More woe on the BBC

[RVR800]

According to a report on the BBC European
Airlines are likely to suffer further problems

Only the Big flag carriers are expected to survive Lufthansa Air France and BA

The Low cost carrier will expand exponentially

Overall job losses will be in the
order of 70000-100000 !

Exmaples cited

Air France - cutting schedules, freezing
hiring

Iberia - Ticket surcharge for extra security and insurance

Lufthansa - insurance surcharge, postponed orders for 19 planes

Alitalia - 2,500 jobs at risk, planes mothballed

TAP (Portugal) - trying to sue Swissair for pulling out of partnership contract

British Airways - cutting 7,000 jobs, cancelling 190 flights per week

SAS (Scandinavia) - cutting 800-1,100 jobs, raising prices, cutting capacity by 12%

Swissair grounded

Sabena in big trouble

Any good news?

[The Guvnor]

RVR800 - I'm getting rather worried as you're supposed to be the PPRuNe "glass is half full" optimist!

I think that the niche regionals and the low cost operators will do well; and indeed go from strength to strength. Carriers with high costs will go under - so everyone needs to cut their costs (and - most importantly - keep them low). I suspect that this current crisis will result in the survivors being unrecognisable at the end of the process - but at the same time, will be in a much stronger position to deal with competitive threats from around the world - and especially across the Atlantic - than they are now.

Beware of the light at the end of the tunnel being an oncoming train!

[Daifly]

"I think that the niche regionals and the low cost operators will do well; and indeed go from strength to strength. Carriers with high costs will go under - so everyone needs to cut their costs (and - most importantly - keep them low). I suspect that this current crisis will result in the survivors being unrecognisable at the end of the process - but at the same time, will be in a much stronger position to deal with competitive threats from around the world - and especially across the Atlantic - than they are now."

You'd better watch out then Guv, you said it yourself that the survivors will be in a much stronger position to deal with competitve threats from... Oh, hold on, competitive threats - on second thoughts, don't worry it won't affect you! :D

[ 03 October 2001: Message edited by: Daifly ]

[Gaza]

I'm afraid the industry now is in a bit of a spin at the moment and despite bootfulls of rudder they cannot get out of it. IMHO The problems are twofold:-

1) The economic downturn has been made worse by 11 Sept and the general negativity from the press. I'm sure members of the press are all lovers of the Dad's Army character whose favourite saying was "Doomed! We're all doomed!" I'll bet there are certain little 5hits in Wapping and the likes rubbing their hands in glee at finally convincing the public that the whole economy is in recession when clearly it was only the manufacturing segment in trouble. The old adage about if you say something often enough people will believe you is very true in this case.

2) Consumer confidence in the industry is rock bottom. I am hearing more and more people saying they don't want to book flights in case the airline collapses! Unfounded worries? Maybe. But who can blame them? Six months ago who would have predicted that Swissair and Ansett would be in the state they are now? All but the rosiest tinted glasses wearers expected big losses but few would have foreseen this.

While MOL and Stelios are out there saying "come in, the waters lovely" by offering lots of cut price deals, what are the big boys doing? Bleating and moaning and looking for Government handouts that's what. Not only that they are increasing prices! BA announced on 1 October that the cost of their round the world tickets would increase by as much as 30% in some markets! Madness. Absolute madness! I'm sure some folk in Waterworld went to the Reggie Perrin "Grot" School of Economics (for those outside the UK this is a reference to a comedy series in the 70's in which the main character had shop where he put prices up by 50% during Sale time!)!

I am normally against Government subsidy. However, for the greater economic good we cannot allow the major airlines to fail. Not only will this have a serious impact on our own economy but in poorer countries too. If the tourists cannot get there or if only the rich can afford too, then these countries will suffer. They will then become breeding grounds for all sorts of fundamentalists and extremists. And we all know what happens then.

