By Jonathan Stempel
NEW YORK, March 21 (Reuters) - More travelers are resisting taking to the skies, but that doesn't mean they all plan to hit the road.
Business at rental car companies, which mostly serve air travelers who pick up cars at airports, surged in the days and weeks immediately after the Sept. 11, 2001 attacks when those stranded by the government shut-down of air traffic snapped up cars to drive to their destinations.
Although some travelers worry about the potential for new attacks that might again close the skies, travel experts do not foresee a similar surge in car rentals now, and say business might even drop for a while.
"After 9-11, rental cars had a huge bump because travelers rented cars for long business trips," said Thomas Nulty, a principal at Finding the Better Way Inc., a Monarch Beach, California-based travel consulting firm. "That's not happening any more. Rental car companies are feeling the pain right alongside the airlines."
Several big airlines, including AMR Corp.'s American Airlines Inc., UAL Corp.'s United Airlines Inc. and Continental Airlines Inc. , are cutting or preparing to cut flights as the war in Iraq curbs travel.
As air travel slumps, so might demand for car rentals. Up to 90 percent of rentals at Hertz, a unit of Ford Motor Co. and the world's largest car rental agency, are at airports, Hertz spokesman Rich Broome said. Other agencies say their airport rental percentages are nearly as high.
"Our off-airport business is holding up strong, but we have seen a drop-off in our airport business ... particularly as it relates to international travel," Broome said.
Rental agencies face a conundrum. As U.S. air traffic drops, so might rentals and consequently, the need to maintain fleet sizes.
But if air traffic stops entirely, most likely in case of another big attack in the United States, demand for rental cars, especially one-way travel, will likely surge.
After Sept. 11, "we ended up with many cars in different parts of the country than where they needed to be, and it took time to return the cars back to their home locations," said Susan McGowan, a spokeswoman for Avis Rent A Car and Budget Rent A Car, both part of Cendant Corp. .
READY TO WAIVE FEES
Avis, Budget and Hertz, among others, at the time waived drop-off fees -- charged when a renter picks up a car in one city and drops it off in another -- and have said they will do so again if air traffic shuts down.
It is too soon to say how the war is hurting car rentals.
TQ3 Travel Solutions, a travel agency for mid-size and large companies, said car rentals are dropping because airline ticket sales are falling -- down about 20 percent from normal levels in the northeastern United States.
On the other hand, "if for some reason car rentals become a logical alternative for our travelers, there will be a mad dash" for them, said Keith Boccuzzi, vice president and general manager for TQ3's Northeast Region.
If rental agencies foresee a prolonged downturn, they might try to dispose of some of their fleets.
"There is precedent for this, as companies can look to the 1991 (Persian) Gulf conflict to take measurements of possible fleet contraction upon the outbreak of war," said David Gilman, a spokesman for ANC Rental Corp., which owns Alamo Rent-a-Car and National Car Rental.
However, travelers fatigued with delays and stepped-up security at airports might choose the interstate over the air.
"New security on airplanes can make travel difficult," said Nulty. "It adds one more level of stress and more travel time. I have told people, 'If you can drive it in four hours, you should drive.' Two years ago, I wouldn't have said that."