Higher security after terror threat further squeezes airline industry

Heightened airport security after a botched terrorist attack on Christmas Day means one more cost for an airline industry that’s already experiencing considerable turbulence.

Heightened airport security after a botched terrorist attack on Christmas Day means one more cost for an airline industry that’s already experiencing considerable turbulence.

Consumers will likely be the ones to bear the brunt of the additional expenses, said John McKenna, president and chief executive officer of the Air Transport Association of Canada.

“Any time there are new security measures of any type, the travelling public pays for it,” McKenna said.

After Friday’s attempted attack aboard a Detroit-bound Northwest Airlines flight, travellers now face a pat-down by security agents as well as tougher restrictions on what they are allowed to take on the plane.

Bags with wheels are no longer being allowed as a carry-on, and only one bag per traveller can be taken on the plane.

The secondary checks can take up to five minutes per person. That could add up to a delay of several hours for each flight if more employees aren’t brought in.

“If you add the people, you add costs. And these costs will have to be paid for by somebody,” said McKenna.

“If they are permanent measures, this clearly costs the airlines and the travelling consumer a lot more money.”

In Canada, Transport Minister John Baird requested help from the RCMP on Sunday night, and the Mounties helped provide additional screening security at Canada’s largest airports on Monday.

Transport Canada employees were also been called in on overtime for what was supposed to be a federal holiday to deal with the extra security needs.

For WestJet Airlines Ltd. (TSX:WJA), a Calgary-based carrier, tallying the added costs is not a “primary focus” at the moment, said spokesman Robert Palmer.

“We are focused on our guests and their experience,” Palmer said.

He recalled that airlines struggled a year ago with an onslaught of snowstorms that snarled air traffic at the height of the holiday rush.

“In some ways, this is not dissimilar to last Christmas, when we went above and beyond to help our guests get home for the holidays,” Palmer said.

McGill University professor Karl Moore said he doesn’t believe air travel will be affected significantly during this holiday period because most consumers will already be committed to their travel plans and will adapt.

“It will get back to normal, or the new normal, with a few more restrictions,” said Moore, who noted that passengers are already used to taking off their shoes and belts and having liquid bottles checked.

“Travel is not fun in the way it used to be 15 years ago,” Moore said.

“What we will see is a little bit of a slowdown but I think the restrictions will ease over time,” said Moore, who teaches globalization and management in McGill’s Desautels Faculty of Management.

Moore said Air Canada in particular may actually see a bit of an increase in traffic as a result with travellers being able to choose international routes and connecting flights that avoid the United States.

“The more difficult it is to fly through the U.S., Canada gains a little bit from that.”

A number of travellers at Toronto’s Pearson International Airport said over the holiday weekend that they were impressed with the way Air Canada handled the new security measures.

Stock in WestJet, Jazz Air Income Fund (TSX:JAZ.UN) and Montreal-based travel company Transat AT Inc. (TRZ.B0 felt a downdraft Tuesday in the first trading since Friday’s attempted bombing.

WestJet dropped 17 cents or 1.4 per cent to $12.29 while Jazz, a former Air Canada subsidiary that’s now a separate airline company, dropped 13 cents or 2.9 per cent to $4.30 and Transat (TSX:TRZ.B) slipped 20cents to $21.

Air Canada (TSX:AC.B) was unchanged at $1.25.

In the wake of the 2001 terrorist attacks in the United States, airline travel fell dramatically around the world and led to billions of dollars in losses for the global airline sector.

Earlier this month, The International Air Transport Association revised its financial outlook for 2010 to an expected US$5.6 billion global net loss, larger than the previously forecast loss of $3.8 billion. However, passenger traffic is expected grow by 4.5 per cent in 2010.

For this year, the airline research group maintained its forecast of a $11 billion net loss.

Umar Farouk Abdulmutallab, 23, of Nigeria was charged Saturday with trying to blow up a Northwest Airlines flight as the plane approached Detroit on Christmas Day. He’s accused of igniting an explosive substance hidden in his pants. An al-Qaida group claimed responsibility for the attempt on Monday.

— with files from LuAnn LaSalle in Montreal

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