To close the year, FlyerTalk is looking back at four major changes that made headlines in 2017, and how aviation has reacted as a result. In this story, we look at the airlines that closed for business in the year.
Every year, a number of airlines launch around the world, each with the goal of attracting new passengers and setting up a long-term plan for business success. But for every group that take to the skies for the first time, others shut down their engines for the last time. According to anna.aero, 79 airlines launched through October 2017 – but 25 closed their doors permanently during that same period.
The two which made the most headlines and had the furthest reaching effect on flyers were those of Air Berlin and Monarch Airlines. After years of being sustained by partner Etihad Airways, crippling debts and unsustainable business practices saw Air Berlin declare an abrupt and immediate bankruptcy. As a result, the airline slowly began the process of shutting down, after being floated along by Germany and the European Union. Ultimately, Lufthansa Group would purchase many of the airline’s assets, leading to the expansion of low-cost carrier Eurowings and the launch of their “BIZclass” product.
While Air Berlin was a gradual decline, one could argue that Monarch Airlines was a more gradual decline. In 2014, the airline was sold to private investment company Greybull Capital, with the goal of turning around Britain’s fifth-largest airline. In 2016, the airline almost went out of business before investors were able to keep the carrier flying. The airline and their subsidiaries stopped trading on stock markets and entered administration on October 2, 2017 – immediately grounding the carrier founded in 1967. Today, the only reminder of the former is a landing page administered by the Civil Aviation Administration, reminding passengers of their rights under British law.
Were there circumstances and situations to blame for the demise of these two internationally known carriers? Did Brexit, the weakened Euro, rise of the American Dollar, or lower demand from terrorism create the perfect storm for airlines to run into failure?
Although terrorist attacks – like the ones in Brussels and Paris – have affected passenger loads to Europe, airlines have remained bullish on their growth. Combined with Brexit being years away from being sorted, neither had as much to do with airlines’ failures as did the level of competition in Europe.
In the wake of the airline bankruptcies, consultants repeated a familiar issue with European skies: there are too many carriers and not enough demand. Andrew Charlton of Aviation Advocacy told The New York Times: “Europe’s got too many airlines,” while Rob Byde of Cantor Fitzgerald called it “an issue of scale and competition” in a quote to CNN.
With too many players in the skies, grounding carriers was not so much a question of “if” but “when.” For Air Berlin and Monarch, “when” possibly should have come many years ago – but it came at a time when they faced the most pressure to close. The stress test is complete, and many European airlines were able to pass. It may not mean we have seen the end of carrier consolidation, but to borrow a quote from another great Brit: “It is the end of the beginning.”
In the United States, aviation remained as it was for the most part, with Eastern Airlines closing after unsuccessfully attempting to launch the formerly beloved carrier. By itself, nostalgia proved unsuccessful as a business plan to win consumers.