business

Airline bankruptcies surge, leaving rivals vying for planes

4 Comments
By Laurence Frost

Airline bankruptcies have increased this year at the fastest ever rate, led by the collapse of India's Jet Airways, British travel group Thomas Cook and Avianca of Brazil, according to industry data.

"2019 has seen the fastest growth in airline failure in history," said airline consulting firm IBA, which has tracked plane fleets returned to lessors or administrators by 17 carriers that have gone bust so far this year.

More may follow as weaker players are squeezed by low-cost competition and higher fuel costs exacerbated by a strong dollar which hurts those selling tickets in euros or pounds and buying kerosene and planes in the U.S. currency.

"The last quarter of the year tends to see more failures during the northern hemisphere winter," Phil Seymour, IBA's chief executive, said in an interview. U.S. carriers have been spared by the "natural hedge" of dollar revenue, he added.

The run of bankruptcies has also created opportunities for stronger carriers to pick up planes, traffic and airport slots abandoned by collapsed rivals.

Other airlines that have folded in 2019 include France's Aigle Azur and XL Airways, Germania, Flybmi and Adria of Slovenia, which filed for bankruptcy this week.

Indian low-cost carrier SpiceJet said on Friday it may take more Boeing 737 MAX planes ordered by Jet Airways, which went bust in June.

The entire global MAX fleet numbering hundreds of the new jet remains grounded awaiting approval of software changes to address safety concerns after two fatal crashes. That has increased the jostling for substitutes, driving up waiting times and prices for new, second-hand and leased airliners.

Leading European low-cost operator Ryanair, which has been hit hard by the MAX grounding, is seeking to take over Airbus A320-family aircraft previously leased by Thomas Cook and deploy them at its Austrian carrier Lauda.

"Opportunities crop up out of things like the failure of Thomas Cook," Ryanair group CEO Michael O'Leary said at a Reuters Newsmaker event in London on Tuesday.

"We're talking to a number of the leasing companies about taking some of those Airbus aircraft and putting them into Lauda next summer," he said.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

4 Comments
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The major reason is that all these low cost carriers tried to take action away from the high priced carriers. The problem with that is that the high cost carriers responded by lowering prices and still offering better services at a slightly higher price.

2 ( +2 / -0 )

The problem with that is that the high cost carriers responded by lowering prices and still offering better services at a slightly higher price.

thats the beauty of competition, lower prices better services for the consumer

3 ( +3 / -0 )

Actually you find that the purely budget carriers that have become really big are the ones dominating the market and run much higher profit margins compared to country brand carriers

https://www.youtube.com/watch?v=069y1MpOkQY

0 ( +0 / -0 )

Besides those mentioned past week Peruvian Airlines ceased operations too.

1 ( +1 / -0 )

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