What is really the problem with this business? It's not 9111, it's not the war against iraq, it's definately not an 8-week effect like SARS. It's simply the fact that this is an testosterone-driven (rather than market-driven) industry where national pride, market-share and prestige matters way more than sane entrepreneurial thinking.
In 2001 and 2002 this world's airlines have lost more money than has been made in the 100 years before that. This is not because every airline lost a whole lot of money, but because many airlines who were already doing not-so-well, did even worse. And what do we do? We bail them out, with billions and billions of tax dollars, whereas on the other end, we increase taxes more and more on the tickets, in order to "distribute" the wealth in this industry.
Of course it is sad to see airlines go. I think its very sad that there is no more Braniff, or Eastern or Pan Am. It's sad to see whan happens to SwissAir and Sabena.
But we have to let them die.
We have to unless we want to do even more harm to the entire business. Especially in Europe, there are way to many airlines. It is a terrible fact for the industry that we have 20+ airlines in the EU, and every single one of them thinks they need to operate an international network.
We have to abolish those mediaeval protectionistic laws like Bermuda II
, or the 25% rule in the U.S., and all similar rules that are around, no matter where they origin from.
In some ways the Europeans have to learn from the Americans here, over in the U.S. there are a number of large airways (on the long run, US/UA, DL
/CO/NW, and AA
) and a couple of low-cost and niche carriers, plus the regionals, most intercontinental traffic is routed through a very limited number of airports: LAX
getting the most, then the hubs of the airlines get a number of traffic (ATL
) and some large O&D markets have a limited number of flights (e.g. BOS
). What about Europe? Every country thinks they need at least two (better more) airports with an intercontinental network. But does the market need that? NO. We need a small number of large network carriers (as a first guess these would be BA
) and most other national carriers will HAVE TO
GO (merged into the 3 or 4 remaining). Sorry. Otherwise we do not get the downward spiral stopped.
This would also be the only way to overcome the horrendous overcapacity that exists. Over 15% of the world fleet is currently grounded somewhere. Almost 300 747s are mothballed (if you say that only the half is airworthy of those, still a fleet larger than SQ
+BA+LH sits on the ground). Of course there will be tremendous growth in the next 30 years. But as long as we dont let the market to clean up itself, it will simply collapse one day. Think of it, most of the growth will NOT take place in North America, or Europe, but in other place. New, underdeveloped markets who look at what going on in the big ones. We have to set an exsample for those as well.
It's a simple matter of evolution. You have to let the feeble once die, so that the strong ones can survive.