Come fly with me?

Times are tough in the air: a slowdown in the economy, competition from no-frills carriers and, to cap it all, tanks around the runways at Heathrow. But just how worried are airline staff? Simon Calder takes to the skies to find out

"Air Lib: it's over." Yesterday, the radio station France-Inter announced the demise of the second biggest French airline. After 15 turbulent years, marked chiefly by dreadful financial results, the no-frills airline has become a no-flights airline: "Destination unemployment for 3,200 workers", recited the newsreader.

Join the club. Air Lib's unfortunate staff will swell the ranks of redundant aviation employees all over the world. These are difficult days for airline personnel.

How bad? Even at the best of times, the industry has always struggled to make healthy profits. And this month, with the threat of war looming and a jumpy Government sending the troops in to our major airports, is getting close to the worst of times.

Welcome to Heathrow? Not these days, you're not. Until recently, a billboard at the airport's main entrance promoted the benefits of Oneworld, a business alliance that links British Airways with American Airlines and several other carriers. Now it carries the much more menacing image of a pair of scissors inside a red circle. "No sharp objects", reads the poster. "If you do not comply with this notice you will be liable to prosecution." Move on to the entrance to the tunnel beneath the northern runway, where a model of Concorde is on display, and you run into an Army post. Tanks are a common enough sight at the airports in Medellin and Maputo, but previously unknown in Middlesex. They've recently left London's main airport, but could well be back. At this rate London Heathrow could soon to be renamed London Ring of Steel.

"The market situation at the moment is extremely challenging," concedes Martin George, BA's director of marketing. Before I met him, I jotted down 10 reasons why he has the worst job in the world. They range from Britain having the world's most viciously competitive low-cost carriers, to the image problems associated with carrying a passenger plus live hand grenade from Caracas to Gatwick. As I waited for Mr George, an 11th reason became apparent: the front page of the current edition of British Airways News.

"Tougher Times Ahead Despite £25m Profit" read the headline, while the main picture showed an armoured vehicle at the airport. With bad news like that to contend with, many people might be heading for the emergency exit. But in adversity Mr George is resilient. "There's no point crying in your beer," he says. "We're planning for the worst and hoping for the best as far as military action is concerned."

Meanwhile, the airline must carry on as normal, not always easy, if you have had to turn up at work to find a tank parked outside. This is a lousy time to be working in aviation, not least because you have to deal with nervous and possibly misguided passengers. Jamie Bowden worked with British Airways for 20 years at Heathrow and in the Middle East, and is now an adviser to the airline industry on crisis management. "After the bombing of Libya in 1986, I remember an American on a short-haul flight to Madrid asking 'How close does this go to Lebanon?'" The Gulf War was even worse, financially: "There were jumbo jets going with 20 people on them. Americans just stayed at home. There are worries that we'll see the same again."

"I still enjoy it, even though all this is going on," says Abid Hussain, a customer-service agent in Terminal One. He joined BA when its share price was at its highest: 770p. Its stock began trading this week at less than one-seventh of that peak. "There's not much opportunity in the way of progressing or moving up the ladder, because they're looking more to get rid of people. But if I leave here, I wouldn't get another job where I would enjoy myself as much."

His colleague Barbara Page-Smith says that her relations are more worried than she is: "Last week, a member of my family rang me at work here in the terminal. I didn't know that the Army was outside. But everyone was very calm. We just got on with it."

Rod Eddington is also getting on with it. British Airway's chief executive is the man ultimately responsible for coping with what he describes as "an unprecedented reduction in our revenue because of the continued threat of war, increasing competitive pressures and the uncertain economic environment".

Across in Dublin, his counterpart at Ryanair does not see it like that: "Traffic's booming," reports Michael O'Leary, the Irish airline's chief executive . "We expect 45-50 per cent year-on-year growth in February. Business has never been better."

Warming to his theme, O'Leary says the threat of conflict is persuading passengers to switch from BA to his airline. "They've stopped travelling with very high-fare airlines but they've continued to travel very strongly with low-fares airlines. We're operating now with higher advance load-factors than we've ever had before." In other words, Ryanair has sold a higher proportion of seats in advance than at any time in its history.

"People are now remarkably sensitive about the price of their air ticket, in a way that I've never known before," echoes Tim Jeans, managing director of a recent no-frills start-up, MyTravelLite. "There's a growing awareness that on most routes there's a choice, so everybody except civil servants on junkets will choose the low- cost option. Even people who are part of large corporations are now sensitive to whether they've paid £500 or £100 for a flight to Frankfurt."

As it happens, today I am flying to Frankfurt. I have paid £93 for a British Airways return flight, booked three days in advance. This is BA's gold-standard route, connecting Europe's two most important airports, London Heathrow and Frankfurt Main, and its financial hubs. A year ago, the same seat would have cost nearer £500. But BA has abandoned all the restrictions that were designed to force business travellers on short trips to pay sky-high fares. As a result, says the airline's boss, Rod Eddington, "we're transporting a lot less fresh air around".

Fresh air. That's what I could do with in the confined spaces of Heathrow's ageing Terminal One. The queue for security stretches back 100m, past Boots, a bureau de change and the Virgin store, reaching a straggly conclusion outside Sock Shop. Passengers are funnelled by a labyrinth of roped walkways into a space larger than some of the no-frills airports in Europe, full of metal-detector gates and X-ray machines. In the queue, I get talking to Jalil, a Moroccan going home to visit his family in Casablanca. "Yes, I feel worried about flying, but I want to see my family. I have to fly. But tourists who are worried will just stop coming."

