Travel chaos may prompt claim by BA against Heathrow
Tuesday 15 August 2006
British Airways is considering a compensation claim against the airports operator BAA as City analysts estimated the current crisis in UK air travel would cost the airline about £50m.
Such a cost to BA would make the terrorism alert more expensive than last year's bitter catering dispute with workers from the supplier Gate Gourmet, which cost it some £40m. A BA spokesman said: "We're giving serious consideration to pursuing BAA for compensation over this."
Over the weekend a war of words erupted between BAA and BA and Ryanair over the level of delays and cancelled flights that have resulted from last week's foiled alleged terrorist plot.
The security emergency has created the third summer in a row of chaos for BA. It has had to cancel 1,000 flights. The terrorism alert has also affected the budget carriers Ryanair and easyJet, which have each had to cancel about 500 flights, even though they do not use Heathrow, the airport at the centre of the alleged plot to blow up aircraft.
Andrew Fitchie, of the stockbroker Collins Stewart, calculated that the disruption cost BA some £20m on Thursday, the day when the alleged plot caused the grounding of almost all air travel. He said each subsequent day will cost it about £5m until a return to normality, making it a likely £50m overall.
According to Collins Stewart, the crisis is likely to cost easyJet some £10m, or up to 7 per cent of forecast profits for this year, while Ryanair's hit will be less than 5 per cent of profits.
Willie Walsh, BA's chief executive, has said BAA "is unable to provide a robust security search process and baggage operation at London Heathrow". Ryanair's Michael O'Leary has even suggested the Army should have been called in because BAA could not provide enough personnel to handle the emergency security needs.
Aviation industry experts and City analysts suggested the performance of BAA during the current crisis could even be used against it by airlines in the current regulatory reviews of the company's performance. Mr Fitchie said: "BAA will now face even tougher reviews. The airlines could cite the present situation to argue that the airports are not operating efficiently."
The Civil Aviation Authority has started a five-yearly review of BAA's landing charges to the airlines, while the Office of Fair Trading recently announced an investigation into the competitiveness of the airlines sector.
Some businesses have benefited from the crisis and from the emergency restrictions on what passengers are allowed to take through check-in. The news yesterday that the ban on hand luggage had largely been lifted ended the bonanza some retailers enjoyed over the weekend as passengers had stocked up on items they were prohibited from taking through security once they had made it into the departure lounge.
WH Smith, which reported a boom in sales of books and magazines, extended its opening hours to 1am, increased its deliveries and shifted staff from its outlets in the main check-in hall to sites in the duty-free zone to cope with extra demand. Its airport stores account for about 12 per cent of its total revenues and half of all sales made at its travel division, which also includes sites at railway stations.
A spokesman for Alliance Boots said it had been "swings and roundabouts" from the restrictions in place for its airport outlets. It sold more food, especially for infants, but fewer toiletries. Although passengers can buy moisturiser and toothpaste to use in the departure lounge, these cannot be taken on board, even after yesterday's relaxation of rules on cabin baggage.
Meanwhile, Dixons was forced to resort to offering customers the option of picking up purchases on their return or getting them delivered to their homes to get round the ban on taking electrical items on board. "Things are progressively getting back to normal," a group spokesman said. That is, unless passengers are heading for the US, in which case they may not take anything purchased in the departure lounge on board.
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