The airline industry certainly knows how to shoot itself in the foot.
The last couple of weeks have seen the collapse of a number of airlines in Europe (Aigle Azur, XL Airways and Thomas Cook Airlines) although Thomas Cook Group subsidiary Condor, which is profitable, is still flying in Germany after being bailed out by a Federal and state government bridging loan of the variety the British government was not able to find it in its heart to make to the parent company.
Or at least to Thomas Cook Airlines, which was also largely profitable in recent years. It made earnings before financing costs and tax of GBP129 million in the 2017-28 financial year last year, although it has reported losses since then. It was the tour and hotels side of the business which had racked up huge debts and which brought down Cook, a company that never really embraced the internet age either, together with the financial mismanagement which will become clearer as a government investigation continues.
Oh, and the intransigence of British banks, led by the ‘Royal Bank of Scotland’, which is 62.4% owned by the UK government (it has been more) as it would have collapsed itself in 2011 had it not been bailed out by the then government.
For the sake of the GBP200 million extra that bank suddenly demanded in guarantees from its owner Fosun to keep Thomas Cook in business (it had overall debts of GBP3 billion), there is now a bill of GBP600 million and counting just to return home holidaymakers trapped abroad, in what is described as “the biggest repatriation since Dunkirk”.
Now concerns start to mount about TUI, the world’s biggest travel company, which while only marginally affected by the Thomas Cook collapse, has finances of its own which are hardly healthy as the tour operator business has been turned on its head over the past decade by new arrivals and technology advances.
The most distressing outcome of these events has been how other airlines have reacted. Almost immediately Cooks’ failure was announced airlines began to ramp up ticket prices. In the space of 24 hours some prices tripled and even quadrupled. That is nothing more than blatant profiteering. There can be no other word for it.
A British newspaper reports that Thomas Cook cabin crew in the US were charged USDS10,000 for a seat to return home to the UK. If that is true, it smacks of vindictiveness, and of course British Airways has just suffered a damaging pilots strike which lost it GBP80 million according to some reports. On the flip side some Thomas Cook crew were apparently well looked after on Virgin Atlantic service.
While the airline industry flounders around and makes incomprehensible decisions such as these its nemesis, the Flight Shame movement, which began as the ramblings of an otherwise unheard of Swedish musician, multiplies exponentially. It has a figurehead, the sixteen-year old Greta Thunberg, who – even if she is being manipulated – could teach airline bosses more than a thing or two about public relations.
Ms Thunberg has become a cause célèbre in her own right, being lauded by supporters as disparate as the European Union; Amnesty International, which gave her its highest award; and the Duchess of Sussex, the US actress Meghan Markle. She has met, and been praised by, the Pope, and both the present and previous Presidents of the United States. She’s appeared on the cover of Time magazine, and been nominated for a Nobel Peace Prize by two countries.
Everybody wants a piece of Greta Thunberg – you would think it was the Second Coming. Does anyone want a piece of Willie Walsh or Carsten Spohr? If you asked people in the street who they are few would know, but they know who Greta is all right.
Ms Thunberg and her supporters are unequivocal about what they want. They want people to give up flying. Period. In countries like the UK, which produces more international passengers than anywhere else, and where multiple sun holidays, foreign weekend breaks, and stag and hen parties, football matches, you name it, are demanded each year that would have been a very big ask only a short while ago.
But not now. The tipping point may now have been reached in Europe. As a direct result of the loss of capacity from airline failures, much of which won’t be replaced; the increasing taxes that are being lumped on aviation; and the consequentially even faster growth of this flight shame movement, the first casualty may likely be the third runway at Heathrow, which is already under threat, again.
After that, anything can happen.