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By: - 22nd June 2003 at 14:30 Permalink - Edited 1st January 1970 at 01:00
Dartie its not getting any better, definitly not in the US and recently aircanada is in deep trouble. Europe hasnt been affected as seriously but is still looking bad. All the airlines are cutting back and reshuffeling their companies. Its not like they've had all this time since 9/11 to recover, there was the war on iraq and SARS. I dont think anyone could say things are getting back to normal, even the major expanders are slowing down, for example ryanair. But also what a lot of people don't realize is that the US airline industry was starting to do badly before the terrorist attacks of 9/11. Over ambitious growth leads to an implosion. I think it will be another couple years at least before things are good once again. My last point is that the airline industry as a whole has never been profitable, individual players have been very succesful but as one its a loss making industry and the reason it survives is the government support, not only financially but airlines dont have to compensate for environmental damage as well as national carriers having key slots reserved. For example when 9/11 happened the insurance on planes soared, but the airlines didn't cover those costs the governments did.
By: - 22nd June 2003 at 14:47 Permalink - Edited 1st January 1970 at 01:00
Im sorry Robc i wasnt paying much attention to the USA crisis, I do apologise!! I heard about Air Canada but didnt know the extent of the aviation market up north.
By: - 22nd June 2003 at 15:36 Permalink - Edited 1st January 1970 at 01:00
The North American market is different in that there has been crisis brewing there for a long time. 9/11 didn't suddenly break airlines, it just brought it all to a head - the final nail in the coffin for some.
Elsewhere, I think the outlook is good. The Iraqi issue has been sorted, and the effects of SARS are diminishing daily.
Even insurance is not a problem. In the UK in particular, insurance companies were badly run in the 1990s. They all lost money (or didn't make any, nearly the same thing) on underwriting, but rescued themselves with investment gains. 9/11 made them wake up. In the immediate aftermath, they panicked and raised premiums too fast. Note, the actual new level of premiums wasn't so bad, it was just that the rise came along so quickly. It's like paying £1 a year for your phone bill, then suddenly getting a "real world" bill with no warning.
I would look forward to good growth and expansion in Asia and the Middle East. Europe will go nowhere until all this pathetic state subsidisation ends; when it does, the better run and profitable national carriers will grow massively from the carcases of the badly run airlines. I'd expect Lufthansa, KLM and BA to succeed. Air France has a question mark over it. SN Brussels, Swiss, Alitalia and Olympic are history. Others, well run but small, will become absorbed - like SAS and Austrian. Iberia...they are one of the few airlines who can still decide their own future. Swim or sink.
By: - 22nd June 2003 at 16:27 Permalink - Edited 1st January 1970 at 01:00
I must add the condition in Asia is improving. SIA coming out of the dumps, Thai posting healthy profits. Still troubles in China though. Even AI placed profits this time.
By: - 22nd June 2003 at 18:08 Permalink - Edited 1st January 1970 at 01:00
9/11 made it very visible and realistic that a more business like approach is needed towards airline ownership. Airlines such as British Airways and Lufthansa should be able to benefit from economies of scale by buying other airlines out like SAS with your smaller unprofitable airlines who cannot survive on their own going under. Such situations like governments bailing out airlines because of national identity or pride is nonsense with this act being apparent in no other industry.
As was discussed earlier factors such as bilateral agreements, government bailouts, foreign ownership etc, all protect an airline, whereas in contrast, these barriers should not exist and for the good of the industry. Consolidation should be allowed to take
place with restrictions being lifted and less significance placed on an airlines nationality but more on them as business'.
The situation in Europe where every country has a national airline is an old idea as seen by the unprofitably, large fleets and networks of certain airlines. If these were to be merged than there would be greater efficiency with 3 or 4 major carriers and smaller carriers linking to hubs such as Frankfurt, Heathrow or CDG. This is what I would like to see happen but from things mentioned in above paragraphs, I quite doubt it.
By: - 22nd June 2003 at 18:34 Permalink - Edited 1st January 1970 at 01:00
I wonder if all the people who are in the process of being made redundant from the industry think it is getting back to normal? 1500 from BMI, 50 from EZY
By: - 22nd June 2003 at 21:59 Permalink - Edited 1st January 1970 at 01:00
That's an unfair question.
They presumably feel bitter, but you should not consider them without also looking at the thousands of people who have got the new jobs created by the LCC's over the last 5 years. Jobs go, jobs come. It's just a routine thing in every country these days.
Posts: 1,141
By: dartie - 22nd June 2003 at 14:18
Do you reckon that the aviation world is getting back to normal before the 11th of September, USA is gaining more traffic, some proof is of Qantas which is increasing flight to LAX by August to 30/week, and also introducing their new Chicago Service. Also in Australia Emirates is moving fast to increase their flights by the end of this year they hope to be flying to Sydney and Melbourne non-stop from Dubai, Brisbane via Singapore and New Zealand viz YSSY and YMML.