Concerns on flights may cost airlines

Security actions taken on possible threats come amid post-9/11 recovery

January 03, 2004|By Paul Adams | Paul Adams,SUN STAFF

The government's growing concern about the terrorist threats from international flights into the United States could prove costly for an industry that was just beginning to restore passenger confidence and cut its losses after the worst aviation slump in history.

Industry analysts estimate that a canceled flight can cost an airline up to $250,000 or more, adding to losses that have run into the hundreds of millions of dollars for many airlines in recent years.

But more importantly, analysts say, continued cancellations, diversions and delays could scare travelers off or make them decide to stay home rather than put up with the hassle that has increasingly come to define air travel.

"Long term, people get more and more disgusted with flying, and so they stay home or they telephone their relatives or they take another airline that's not being picked on," said Morten Beyer, an airline consultant with Morten Beyer Agnew Inc. in Arlington, Va.

British Airways has been hardest hit. The international carrier canceled three flights between London and Washington's Dulles International Airport within 24 hours yesterday as a result of unspecified intelligence about a possible terror threat.

Some of those passengers are being rerouted through Baltimore-Washington International Airport, Philadelphia and other regional airports that British Airways flies out of. The airline also canceled a flight from London to Riyadh, Saudi Arabia.

The airline said it does not have an estimate on how much the cancellations have cost or whether the delays and cancellations will continue.

"We just don't know," said John Lampl, a spokesman for the airline. "It's going from day to day. We don't know what's going to happen tomorrow, for example."

No flights at BWI have been affected. But Cheryl Stewart, a spokeswoman for the airport, said security officials are on high alert, much as they have been since the nation's terror alert level was raised to orange. Stewart said there have been no long delays at security checkpoints as a result of the heightened security.

Year-over-year passenger traffic among the nation's largest airlines was down 3.7 percent through November, according to the Air Transport Association, a trade group representing major carriers. Airlines lost $11.3 billion in 2002 as a sluggish economy and terrorism fears continued to rattle the industry. But carriers entered this year hoping to be lifted by the surging U.S. economy.

If no terrorist plots are uncovered and the latest disruptions to air travel prove short-lived, most analysts forecast little impact on the industry. The damage would most likely be limited to British Airways, Air France and other carriers that have had flights singled out by federal security officials for further scrutiny.

"If this happens sporadically or not too often, then I don't think it will hurt at all," said Darryl Jenkins, director of George Washington University's Aviation Institute. "If this becomes a daily event, that's something different."

Losses from canceled flights add up quickly, Jenkins said. With most carriers already losing money, few can afford to keep taking hits.

"Right now, any additional expense is a lot," he said.

Beyer, the aviation consultant, said the psychological impact of such incidents typically affects passenger behavior for up to three to four months.

"Then, if nothing happens, people gradually come back to flying again," he said. "But meanwhile, the damage is done."

The public begins to lose confidence each time the government cancels a flight but fails to discover terrorists, Beyer said.

Whether the latest threats will cause passengers to stay home likely won't be known until around the spring-break travel rush, said David Stempler, president of the Air Travelers Association, a Washington-based advocacy group for airline passengers. He pointed out that travelers have grown accustomed to inconvenience since the Sept. 11, 2001, terrorist attacks. For many, word of flight cancellations won't prompt increased anxiety.

"We as airline travelers are a resilient lot," he said. "We're getting used to the minor striptease that goes on at security checkpoints. That was new for a while, but now that seems routine."

But if more flights are canceled, affected passengers may start to feel it in their pocketbooks, Stempler warned. Airlines are typically not obligated to pay for extra lodging or other expenses when a flight is canceled for reasons beyond the airline's control. Such is not the case when a flight is delayed because of mechanical problems or other operational issues.

Lampl said British Airways is offering refunds to passengers who choose not to rebook their flights with the carrier. It was unclear yesterday whether the airline was paying for hotel accommodations for passengers who were stranded as a result of the cancellations.

"If it's a situation that is totally out of our control, theoretically we don't have the liability to put somebody up or compensate them," Lampl said.

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