lmost instantly after the attacks the picture looked dismal for the industry. They were not allowed to fly for four days. And when they could again take to the skies, with airports gradually opening, it was clear that demand would be substantially reduced. Potential passengers were afraid: of flying, of being away from home, of facing long hassles at the airport. Even hardened business "road warriors" were pulling back from their frequent flying patterns.

It was a time for a bold vision and bold actions by the airlines' senior managements. Instead, their actions were tentative and timid at best.

After some delay, the airlines embarked upon modest efforts to coax their customers to return to the skies. The most common efforts involved some fare promotions aimed at business flyers, plus some extra frequent-flyer miles thrown in. Also, some airlines eased their requirements for the redemption of frequent-flyer mileage for travel awards – cutting the standard requirement from 25,000 miles to 15,000 for a few weeks.

Such reductions were a good start. But the airlines needed to go much further much faster. From the first day of the resumption of flights, the airlines should have offered flight awards at even lower levels: redemptions of only 10,000 miles, or perhaps even 5,000 miles – a fifth of normal requirements – but valid only for the next month or two. In addition, the airlines should have opened up larger allocations of seats that would have been eligible for the use of these awards. And, of course, they needed to publicize widely these expansive actions.

At first blush, giving away more airline seats would seem like an expensive proposition for the struggling airlines. But this strategy would in fact have carried little cost and would have brought them considerable benefits. The carriers had far too many empty seats on their flights. If they quickly filled those otherwise empty seats with additional frequent-flyer passengers, the extra costs would have been small – a few more meals and a few more gallons of jet fuel for the additional weight – so long as the extra passengers did not displace paying customers. Given the decline in business travel and the low load factors on most routes, this prospect was not a serious problem.

Now consider the benefits. First, the airlines would instantly have had more customers, who would then have informed their friends and family that it was indeed safe to fly again. That would surely have stimulated greater subsequent demand for paying tickets. Second, the airlines could have reduced – at very small cost – the huge overhang of potential frequent-flyer awards that customers have accumulated and that industry analysts have often described as a sizable future liability for the industry. Third, the airlines would have built substantial goodwill and customer loyalty among their customers, many of whom have been frustrated in the past by the unavailability of seats for frequent-flyer award travel.

This strategy would also have produced beneficial effects for related parts of the vacation travel industry, which have also been hard hit. Though these additional travelers would not have been paying for their airline tickets, they would still have spent money on hotel rooms, rental cars, restaurant meals, and taxis while on their travels. The airlines wouldn't have benefited directly from that spending. Nonetheless, it would certainly have earned them additional friends and goodwill – and maybe some additional paying flights – from employees and executives in those industries.

Of course, there were and still are other preconditions for reviving robust air travel in the U.S., such as improved security procedures and reduced airport delay and hassle factors. But stimulating demand has many facets, and radically expanded frequent flyer awards should have been among them.

By now (March 2002) the window of opportunity has closed. Awash in red ink, the airlines have cut back substantially on their flight frequencies and availabilities. With their reduced flight schedules there are fewer empty seats. The opportunity costs of drastically widening their frequent flyer awards have risen, while the likely benefits have diminished.

In sum, September was a time for the airline industry to have been bold and expansive in an area where it was perceived as timid and stingy. By liberalizing frequent flyer reward programs, airlines could have reaped substantial benefits at quite modest costs. Easing these requirements would surely have been a win-win proposition for the airlines, their customers, their employees, and their travel industry brethren. That's a combination that would have been hard to beat. It's a pity that the opportunity was not grasped.

Perhaps the current senior managements of the industry will survive the current crisis; perhaps not. In any event, some companies, under some brand names, with some managements, using some aircraft will surely be flying in the future as the economy revives and travelers' fears of flying recede. Let us hope that those managements never face as severe a crisis as occurred on September 11. But let us also hope that they will face any future crises with fresher ideas and less restricted outlooks.

Lawrence J. White is Arthur E. Imperatore professor of economics at NYU Stern.