NEW YORK (CNN/Money) -
Airline stocks sank Monday morning, the day after Director of Homeland Security Tom Ridge warned that al Qaeda was again eyeing using aircraft as a weapon.
Ridge made his comments as he raised the nation's terror threat alert to orange, or "high," from yellow, or "elevated."
Shares of major airlines fell as much as 3 percent in morning trading following the remarks, although some of the airline stocks rebounded by mid-afternoon trading in New York. Still AMR Corp. (AMR: down $0.13 to $12.67, Research, Estimates) parent of No. 1 airline American, and No. 4 Northwest Airlines (NWAC: down $0.23 to $12.25, Research, Estimates) were still off just less than 2 percent in the mid-afternoon.
Officials at those carrier, as well as No. 2 United Airlines and No. 3 Delta Air Lines (DAL: down $0.08 to $11.29, Research, Estimates) said they had seen no rush by passengers to cancel travel plans.
Nor have the airlines loosened their flight cancellation policies as most carriers did during the outbreak of fighting in Iraq in March.
"We don't expect our operations to be impacted. We're operating routinely," said Jacquie Young, spokeswoman for American.
Standard & Poor's airline equity analyst Jim Corridore said the drop in airline stock prices wasn't much worse than during previous Code Orange alerts, even those when officials did not mention a threat to the nation's aircraft.
"There will be an extra discount in the stocks while this in effect, but barring an attack, I don't expect there will be a long-term impact on stocks," he said.
Since most seats are already booked for the holiday travel period, mostly with travelers with non-refundable tickets, that will mute any impact on airlines' already battered bottom lines, he said.
"I don't know if there is ever a good time for this to happen. If it happened in the early holiday period when bookings were being firmed up, it could have had more of an impact," he said.
Some in the tourism business said they haven't seen any immediate impact on bookings or cancellations due to the raised threat level. Disney World spokesman Bill Warren said the Florida resort is not expecting any dropoff in business.
"Clearly we have not been singled out by what Mr. Ridge has said, and we've not been given any indication we're on someone's list," he said.
Noel Irwin Hentschel, CEO of AmericanTours International, the largest operator of tours to the United States, said the holidays are not the prime time for overseas travel to the United States.
Japanese travelers are generally more sensitive to security concerns than Europeans, who have seen more acts of terrorism close to home, she said, adding the low value of the dollar will nevertheless draw international travelers to the United States after the holidays, no matter the risk assessment.
"We don't believe the international market is even paying attention to these colors," she said. "The dollar is the lowest it's ever been (against the euro), and there's a lot of pentup demand to travel here."
Business travel, usually slower during the holidays, could get hit if the Code Orange extends into the new year.
In a survey earlier this year of travel managers who belong to the National Business Travel Association, 63 percent said a move to Code Orange would have no effect on corporate travel policy. But 36 percent said there would be some drop in travel as a result of the threat level.
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Ridge's comments about terrorists wanting to use aircraft in attacks could catch the attention of some corporate travel managers in a way that a simple code change would not, said Kevin Mitchell, president of the Business Travel Coalition, another business travel group.
"Business travelers and companies that fund the travel have been through the drill, they're a bit jaundiced (about code levels) at this point," said Mitchell.
He also said the greater threat level could scare some folks into driving rather than flying due to fears about hassles and long lines at airport security checkpoints.
"I have one friend in Baltimore who was set to fly to Hartford tomorrow. Now he's thinking about driving because of the thought of what BWI might look like," he said, referring to Baltimore-Washington International Airport. "The sad thing is, the more people who are forced into their cars, it increases the death rate on the highways."
Still, most people traveling this holiday will be driving, not flying, which was true even before the threat level was raised. The Department of Transportation estimated in November that 91 percent of holiday travelers going 50 or more miles will go by car, compared to only 5 to 6 percent by air.
Even those traveling 1,000 miles are more likely to go by car than plane, according to the DOT statistics. It's not until the trip reaches almost 1,500 miles one-way that air travel is more common than travel by car.
Ridge told a news conference Sunday that security at the nation's airports would be tightened during the heightened alert period.
"We continue to hear, one, the interest in using aircraft as a means of attack," he said. "Two, there's continued discussion -- again, these are from credible sources -- about near-term attacks that could either rival or exceed what we experienced on Sept. 11."
But Ridge said he believes it's safe for the public to travel over the holidays, and urged people go ahead with their travel plans.
"We have a substantial level of security at the airports, but we can ramp it up a little bit more when we go to orange, and that's precisely what we do," he said. "But make no mistake about it, aviation is far more secure than it's ever been in the history of the country."
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