This past year was a rough one for the airline industry. We saw the bankruptcy and closure of multiple carriers, from the major loss of leisure carrier Thomas Cook, to the shuttering of Adria Airways, the flag carrier of Slovenia. Other major losses include upstart transatlantic low-cost carrier WOW Air, and the conclusion of Jet Airways, a full-service carrier based in India.
The briefest one way saw was likely California Pacific Airlines. This west coast regional startup based out of McClellan-Palomar Airport flew for less than three months before operations stalled in early 2019. However, the airline will potentially restart service.
It’s always sad to see airlines go. The market is fierce these days, with many airlines feeling the financial squeeze of a price-sensitive public. Flying in this age is great for the consumer. Not so much for the airline.
I’m not sure what 2020 holds, but here are three more airlines that are already on the rocks. It would not surprise me if they close their doors for the last time in 2020.
Air India is a recent addition to the list of carriers in crisis. The Indian government is getting more and more desperate to sell the national airline, even retaining all the debt in the process. The airline continues to receive financial backing from the government, with debt being shifted off the books. Air India has failed to turn a profit over the past several years, instead losing over half a billion dollars every year.
However, other factors are likely putting a damper on prospective buyers of India’s flag carrier. At first the government only wanted to sell a 76% stake. Now it wants to sell the whole enchilada. But pilots are protesting this change, as are unions. And the state-owned fuel companies just want to get paid. At the root of it all, Air India isn’t really a brand worth buying.
That all being said, there are some at Air India that say all the fuss is for nothing. The airline isn’t going to be shutting down, and the financial situation is “being appropriately dealt with without compromising on our service levels.” Because stellar service is what Air India does best.
Italy’s flag carrier is perennially in financial crisis. They have been burning through cash for years, and even with multiple bailouts, things still aren’t looking any better. The government has finally set a 6-month deadline for a solution to be found. If this fails, the government will liquidate the airline. For an airline that hasn’t turned a profit for 17 years, this has dragged on long enough.
Alitalia isn’t known for offering a great product, which is another problem for a carrier looking to recover. Neither of my long-haul business class experiences (first review, second review) were especially memorable, as the catering is poor and the product worn.
The fact that the airline loses 2 million euros per day isn’t lost on investors. I don’t see anyone coming along to rescue Alitalia. Personally, I would not book travel on the airline later than this spring.
Thai Airways is in crisis. As a full service airline in an area dominated by multiple low-cost carriers, Thai Airways has not adapted quickly enough to the changing marketplace. They have been bleeding cash, and without striking a deal of some sort in the coming months, Thailand’s flag carrier may go under.
Their chairman resigned back in November. Other executives have thrown in the towel as well. The president’s memo to staff was a bit extreme, telling them, “Thai is really in a crisis…everyone dies if this ship sinks.” But with revenue down 10% and passenger traffic down 5%, things are looking bleak. Thai reported a loss of ~$220 million USD for the second quarter of 2019.
My guess is that the government will step into the situation with Thai. Unlike beleaguered Alitalia that has been criticized for years, Thai’s crisis is a bit more recent. And there is the long, proud history of an airline that has been running for around 60 years to consider. We’ll likely see a restructuring and/or bailout in the short term.
It’s always sad to see airlines on the rocks or go under completely, but some prove impossible to sustain. We may see the closure of all three this year, or one or more may pull through. We’ll see what unfolds in the coming months.
Thai Airways A380 photo courtesy of Masakatsu Ukon, used under CC BY 2.0 license.