has applied for numerous jobs in the service, managerial and teaching fields, but has had no luck.

He faces soaring medical costs because his 2-year-old daughter was born with an intestinal tract defect. His union is paying for temporary coverage, but he worries about the airline's future.

Boyce sold his home in late February and moved to one that could accommodate his in-laws, who are going to share living expenses.

"It cut down my exposure and gave me a little bit more cash to operate with," he said.

More homes are being put up for sale by out-of-work employees, but fewer are being bought.

Lynn Amos, an agent with The HomeSource Realtors in Peachtree City, said 603 homes sold in the community last year. Only 142 have sold during the first four months of this year, she said.

Peachtree City has been working to diversify its economy to make its tax base less reliant on the airlines since the collapse of Eastern Airlines in 1991, Mayor Steve Brown said.

Property tax revenues have remained steady so far, but the city is watching the situation at the airlines carefully, the mayor said.

"We can weather a rough period with them as long as they stay in business," Brown said. "However, if the business fails altogether, that's going to be an interesting scenario we would rather not encounter."