'Strict baggage controls bad for low-cost airlines'

Sydney, Aug 13: The Centre for Asia Pacific Aviation (CAPA) today predicted that shock waves due to London bomb scare will undoubtedly result in a temporary reduction in flight bookings and some cancellations.

But passengers today are very resilient and less ready to over-react to what, at this stage, appears to be a particularly Britain-US issue.

Significantly, it said, the positive aspect is that it appears that intelligence was sufficiently good that it stopped the threat.

Nonetheless, there will be a considerable consumer backlash, particularly in the Britain, where the information impact is greatest.

After 9/11, some major airlines actually had negative booking levels, that is there were more cancellations than new bookings.

This could prompt airlines in the short-medium term to offer more discounts to keep load factors up, within Europe and on flights to and from Europe and the United States.

With all other forces at work in the market at present, these effects are likely to be only part of the overall challenges on the industry, as fuel prices bite and economies slow.

In turn, the CAPA said, this will impact on some airline share prices. British and US carriers particularly immediately saw share price falls of five per cent and more.

This is peak season in the North Atlantic and a time when many less-frequent travellers take to the air. They are the ones who are more likely to be affected negatively by the terror threat. Paradoxically, they are likely to be attracted back into the air by cheap prices. It will also hurt airport shares, especially in Britain and especially at London airports. BAA's share price has already suffered.

Temporarily at least, it will have a negative impact on the sales of duty free liquor at point of departure -- at least until tamper-proof containers and procedures are introduced.

The CAPA said this does, however, mark a watershed in airport and airline security. In the past, the focus has been on screening for weapons and similar implements.

Here the problem has been elevated to another level where a combination of substances can become life threatening. The main ingredient is a liquid chemical as well as components which can be well disguised in a laptop, MP3 music player or camera.

So it looks for the time being at least that there will be a blanket prohibition on any of these items on board -- at least on flights involving the US and Britain.

Hand baggage will probably never be the same again for British and US flights. This promises to be a significant inconvenience for travellers, especially on long haul flights as many flights are in the Asia Pacific region. For the time being, only wallets and passports in plastic see-through packets are permitted but laptops or MP3 music players are not.

This could be a great inconvenience to passengers. A 15-hour flight is already a tough proposition and many passengers have their own preferred ways of passing that time, whether it is playing computer games, working on a laptop, listening to an MP3 music player or even just reading a book. As time passes, and the immediate risk (and ways of responding to that risk) will become more sophisticated and less intrusive on travellers.

Meanwhile, however, this imposition probably takes consumers through one more resistance level. They have already become uncomfortably aware of small seats and crowded aircraft, hassles at airports, unreliable in flight entertainment, reduced food quality and queues for fewer toilets.

The CAPA said it expects authorities in the Asia Pacific region also to be much more vigilant in security checks which will also lead to some delays on flights within the region.

However, one important lesson out of this event is that the most effective place to spend money and resources is in pre-emption well before anyone gets on an aircraft. Part of the visible security measures is there for little more than to reassure the public and to respond to political pressures and this has skewed spending and costs disproportionately.

Stricter controls on hand baggage could be bad news for the evolution of the LCC model at a time when they were beginning to charge passengers for checked baggage, in order to encourage them to carry more in the cabin. This reduces handling costs and and aircraft turnaround time, giving LCCs greater asset utilisation.

Aircraft manufacturers were looking at installing larger inflight baggage bins as a result. LCCs, at least in Europe, may be worse affected, perhaps in the long term too, said the CAPA.

UNI

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