Originally Posted by
msbbarratt
Misjudging what the business costs are is quite common. Apparently a lot of restaurants fail because the forget that bread, butter, sauces, salt and pepper all cost money too. It's the little things that are too trivial to think about that stack up.
Perhaps there ought to be some kind of legal lower price limit on airline tickets, so as to protect passengers' interests. If you're selling tickets at Laker-esque prices, it seems likely you're going to go bust. If an airline is offering tickets at way too low a cost to be sustainable as a business, why is that business allowed to operate at all? I admit that that might be somewhat contentious in a free market society! For quite a lot of people buying a long haul ticket is a notable investment, and they're always going to buy the cheapest seat available. If they ploughed that much money into, say, a bank savings account and the bank went bust, they'd get their money back.
Also, at what point does an airline business collecting large sums in fares well in advance of the fly date stop being a struggling airline and starts becoming a Ponzi scheme? Of course I'm not saying that that's what's happened here with Primera, there's no evidence of that that I'm aware of. I'm merely pointing out that the way tickets are sold well in advance for large sums makes it very easy for a Ponzi-esque situation to arise, likely unintentionally. What incentive is there for senior management to call a halt at the proper moment when so long as the company is trading they're likely collecting their remuneration packages?
Most businesses fail due to poor money management. They cannot control their costs, and greed by owners play a big part in why a business will fail. I have seen companies with full order books fail because they had little or no cash in the business; overgeared, in debt and unable to meet creditor payments on due dates. The story is all too familiar.