Atlanta airport blackout cost could soar to tens of millions or more

The 11-hour blackout at the world’s busiest airport is likely to cost tens of millions of dollars or more to airlines, stranded travelers and others, but the final tab isn’t likely to be known for months to come, aviation expert say.

That price tag is likely to grow as officials assess the cause of the fire that cut power Sunday to Hartsfield-Jackson International Airport, and redesign the airport’s power grid to make it more resilient. How much those fixes will cost — and who will pay for it — isn’t exactly clear.

The blackout disrupted the schedules of tens of thousands of travelers. Family events and business meetings were canceled. Many stranded passengers booked hotel rooms or rented cars, creating a windfall for those companies.

Mike Boyd, an aviation consultant at the Boyd Group International, said the outage is likely to cost airlines at least $100 million in lost revenue and other expenses.

That doesn’t include the future costs to upgrade the airport’s electrical system to ensure redundancy, or the cost that Hartsfield-Jackson and other airports will incur as they review what happened in Atlanta and make new readiness plans to mitigate the potential for similar blackouts.

“I think the costs are mind-boggling,” Boyd said.

More than 100 airliners, meanwhile, idled for hours on the tarmac in Atlanta. Jets were diverted and out of position for the Monday morning rush. The outage triggered waves of flight cancellations nationwide, with hometown carrier Delta Air Lines canceling about 1,400.

An airport spokesman said it’s too soon to know the cost of the outage. A Delta spokesman said details about cost from such service disruptions are typically shared in its regular securities filings.

Georgia Power spokesman Jacob Hawkins said the utility is focused on investigating the cause.

“Our response and repair efforts at Hartsfield-Jackson are ongoing and the cost will be evaluated once repairs are completed,” he said.

Loss of productivity

If past air service disruptions from major weather events are any indication, the price of shutting down such a major hub will be steep.

In April, severe storms caused an operational meltdown at Hartsfield-Jackson. Delta canceled more than 4,000 flights and took a $125 million hit to its bottom line.

In August 2016, a major Delta data center power outage triggered cancellations across the globe. That snarl caused 2,300 flights to be canceled and Delta absorbed a $150 million hit to its pre-tax earnings.

According to Airlines for America, an industry trade group, the average cost of delay in 2016 for the typical domestic airliner was $62.55 per minute. Crew costs and fuel accounted for about two-thirds of that figure.

A 2010 study by Nextor pegged the cost of delays to airlines and consumers in 2007 at $31.2 billion.

Boyd estimated that immediate costs of lost productivity from delayed and canceled flights at $12 million. That figure triples from indirect opportunity costs. Because planes make multiple flights per day, grounded aircraft and crew were out of position for the next business day.

The airlines waived fees for passengers to re-book. Delta offered customers in Atlanta reimbursements for Sunday hotel stays.

“It’s tens of millions from Delta’s perspective,” said Robert Mann, an airline consultant with R.W. Mann & Co. in New York. “But the question is if they bear those costs, or are they able to recoup some of them.”

The airlines’ business interruption insurance coverage may cover some of the costs. Some costs might be thrust upon others, such as Georgia Power or contractors, depending upon what caused the blackout.

“The question will turn on who takes responsibility, or who is found to be responsible, and does their insurance coverage indemnify them from claims,” he said.

More investment needed

Sunday’s episode showed that America’s airports need to better prepare for a catastrophic outage and how to protect passengers — and those costs will ripple throughout the country, Boyd said.

Broad swaths of Hartsfield-Jackson were left in the dark, indicating the airport needs additional emergency power-generating capacity on the campus, Mann said.

“These airports are engines of economic activity not only locally but nationally,” Mann said. “You can’t go around under-investing in backup capabilities in a key facility like this.”

Dan Erling, who owns Accountants One, a staffing firm, had planned to return to Atlanta from Orlando on Monday morning, but his flight was canceled.

Instead, Erling and his wife, Michelle, rented a car and drove, losing most of a day to travel.

“I’ve been able to take some meetings in my car, but I’d planned on dinner with a client,” Erling said by phone Monday. “That’s not going to happen.”

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