U.S. air space reopened to commercial traffic Thursday after a two-day closure, but rescheduling problems and new security measures coupled with an expected drop-off in air travel will leave world airlines with losses ranging from $4 billion to $10 billion, experts said.

Transportation Secretary Norman Y. Mineta announced that the nation's airspace was reopened to commercial traffic at 11 a.m. Thursday on a case-by-case basis.

Still, air travel won't be the same: Curbside luggage check-in is forbidden, boarding areas are restricted to original passengers only and authorities are eyeing all vehicles. Airlines are allowed to move empty aircraft. Personal aircraft will still be grounded.

When individual airports open depends on how quickly they meet the new security requirements. Airlines will ultimately determine which of their flights will take off and when.

About 4,000 of the world's 12,000 commercial airliners have been grounded since four commercial jets were hijacked in the Tuesday morning terrorist attacks in New York and Washington D.C. U.S. air space has been essentially closed since then. 

But even as various airlines around the country began making contingency plans and tentatively preparing to launch skeletal schedules as a way to get stranded passengers home, Midway Airlines announced on Wednesday that it would be shutting down operations for good.

Citing the impact of Tuesday's attacks and its own very precarious financial reality, the Raleigh/Durham, North Carolina-based airline said it would be halting operations and laying off 1,700 employees.

Midway — which had filed for chapter 11 bankruptcy in mid-August — says that because of the recent attacks, "demand for air transportation is expected to decline sharply".

The airline had gained a reputation for service and first class-like amenities, on-time performance and reliable service to a handful of East Coast and Midwestern cities including Boston, New York, Washington, Miami, New Orleans, Atlanta and Denver with a fleet of mostly Boeing 737-700s and Canadair Regional Jets.

More Failures Seen

Midway may only be the first of a long series. On Thursday, UBS Warburg said the airline industry will take a $2.1 billion hit, leading to the largest loss ever in the industry — $4.4 billion.

Although he cautioned the estimates were "highly provisional," analyst Samuel Buttrick said there would be residual impact in 2002 and forecast a $400 million loss for the industry in 2002. 

"Not all airlines will make it outside of bankruptcy protection,'' Buttrick said in research note 

"Reduced demand, higher jet fuel costs and higher security related costs (are) the primary incremental factors with demand levels overwhelming other factors,'' he said. East Coast, New York and long-haul operations will probably be hurt disproportionately, he said.

The International Air Transport Association (IATA) had an even more somber outlook. William Gaillard, spokesman for the body whose member carriers include all major airlines, said the industry could be facing losses of up to $10 billion. 

The U.S. market is worth about $1 billion per day, according to IATA. But the slowdown on Canadian and Mexican markets as well as in transPacific and transAtlantic traffic must also be taken into account. 

``This is a ballpark figure, but we could be talking about immediate losses of $10 billion dollars this week alone. There could be a ripple effect, too,'' Gaillard told Reuters in an interview at IATA headquarters near Geneva's Cointrin airport. 

``A week ago we were talking about losses of about $2.8 billion dollars on international scheduled traffic this year. There is no doubt it is going to be more,'' he added. 

``And if we add U.S. domestic to that which is a big chunk of the whole thing, we could be facing record losses. This would be the first time since 1994,'' Gaillard said. 

The IATA annual figures cover only international scheduled flights and do not include the U.S. domestic market. 

The world's airlines suffered heavy losses in the period of 1990-94. The worst year was after the 1991 Gulf War, with IATA airlines reporting combined losses of $7.5 billion in 1992, the spokesman said. 

Fox News' Farhad Heydari and Reuters contributed to this report.