I'm all for it if this is what they did. Remember the adage: we reserve the right to refuse service to anyone. Nothing says they have to fly anyone they don't want to.
Ok, but how about all this:
"He said the pilot then told more than 100 remaining passengers they would all have to leave the plane and take all baggage with them to be searched….Each passenger was scanned through a metal detector and all hand luggage was thoroughly searched by security personnel…Even if you had to go to the toilet whilst you were off the plane, you had to get escorted," he said. "They checked your shoes and patted everyone down thoroughly and there was a sniffer dog waiting."
100 innocent people were detained, frisked and searched. You are very correct that airlines don't have to fly anyone anywhere if they don't want to. If the airline had just kicked everyone off the plane, that is one thing. But if they are going to prompt authorities to detain, frisk and search over 100 people, they d@mned well had better have a good reason and explain their reasons to the passengers.
Sure, no law will make the airline do so, but then again, no law is going to make irate passengers patronize the airline.