UK Airline Industry Relations Are Strained, and Getting Nasty

(HT to commenter Kevin, who indicated that the following could be a story worth following)

Three interesting aspects of the disrupted and hopefully thwarted-for-good UK airplane bomb plot that have received little attention thus far:

1. Airport security and management in the UK were privatized some time ago. Until recently, British company BAA was responsible for those functions.
2. Ownership changed hands on July 29, less than two weeks before the plot was uncovered, when a Spanish company, Grupo Ferrovial, acquired BAA. Ferrovial’s financial welcoming present is apparently going to be a downgrade in BAA bonds it took on in the deal.
3. British airlines have been unhappy with what they (and perhaps passengers) have had to pay for the services provided for some time, and have been calling for cuts in payments.

Now, what is getting a lot of attention is what the British airlines consider to be the last straw — the travel restrictions being imposed on passengers in the wake of the plot that appear on their way to becoming permanent. The airlines are ready to sue the government. In fact, the government, which sets security policies Ferrovial must follow, is moving in a totally opposite direction:

AIRLINES including Ryanair are considering suing the Government for up to £300 million to recover the losses incurred since extra security measures were imposed last week.
They are hoping that the threat of legal action will force ministers to lift the restrictions on hand luggage, which have caused thousands of flight cancellations and delayed millions of passengers since an alleged terrorist plot was foiled.

But the Home Office said yesterday that it would press the rest of Europe to adopt Britain’s tighter airport controls, which include a smaller maximum size for hand luggage and a ban on carrying liquids.

….. The legal action being considered focuses on Section 93 of the Transport Act 2000, under which the Government can be liable to pay compensation for losses resulting from its emergency directions. Ryanair made the strongest threats against the Government yesterday but British Airways and easyJet also said that they were con-sidering legal action.

Jim Callaghan, Ryanair’s head of regulatory affairs, sent an e-mail to a group of leading airlines yesterday outlining the case for compensation and encouraging them to take action.

This could get really nasty. The airlines are paying a heavy price (as are passengers). Ferrovial employee have to deal with the harried passengers on a day-to-day basis, while the government may be insulated from the true impact of the draconian ideas it wants to spread elsewhere because of the privatization relationship.

Stay tuned.