Shortly after 11 September 2001, a cartoon in a Florida newspaper showed a smiling check-in woman asking "Thank you for flying today. Do you have reservations?" and a passenger answering, "Yes, but I'm still going." Dorian Klein, a BA passenger flying to Milan, is that sort of traveller. He is going to Italy because his work demands it. "When you're in business you do what's necessary, but I'd much rather my family drove or took a train than fly."

Everyone I talk to feels the same thing: the world is now a dangerous place. This is no great surprise, considering the message our Government is pumping out to prospective travellers. Every piece of Foreign Office travel advice begins with an assessment of the risk of terrorism. At a time when developing countries are desperate for foreign-currency earnings from tourism, the Government's relentless warnings seem designed to cut the number of British travellers heading abroad. While this hurts BA and Virgin Atlantic, the citizens of Sri Lanka and Tanzania suffer much more.

The UK tourist industry, struggling to recover from the after-effects of foot-and-mouth disease, is hurting too. The recent, extremely visible high security at Heathrow is not exactly the image that London hoteliers like to see beamed around the world. As with the foot-and-mouth epidemic, the Government's reaction to a difficult set of circumstances is wreaking further havoc on travel and tourism, an industry that is already weak.

"It's a beautiful day for flying," announces Captain Robert Mead, as he prepares the Airbus A319 for departure. BA flight 908 is reasonably full; about three-quarters of the seats are occupied. Around 80 per cent of the passengers are male, half of them wearing suits, and all of them looked after by four cabin crew, including Jane Perris. She graduated in business management from Leeds University three years ago, and sums up the addiction that keeps many people in the aviation industry. "I love flying. I love meeting people from all cultures, all backgrounds. That's what makes it special. No two days are the same."

I grab a word with Captain Robert Mead on the flight deck, who is concerned that the passengers on whom his job depends have misconceptions about the risks of travel. "As far as security is concerned, still by far the most dangerous thing is actually getting to the airport. You're perfectly safe on board any aircraft." Jane Perris meanwhile, is calming the nerves of two gentlemen in row 10 with the help of a couple of large Bloody Marys ("They won't necessarily be full strength," she confides).

All aboard for the white-knuckle ride. I have not flown from Heathrow since the terror alert, complete with lurid descriptions of how a surface-to-air missile on the airport perimeter could bring down an aircraft. Perhaps I am mistaken, but I am sure the cabin is quieter than usual, and the passengers less relaxed as we wait for our take-off slot. "The time to worry is when we look worried," says Perris.

At least two Americans are on the passenger list today. Indeed, BA 908 has two captains aboard. Apart from the one on the flight deck, sitting in the economy cabin is US Army Captain Chris Ayers, who is flying back to his base with his wife Jessica. "Flying is still safe. Incidents here and there. The press makes a lot of an incident. If something's going to happen, it's going to happen."

The same fatalistic outlook is shared by the stewardess Jane Perris: "My attitude is that things can happen any time, at any place." And if her Bloody Marys don't cheer up the businessmen in row 10, Michael O'Leary, Ryanair's chief executive, has something to say that might do the trick: "Even if a war breaks out, our response will be to lower prices and keep people flying." As Ryanair is sitting on cash reserves of £1bn – while BA has double that amount salted away – this doesn't seem an unlikely story. So whether or not you feel safe flying in the next month or two, you should feel smug: never has there been a better time to find a cheap flight.

Seven minutes late, BA 908 pulls up to at gate at Frankfurt airport. Terminal Two is a voluminous cathedral to aviation, a miracle in steel and glass so vast and empty that staff use bicycles to get around. After check-in, you take an escalator to the upper level. Turn left, and you head for the departure gate. Turn right, and you find yourself in something of a side chapel. This is the terminal's own art gallery. The exhibition currently showing is called "September 11". It consists of a harrowing series of photographs chronicling the world's worst catastrophe involving civil aviation, from the ghostly void where the World Trade Centre once stood to an array of fire trucks crushed in the awful events of September 11. After this reminder of the potential for destruction of civil aviation, passengers head through security control to join the least auspicious departure number in the new, slimline BA: flight 911.

"Air travel has never been safer than it is now. People with longer memories can remember the early Seventies, when airline hijackings were commonplace," says Jamie Bowden. "BA's commitment to safety and security borders on the obsessive – and that can only be a good thing." Indeed, after literacy, about the most useful ability a person can have these days is risk-literacy. Some people in aviation are jumpy, which can hardly help public confidence; earlier this week a press release from an Arab airline was e-mailed in Freudian error to International Fright Weekly. Each day, I do something really dangerous: cycle across London. But on Friday, I shall play safe. For the first time, I shall fly Club World to New York, on a ticket picked up in Vienna at a discount of 70 per cent.

Back at Heathrow, customer services agent Abid Hussain is going home to watch the news, and to assess what it might mean for his job prospects. "The future of the airline business as a whole, not just British Airways, all depends on what Tony Blair and George Bush decide to do. If they go ahead with this war, all airlines are going to feel the impact."