A video showing a man listening to a Delta Airlines gate agent auctioning cash vouchers to bump passengers off a flight has gone viral, and people online say that it's a good deal.
27.07.2023 - 18:50 / smartertravel.com
Britain’s Monarch Airlines failed abruptly last week, leaving thousands of passengers stranded at resort destinations without a return flight. The British government is helping those travelers return home, but the airline shutdown raises the question of whether a similar collapse could happen elsewhere.
The pat answer is: Of course, some other airline will undoubtedly fail. And yes, it could (in theory) happen in North America. But—realistically, an airline shutdown is more likely to happen in Asia or Europe. Here’s why.
Why an Airline Shutdown OccursMonarch emerged 50 years ago as the in-house airline for a large U.K. tour operator. At the time, most British holidaymakers traveled on combined air-hotel packages. Buying air travel as part of a package was the only way European travelers could find low fares due to tight regulations. The tour operators were the primary interface with customers: Some operated their own airline subsidiaries, while others relied on third-party charter airlines. Later, those operator-owned airlines were permitted to sell air-only tickets, but they were a small part of the carriers’ market.
Related:Auf Wiedersehen: Air Berlin Files for BankruptcyBy 2017, several of the former charter-tour lines, including Condor, Thomas Cook, Corsair, and Monarch, transformed themselves into low-fare lines to compete for air-only trips. Monarch failed because it was committed to those once tour-focused destinations where demand suddenly tanked. Spots formerly popular as beach destinations like the Turkish coast, Egypt’s Sharm-el-Sheikh, and Tunisia were suddenly dealing with terrorism and political unrest. Monarch unfortunately couldn’t move quickly enough to avoid the market loss.
Two Europe-serving airlines—Alitalia and Air Berlin—also recently declared bankruptcy, but for more conventional financial reasons. Airline experts currently believe that there are too many start-up airlines and low-fare wannabes in both Asia and Europe, making them vulnerable to money problems. Some of them will not survive the ongoing and inevitable financial squeeze.
Where Airline Shutdowns Are Less LikelyU.S. airlines, however, seem to be past that point. Our air travel system has already gone through several shake-up rounds, and has consolidated into what experts see as four giant competitors, plus some strong niche players. The near-oligopoly allows the Big Four (American, Delta, Southwest, and United) to charge high fares and pile on fees with minimal competitive pressure. This evolution is not necessarily beneficial to consumers, but it provides stability for airlines.
Related:Flyers Sue the Big Four Airlines for Collusive PricingAmerican Airlines’ president recently said that his airline would
A video showing a man listening to a Delta Airlines gate agent auctioning cash vouchers to bump passengers off a flight has gone viral, and people online say that it's a good deal.
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