Dwindling airlines in UK
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Dwindling airlines in UK
Apologies to mods. Want sure where to post this.
Probably will be a pprune flame thrower session as per. But! A conversation with a colleague the other day came onto this subject. The UK as we know used to see a plethora of different airlines coming and going. The last 10 years have seen many a company go pop. Usually after a few name changes.
Even still, it wasn't unheard of in the early 2000s to hear of a new airline coming into life in the UK. Notwithstanding the economic climate heal dragging - for discussions sake do you see the UK going back to its entrepreneurial ways in aviation?
The current trend seems to point to a dwindling and culture change. A bit like the motor industry. A large amalgamation of a couple of huge names who then fight off the threat from other countries (Middle East). You only have to look on ppjn under the UK section to find most of the companies need deleting.
Probably will be a pprune flame thrower session as per. But! A conversation with a colleague the other day came onto this subject. The UK as we know used to see a plethora of different airlines coming and going. The last 10 years have seen many a company go pop. Usually after a few name changes.
Even still, it wasn't unheard of in the early 2000s to hear of a new airline coming into life in the UK. Notwithstanding the economic climate heal dragging - for discussions sake do you see the UK going back to its entrepreneurial ways in aviation?
The current trend seems to point to a dwindling and culture change. A bit like the motor industry. A large amalgamation of a couple of huge names who then fight off the threat from other countries (Middle East). You only have to look on ppjn under the UK section to find most of the companies need deleting.
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Cliff Secord,
In terms of the topic that you pose, it was going to ultimately come to this juncture where we have fewer airlines and a few dominant players.
The decision to deregulate the market and allow airlines to grow and expand in Europe (and in the UK as a consequence) with few restrictions has brought benefits. Namely mass air travel on an affordable basis. It has benefitted largely the low cost airlines, who were certainly pioneering in terms of expanding outside of their home markets unlike the incumbents, who largely didnt pursue this prior to deregulation as they were not permitted to do so. But even in the advent of deregulation there are limited examples of any airlines outside of low cost airlines opening hubs outside of their home markets.
The US is a case in point. We've seen the impact of deregulation. There are now essentially a few big players and no new start ups will challenge their position. That said Virgin America is a brand that has challenged the status quo, and at massive cost in terms of losses. The big players are responding offering improved product on competing routes to Virgin America, with such luxuries as cabins on 321s.
Nonetheless, the US carriers like in Europe need to move to a sustainable operation. Losses were historically huge and this was clearly not sustainable. Europe is going the same way a few large airlines flying in a sustainable operation. The smaller ones unless they offer a real point of difference to remain strong opposite large rivals will not be around.
The cost of fuel is making the profit equation more challenging while the low costs airlines like Ryanair have been changing the rules of the game. This has driven prices down, wages down, costs down and all that this impacts, it is truly transformational.
Despite all of this transformation where does it all go. Ryanair has plans to be a bigger, the order book shows that. As business travellers will be wooed, how many more casualities will we see. Alitalia has been saved by the bell, others wont be so lucky. For now the larger airlines who operate in the long haul space have a different market to play in away from the low cost airlines, but will that be enough as their domestic and short markets are eroded? Aer Lingus is one that can play to its strenghts, being a small carrier, with good transatlantic feed via Dublin. However, they will need to keep growing that business to maintain a long term sustainable operation...
A bit long winded but my take on the matter. Besides all of that, globalisation is centre stage nowadays. Supermarket multiples are the same, few truly big players and we will see how that plays out as they are in decline. Buying your glasses, specsavers is enormous, hence fewer local opticians. The list goes on.
Aviation is a little different as the cost of entry is so high....
In terms of the topic that you pose, it was going to ultimately come to this juncture where we have fewer airlines and a few dominant players.
The decision to deregulate the market and allow airlines to grow and expand in Europe (and in the UK as a consequence) with few restrictions has brought benefits. Namely mass air travel on an affordable basis. It has benefitted largely the low cost airlines, who were certainly pioneering in terms of expanding outside of their home markets unlike the incumbents, who largely didnt pursue this prior to deregulation as they were not permitted to do so. But even in the advent of deregulation there are limited examples of any airlines outside of low cost airlines opening hubs outside of their home markets.
The US is a case in point. We've seen the impact of deregulation. There are now essentially a few big players and no new start ups will challenge their position. That said Virgin America is a brand that has challenged the status quo, and at massive cost in terms of losses. The big players are responding offering improved product on competing routes to Virgin America, with such luxuries as cabins on 321s.
Nonetheless, the US carriers like in Europe need to move to a sustainable operation. Losses were historically huge and this was clearly not sustainable. Europe is going the same way a few large airlines flying in a sustainable operation. The smaller ones unless they offer a real point of difference to remain strong opposite large rivals will not be around.
The cost of fuel is making the profit equation more challenging while the low costs airlines like Ryanair have been changing the rules of the game. This has driven prices down, wages down, costs down and all that this impacts, it is truly transformational.
Despite all of this transformation where does it all go. Ryanair has plans to be a bigger, the order book shows that. As business travellers will be wooed, how many more casualities will we see. Alitalia has been saved by the bell, others wont be so lucky. For now the larger airlines who operate in the long haul space have a different market to play in away from the low cost airlines, but will that be enough as their domestic and short markets are eroded? Aer Lingus is one that can play to its strenghts, being a small carrier, with good transatlantic feed via Dublin. However, they will need to keep growing that business to maintain a long term sustainable operation...
A bit long winded but my take on the matter. Besides all of that, globalisation is centre stage nowadays. Supermarket multiples are the same, few truly big players and we will see how that plays out as they are in decline. Buying your glasses, specsavers is enormous, hence fewer local opticians. The list goes on.
Aviation is a little different as the cost of entry is so high....
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As I see it the future is big or niche, where it often goes wrong is when niche tries to become big!
Skybus is a good example of a little airline that has lasted the distance, small aircraft, couple of monopoly routes so why try to be anything else.
Skybus is a good example of a little airline that has lasted the distance, small aircraft, couple of monopoly routes so why try to be anything else.
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As EI-BUD asks, where does it go? The big LCCs are intent on becoming still bigger, and former respect for territories is devolving to an all-out fracas with no-one immune. It seems to me market saturation can be the only result at this rate with a lot of red ink in company financials. Potential investors in start-up airlines see this kind of behaviour and are scared away. The biggest problem, apart from denying start-ups investment, is that growth in the industry is not evenly distributed across markets. Bigger and bigger aircraft need big airports, and regional airports feel the brunt. But without investment income, how are start-ups, and indeed regional airports, to redress this market inefficiency?
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Potential investors in start-up airlines see this kind of behaviour and are scared away. The biggest problem, apart from denying start-ups investment, is that growth in the industry is not evenly distributed across markets. Bigger and bigger aircraft need big airports, and regional airports feel the brunt. But without investment income, how are start-ups, and indeed regional airports, to redress this market inefficiency?
As far as investment is concerned, there is a simple solution (perhaps coming soon to a regional airport/airline near you ... ) but it requires someone to prick the aviation industry's "because we're worth it" bubble, and there are very few people within the industry who are ready to give up their debt-dependency in favour of a radically different business model. The various regulatory and tax authorities could help by recognising the value of niche operations and, for example, exonerating <50 seat flights from APD, but I can't see that happening any time soon, so it means AOC-holders need to work more imaginatively with private third-party enterprise.
