The global airline industry can recover from the turbulence of a foiled terror plot in Britain last week, but it is not clear skies ahead as the sector faces higher security costs and passengers face even more hassle, analysts said.
Airport security will need new technology after British authorities Thursday uncovered an alleged plot to blow up transatlantic flights between Britain and the United States using liquid explosives smuggled onto planes in hand luggage.
A possible explosive in a soft drink can or bottle of perfume has once again changed the nature of the terrorist threat and increased the risks facing the airline industry.
"Unfortunately, the risk of terrorist attacks has joined recessions and fuel price volatility as an ongoing industry risk factor for airlines, particularly those in the US and Western Europe," said Philip Baggaley, airlines analyst at Standard and Poor's.
And demand may drop if airline travellers get too discouraged by stricter security rules. The United States and other countries have banned all liquids from being taken into the plane's cabin, while Britain has barred all hand luggage - meaning no handbags, laptops, mobile phones or MP3 players - except for travel documents and medications carried in see-through bags.
"The security checks for transatlantic travel have become draconian," said Jean-Claude Baumgarten, president of the World Travel and Tourism Council, adding that travellers will face "even greater delays in checking-in" for flights. "The constraints will be particularly hard for the legions of businessmen who take planes every day, and keep their briefcases with them so they won't get lost and they can quickly leave the airport" upon arrival at their destination, Baumgarten said.
A troublesome sign of the new hassles was evident at London's Heathrow Airport Saturday, where the British Airports Authority cancelled a third of departing flights from mid-afternoon, blaming the pressure of additional security checks.
British Airways Chief Executive Willie Walsh criticised the operator for failing to meet the challenge.
"The airport's baggage system cannot process all of the passengers' bags and where passengers have been able to check their bags in, the lengthy queues in the airport security search area means that passengers are unable to get to the departure gate in time for their flight," Walsh said.
In airports around the world passengers have been jettisoning drinks, perfumes, and toothpaste into rapidly filling waste containers.
Michael Silverstein, senior vice president of the Boston Consulting Group, said he been forced to hand over his toothpaste, deodorant, cologne and hair gel before his flight from Chicago to New York.
"I guess my hair will be flying in the meeting and the client will probably stare at my hair and say, 'Where is his gel?'" he said, though adding that he could have cancelled his trip, "but that would allow the terrorists to win."
US Homeland Security Secretary Michael Chertoff said authorities were working on refining the security measures "in order to somewhat reduce any additional inconvenience." But Britain's Transport Secretary Douglas Alexander was less specific, saying the measures would "last as long as the situation demands".
WTTC's Baumgarten thinks British authorities will relax some of the tough rules in a few months, but the cunning of terrorist plots still leaves the airline industry vulnerable.
"The biggest risks are for BA as the UK's flag carrier, since the situation points to the vulnerability of the UK as a terrorist target," said Nick van den Brul, aviation analyst at Exane BNP Paribas in London.
On Friday in London, shares in British Airways slipped by 0.07 percent to close at 370 pence amid concern that it would have to invest in costly new security measures.
On the other side of the Atlantic, US carriers felt the turbulence from the London terror alert as there are about 106 flights each day between Britain and the United States.
On Friday major US airline stocks slumped in the wake of the uncovered terrorist plot but also in line with the wider market downturn in New York. United Airlines parent UAL Corp closed down 1.19 dollars, or 5.1 percent, at 22.33 dollars, while AMR Corp, the parent of American Airlines, closed down 1.46 dollars, or 7.2 percent, at 18.83 dollars.
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