New Delhi Airlines, already lowering fares in response to softening demand this fall, face additional pressure on margins from tighter security measures after this week's foiled bomb threat, experts said.
New restrictions on carry-on baggage, including banning liquids ranging from toothpaste to bottled water, are creating a variety of profit-sapping headaches for airlines, including the need to stock more drinks on board and handle additional baggage.
Those requirements are forcing the airlines to backtrack on services they had scaled back on in recent years in their efforts to cut costs.
"The airlines are going to have to step up to the plate and offer more in-flight service," said Terry Trippler, industry expert at travel club myvacationpassport.com.
The timing of the new security restrictions couldn't be worse for airlines.
After posting their strongest profits in six years last quarter, carriers are bracing for a seasonal slackening in demand amid still-rising jet fuel costs.
So far they have modestly cut some fares for the fall travel season.
But if demand shows further softening due to tightened security, airlines could respond with bigger price cuts as early as the end of next week, says travel expert Trippler.
"We believe the risk is likely to be in the short haul market, where travelers were already a ing some trips because of high fares," said Helane Becker, an analyst with The Benchmark Co.
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