Cloudy skies for Heathrow's new terminal

LONDON - March 31, 2008 British Airways told ABC News on Monday that it had misplaced a mountain of more than 20,000 bags.

This is not exactly a new development for the airline. According to a study carried out in the last quarter by the Association of European Airlines, BA was the carrier most likely to lose bags among its European competitors.

However, many had hoped that the establishment of a new, high-tech baggage handling system at Heathrow's Terminal Five would restore the airline's reputation and performance.

So far, operations at the new terminal have been turbulent.

Fasten Your Seat Belts

Since the facility opened on Thursday, 299 flights have been cancelled, according to Anne Morton, communications manager for the airline.

On Monday, BA announced that it would cancel 54 flights out of a planned 394. Tomorrow, the airline plans to cancel a further 52 out of 392 services.

The immediate future looks cloudy as best, with the airline saying it's not sure when the problems will be fixed.

In an interview with ABC News, Morton confided that although the airline's aim "is to get to 100 per cent as quickly as possible … as yet we have not put a timeframe on it."

She added: "We have to be confident in the terminal's overall performance before we can go up to 100 percent."

As cancellations continue throughout the week, many in the UK face disruption to their travel plans. Over 60 percent of schools will close for Easter break, which begins on Friday, and many families will now have to rethink their travel plans.

But cancellations are only one of the many problems plaguing the new terminal.

Morton said that "technical failures of the new baggage system" had caused over 20,000 bags to go missing.

Now, these bags will be further delayed as they need "to be re-screened for security reasons before they can be loaded on to a subsequent aircraft," she explained.

The automated system for reprocessing and re-screening delayed bags in Terminal Five can't be used, Morton said. This means "bags are having to be transported to other sites at or near Heathrow to be re-screened manually before being brought back to be loaded on flights to their destinations."

"This process is extremely time-consuming," she said.

A spokesperson for BAA, the airport company that owns the baggage system in Terminal Five, said in a statement that it is working "to resolve baggage issues and to deliver a good service to passengers."

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The airline's image suffered yet another knock when news of its initial offer of $200 compensation for passengers on cancelled flights hit the headlines.

Under EU laws, all airlines traveling to and from Europe are obliged to pay the full costs of a passenger's overnight stay in the event of flight cancellations.

In an interview with ABC News, Jason Wakeford of the Civil Aviation Authority said that the organization "has written to BA about media reports that passengers aren't being offered what they are entitled to under EU legislation."

"Passengers should receive compensation if a flight has been cancelled, free phone calls and refreshments if their flight has been delayed and accommodation if their flight has been delayed overnight," he added.

Morton said that British Airways intends to "compensate passengers for cancelled flights, hotel accommodation, food and drink and transport costs in accordance with the EU regulations."

The airline's woes will cause a sizeable cut in its projected revenue for this year.

Analysts at Citibank released a note saying that the airline's revenue could be reduced by as much as $49.7 million, after company shares fell by 5 percent today following Goldman Sachs' "sell" rating on them.

Although Morton declined to "comment on share price moves," news of the fall has left many investors feeling nervous.

Less than a week after the $8.54 billion terminal opened its doors to the public, many are questioning its ability to service customers effectively.

British Airways CEO Willie Walsh, who has faced calls for his resignation over the past week's chaos, said in a statement — or what some travelers may perceive as an understatement — that "the service we have provided has not been good enough."

But, he added, "both British Airways and BAA have invested an enormous amount of time and effort to create Terminal Five," and he expressed confidence that "these early difficulties can be overcome."

His words were echoed by a British Airways spokesperson, who told ABC News that Terminal Five "will be a success; it is a fantastic terminal and passengers have commented on how great it is and looks."

The impressive new terminal is the size of about 50 soccer fields, but now, after the recent turmoil, many in the UK are wondering if this much-hyped establishment will prove to be a case of too much show and not enough go.

Emily Wither and Sean Duffy contributed to the reporting of this story.