Terrorist threat to hit budget airlines hardest

The foiled UK terror plot last week has left airlines more vulnerable than ever to scare stories and disruption, both of which could ultimately damage the companies’ bottom line. From a purely commercial point of view, the chaos caused by even the threat of an incident is a blow.

The media’s analysis of the ongoing investigation into the news that explosive liquids, disguised as soft drinks, were to be detonated on a number of passenger aircraft en route to the US is difficult to view in anything other than human terms.

So even a thwarted scheme of this supposed scale will damage consumer confidence in the safety of airline travel. The 9/11 attacks, and regular media revelations and warnings from Home Office officials, mean the threat of terrorism is never far from passengers’ minds, leaving marketers to pick up the pieces.

That is undermining the efforts of low-cost airlines to make a growing range of travel opportunities accessible to more people. Last week should have been a buoyant time for Ryanair as it unveiled a significant expansion of its European operations. From December, it will base three new aircraft at Dublin Airport and create more than 200 jobs by launching 12 new European routes. Only the day before the latest terrorist plot was uncovered, Ryanair chief executive Michael O’Leary claimed the company is now Ireland’s national airline, with Aer Lingus a distant number two.

Flight cancellations

But the subsequent week’s delays have been devastating to Ryanair and other airlines. Last Thursday, initial flight cancellations at British Airways alone wiped around &£220m off the national flag carrier’s value, with its share price plunging 5%.

On Monday, when the Home Office downgraded the overall threat from “critical” to “severe”, BA cancelled 39 short-haul and five long-haul flights from Heathrow. Ryanair cancelled eight flights out of its 750. Most observers agree that the current difficulties at airports are likely to continue for some time.

Analysts say low-cost airlines will suffer most because they charge for baggage being stored in plane holds. However, a spokesman for Ryanair denies its future is troubled, saying: “Charging for luggage is about reducing the amount of baggage in the hold and therefore reducing the weight carried on each plane. That policy is not going to be reviewed and will continue.”

The source adds: “Speculation that our type of pricing model is set to be harder hit than other types of airlines is ill-informed nonsense. We don’t just operate in the UK but in 23 countries and we have 16 bases located around Europe. The new security measures have so far just affected the UK.”

Security requirements

While the source refused to detail losses from cancelled flights, Ryanair has joined BA in an unprecedented attack on airports operator BAA and the Government over the extra security requirements that have badly affected their operations. BA chief executive Willie Walsh slammed BAA for being “unable to provide a robust security search process and baggage operation”, while O’Leary called for UK police or the military to assist with security checks in order to reduce delays.

A summer of airport chaos and cancelled holidays may encourage consumers to consider taking future breaks within the UK, or at least travelling abroad on alternative forms of transport. That will ultimately make the job of airlines, and their marketing chiefs, more difficult.