Mounting Bomb Threats Take A Toll On India's Airline Industry

Once a flight is canceled or delayed due to a bomb hoax, a ripple effect of delays and cancellations of other flights occurs adding to financial losses for not the airline but the flying public. 

Over the past 11 days, over 300 flights have been affected after a few dozen flights were targeted with bomb threats, with a particularly intense wave sweeping through mid-October. The total cost incurred by airlines due to these threats has exceeded Rs 600 crore.

While all threats have proven to be hoaxes, their financial impact has been anything but token. 

"These incidents can cost anywhere from Rs 25 lakh to Rs 4 crore per incident," said an airline executive, who spoke on condition of anonymity. "When you are dealing with this frequency of threats, the numbers become staggering," the executive added.

Anatomy Of Financial Burden 

The costs cascade through multiple channels. A recent Air India flight from Mumbai to New York that was diverted to Delhi following a bomb threat, illustrates the complex web of expenses airlines face. 

Factors such as emergency landing fees, mandatory security protocols, passenger accommodations and subsequent flight disruptions, create a domino effect of financial obligations.

Industry analysts suggest that even minor incidents can spiral into major financial setbacks. 

When a bomb threat forces an emergency response, airlines must shoulder immediate costs — landing fees, fuel dumping or additional refueling, extensive security screenings and passenger compensation. And these are just the tip of the iceberg.

According to another aviation consultant, hidden costs are often more significant if one factors in the loss of passenger trust, potential regulatory fines, and the ripple effect on scheduled flights. The financial impact of all this can be devastating.

Not Business As Usual

Airlines are now forced to incorporate these unexpected expenses into their operational budgets, listing them under "extraordinary items" in their profit and loss statements. This accounting classification, reserved for unusual and infrequent events, underscores the unprecedented nature of the current situation.

The threats themselves fall into two categories: Specific and non-specific.

Specific threats, which include detailed flight information, trigger comprehensive and costly security protocols. Non-specific threats, while less disruptive, still require resource allocation for assessment and potential response.

Airlines must follow stringent protocols that can cost crores when a specific threat is received. "The moment we receive a specific threat, the clock starts ticking, and so do the expenses," says a senior security officer at a primary Indian carrier. "We're talking about immediate deployment of bomb squads, evacuation procedures and sometimes, even flight cancellations," the senior security officer added. 

The insurance implications are equally concerning, leaving the airlines to financially fend for themselves. Industry experts note that many standard aviation insurance policies don't fully cover bomb threat responses, leaving airlines to bear a significant portion of the costs. 

"Insurance companies are beginning to view these incidents as a new risk category," explains an aviation insurance specialist. "This could lead to higher premiums across the board," added the aviation insurance specialist.

Urgent Need For Solution 

International comparisons paint a stark picture for India. While global airlines face similar challenges, the recent frequency of threats in India has reached unprecedented levels. 

A European aviation study cited by industry experts suggests that the cost per incident in developed markets ranges from US$ 50,000 to US$ 500,000. However, in India, the combination of stringent security requirements and operational complexities often pushes these figures even higher.

In response to these challenges, Indian airlines are implementing enhanced security measures and exploring technological solutions. However, these preventive steps too, come with their price tags, further straining already tight budgets.

"We're seeing airlines invest in everything from advanced scanning technologies to cybersecurity experts," says a security analyst at an aviation Institute. "While necessary, these investments add another layer of financial pressure," added the security analyst.

The ripple effects extend beyond immediate operational costs. Airlines report declining advance bookings on routes that have experienced threats, suggesting a growing wariness among passengers. 

"Customer confidence is paramount in aviation," notes a marketing director at a low-cost carrier. The marketing director further added, "When that's shaken, the financial impact can last months."

Some airlines are exploring innovative solutions, including artificial intelligence-based threat assessment tools and enhanced coordination with international security agencies.

However, implementation costs for these measures could run into hundreds of crores, adding to the industry's financial burden.

As the industry grapples with this surge in bomb threats, calls are growing for stricter legal measures against perpetrators. Aviation experts suggest that creating a no-fly list for offenders and implementing harsher penalties might serve as deterrents.

For now, Indian airlines continue to prioritise passenger safety while absorbing the mounting costs of these disruptions. As one airlines official puts it, "In this business, you can't put a price on safety. But these hoaxes are forcing us to do exactly that, and the numbers are becoming unsustainable."

(The writer is a Bengaluru-based financial analyst. Views expressed are personal)