Simon Calder: 'Be careful, BA, these blunders could cost us all money in the end'

Grounding irate passengers hurts British Airways at the worst time of year, but it may also cause damage to the economy

The entire edition was devoted to "The BA Way", a mission to boost profits with "service that matters for people who value how they fly".

As Europe's busiest airport ground slowly back into operation, passengers who had been waiting since Thursday learned that for many, there were still hours if not days of waiting yet to come.

In the height of a summer when, as BA News eagerly reports, the planes are fuller than ever, the slightest disturbance quickly ripples across the airlines, causing blockages that take days to clear.

Two years ago, check-in staff demonstrated the repercussions that a relatively brief stoppage can generate.

Last year the fragile nature of the operation was once again revealed when a combination of low staff morale, chronic absenteeism and over-stretched resources led to the cancellation of dozens of flights.

This year, "improved resource planning" and 700 extra staff were supposed to ensure that "holidaymakers' journeys pass off as smoothly as possible", according to the outgoing chief executive, Sir Rod Eddington.

The well-regarded Western Australian has only a few more weeks at the helm of the airline. He was no doubt looking forward to a smooth handover to his successor, Willie Walsh, after five years of turbulence.

Eddington has watched passenger numbers slide by nearly 20 per cent as BA faced a series of shocks - September 11, SARS, foot and mouth and the London bombings - against a background of spiralling oil prices, intensifying competition and falling fares.

Unlike his big European rivals, Air France and Lufthansa, British Airways faces fierce home-grown competition from quality airlines. Between them BMI and Virgin Atlantic have cherry-picked many lucrative routes on which to compete with BA, and between them comprise a "shadow" national airline.

BA's inability to make a sensible return from its short-haul network have been exacerbated because its hub city, London, is also the main base for Europe's two giant no-frills airlines, Easyjet and Ryanair.

Each year, the best hope for BA is to make hay while the August sun shines. This month should have proved extremely profitable: average fare levels have surged and planes are taking off with almost all seats occupied. Or, for many travellers, not taking off.

Compared to normal industries, the economics of aviation are scary. Airlines carry huge fixed costs in terms of aircraft ownership, engineering facilities and staff salaries. But the marginal costs of operating a flight is relatively small. So when hundreds of flights are cancelled, the savings on fuel and airport fees are far outweighed by the costs of hotel beds, meals and mandatory compensation for passengers.

This first miserable summer for BA customers will cost the airline a fortune in the near future, but the long-term harm for both the airline and the UK economy will be more serious.

"Every interaction with customers and stakeholders needs to help promote BA as an airline of reliability", quotes the airline mantra. And Eddington's reputation has been tarnished by the latest shambles, which also adds to the challenge facing his successor. Willie Walsh made his reputation as a cost-cutter at Aer Lingus. He turned the Irish airline around commercially, but only after confronting the union. When Walsh starts to tackle BA's costs, he could precipitate yet more industrial action that will directly effect UK plcs.

Any multinational corporation base their European operations in west London and the Thames Valley largely because of the excellence of air links to and from Heathrow. Every time the airport's leading airline goes into meltdown, that edge is eroded.

Tourism, too, will be effected after the London bombings, the last thing the inbound travel industry needs is for Britain's national carrier to appear incompetent.

"Operational difficulties" have long been the catch-all excuse used by airlines to explain delays and disruptions. It was the explanation offered last August by Mike Street, director of customer service and operations. "A monumental cock-up" was a BA captain's view.

The airline's latest venture into travel limbo brings no danger that BA will buckle. Not only is it well regarded for safety, it also owns the largest number of slots at the world's most desirable airport, Heathrow. This is an asset that is pure gold for any airline.

Simon Calder is travel editor of the 'Independent' and 'Independent on Sunday'