If the Governments do bail out the Airlines, strict conditions will need to be put in place. The bailout should be paid back out of future profits. This should be at the expense of shareholders and not as a levy on customers in the form of increased fares. After all if the airline had been allowed to go tits-up what would they have got? Bermuda II also needs to be urgently revised. Lets have real competition at LHR. I could go on but I’m sure you get the drift.

We can all play a part in turning this around. What ever part of the industry you are involved with, whether it is as an employee or a customer, get out there and tell anyone who will listen that flying is safe. For those inside the industry use works forums, unions, etc to get Management thinking up initiatives to get people flying. It didn’t take MOL and Stelios long to come up with the answer!

bmi said today that there has been a substantial drop in Business Class traffic since 11 Sept. The reasons for this are easy to see. Many companies, particularly American based multinationals, have banned their staff from flying! For example, IBM is severely restricting UK and European travel and has completely banned travel to the Middle East. Cisco employees are only allowed to fly on “business critical” journeys and even then must have it signed off by a senior VP! It is organisations such as these that are the life-blood to many airlines. Get these guys back in the air and you are starting to win the battle. I would hope the big boys have all their sales teams knocking down the doors of their biggest clients trying to get these unnecessary restrictions lifted.

[ 03 October 2001: Message edited by: Gaza ]

[Delboy]

If Mol and Stelios have the answer, which does not involve Government subsidies, why does Gaza think that the answer is Government subsidies. Surely the answer is to provide tickets at a price that the passenger can afford. It is called a market solution. If any large carriers cease operations, which is a shake-out to be expected in a downturn, then the remaining operators will fill the gaps. Holiday destinations will continue to be served, distributing pounds and dollars around the World. Governments are not the solution, they are the problem.
Just in case you ask, I do not work for Mol or Stelios. In fact I work for a large carrier, but I am well aware that profits are essential and that the passenger is the key.

[Gaza]

Delboy

What I said was I normally disagree with Government subsidy. In the most I agree with MOL and Stelios that the big boys problems are largely of their own making so why should they be bailed out. However, they are not going to be able to turn around their business model in time to stop some of the going out of business. I don't believe that allowing some to go bust will be good in the longterm. While Stelios and MOL are happy to serve European destinations I can't ever see them flying to the less glamerous medium to long haul destinations.

I agree that providing affordable tickets is the best way to get people flying again but BA, amongst others, have gone the other way!

[Arkroyal]

Delboy,

You could offer to give the tickets away free, but if the big companies have banned their employees from flying, the airplanes will still be empty.

The terrorists must be crying with laughter at how they've brought the western economy to its knees.

What's needed is a bit of backbone.

If the land of the brave and the home of the free has taken to it's cellars with a month's supply of food and a gun to keep the neighbours out, what chance have we got.

[dv8]

Passengers desert British airlineswhat rot journos have dropped lower on the food chain than I thought possible, Hype Sensationalise just sell news as quick as you can any way you can. Why not just report news?

a dramatic fall in passenger numbers in the wake of the terror Yes it was to be expected and the number of pax not flying to the US after the 11th untill flights resumed would have lowered the figure anyway

[MAXIMOL]

Lets keep talking ourselves into an even wosre situation.
I'm not burying my head in the sand but we could all talk our way out of business, and a job.
People have been talking the country into recession for the last year or so........ guess what, it has not happened, even yet.

Half full cups please..... :D

[skysheriff]

maximol here are the quarter growth figures from the economist
US 0.2%
Euro area 0.2%
Japan -2%

does not look too good, ok if you want to believe we are in an economic boom, thats your choice.
Otherwise i agree with the bbc, Only some players will survive on the european airline front. never say never : remember PanAm or TWA ? Maybe Ryanair will some day buy BA for a symbolic penny for example (i think the British pride would not survive :D )
The big factor of uncertainty is politics : how far are national governments willing to go to save a national company.
there are still too many inefficiencies in the airline sector anyway, there is no place for so much companies in an unified European market. The phenomenon is similar to the consolidation in the US.