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Terror alert spells trouble for cheap travel

Terrorist alert has given rise to fears that no-frills airlines won't be able to avoid passing on to their customers the costs of tougher long-term security measures.
/ Source: The Associated Press

Europeans have become used to cheap flights, sometimes paying no more than the price of a lavish meal for a ticket between London and Spain.

But last week's terrorist alert has given rise to fears that no-frills airlines won't be able to avoid passing on to their customers the costs of tougher long-term security measures.

"The situation as it is at the moment is unsustainable," said David Bryon, an industry consultant and former managing director of low-cost airline bmibaby.

Canceled and delayed flights since Thursday, when authorities revealed a plot to attack several trans-Atlantic flights, have already cost all carriers millions of dollars each day. Budget airlines could be even more susceptible to future costs.

That is because the no-frills carriers are particularly vulnerable to increases in "turnaround times" — the interval between when a plane hits the tarmac and when it takes off again with a new set of passengers.

Quick turnarounds mean more flights and reflect the budget airlines' decisions not to offer full onboard meals and to discourage passengers from checking bags — services that require costly time and ground staff. Speedy groundwork is a primary way no-frills carriers keep their costs and fares lean.

Ryanair Holdings prides itself on a turnaround time of 25 minutes, while its major competitor easyJet aims for just five minutes more. But with passengers stuck in lengthy queues at airports around the country because of strict security checks, those numbers are currently far out of reach.

"The problem is that the budget airlines work to tight schedules," said Bryon. "If you can't physically do that because of passenger checks, you can't meet your turnaround timetable, you have to consider changing your schedule and costs rise."

The government slightly eased strict security measures that had banned all carry-on baggage as the threat level was lowered Monday. The Transport Department said passengers would be allowed to carry a single, briefcase-sized bag aboard planes, and that books, laptop computers and digital music players would be permitted again.

But BAA, the operator of Heathrow and other major London airports, said it would not adopt the relaxed regime until Tuesday. It also ordered airlines to cut Monday's services by 20 percent or face the loss of all their flight slots, drawing complaints from airlines.

BAA has struggled to deal with the chaos and been roundly criticized by Ryanair and British Airways over its handling of the security threats.

Willie Walsh, BA's chief executive, said the airline was ready, willing and able to fly its planes, but blamed BAA's slow-going approach for the delays.

"BAA is unable to provide a robust security search process and baggage operation at London Heathrow, and as a result we are being forced to cancel flights and operate some others from Heathrow without all the passengers onboard," he said.

Bmibaby Chief Executive Nigel Turner said the airline was following BAA's directive but he hoped the situation would have returned to "pretty much as normal" by late Monday.

EasyJet, which has canceled more than 500 flights since Thursday, continued to ask its passengers Monday to still pack everything into one piece of checked luggage in an attempt to minimize the volume of bags it has to deal with.

Ryanair, which has grounded a fifth of all scheduled departures since Thursday, was harshly critical of both the BAA and the government.

"The U.K. government, by insisting on these heavy handed security measures, is allowing the extremists to achieve many of their objectives," Chief Executive Michael O'Leary said.

Ryanair is particularly sensitive to restrictions on hand luggage. In January it began charging customers for each bag they checked as part of a plan to get passengers to take only what they could carry.

The airline temporarily waived its 2.50 euro ($3.20) fee for each carry-on bag that unexpectedly had to be checked, but said Monday it has no plans to ditch the policy.

David Learmount of Flight International magazine said that stance was unsustainable in the long term as some form of more intense security checks were likely to remain in force.

Ryanair said the recent delays and cancelations were unlikely to affect its forecast for the number of passengers it expects to carry over the financial year because it bases the outlook on the number of tickets booked, rather than the actual number of passengers carried.

However, the airline declined to comment on whether the situation would hurt its full-year profit guidance. Ryanair expects net profit over the year to be up 5 percent to 10 percent over the 301.5 million euros it made last year.

Learmount said budget airlines might be able to make some money going forward from increased sales onboard if restrictions remained on purchases of duty-free goods before boarding.

Bryon, however, said that any new restrictions on sales of goods like bottles of alcohol would likely apply to onboard sales as well as at gate-side shops, restricting the abilities of low-cost airlines to spread the extra costs _ unlike full-cost airlines that can leverage the cost over a wider base.

"I don't think we will be able to go back to those days of relaxed onboard baggage, which means things will have to change," he said.