The origin and consequences of the European airline crisis

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The origin and consequences of the European airline crisis

Tags: Airlines Insolvencies

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After the insolvency of Thomas Cook, it is unclear what will happen to its subsidiary airline Condor. What makes this news all the more dramatic is the fact that Condor would only be one of several airlines to recently go belly up. So why are so many airlines currently on the endangered list? What effects will this have on the industry? And how can affected companies and agencies quickly find a replacement?

One airline after the other is filing for bankruptcy: SmallPlanet, Azur Air Deutschland, Primera Air, Germania, Flybmi, Aigle Azur. After the Thomas Cook bankruptcy, Condor is now on the edge. The industry is in turmoil. And it's no longer just the small airlines who are in trouble. More and more we're also seeing well-known airlines who are having to cease operations. The same question is on everyone's minds: what's going on? We talked to Marcus Handlos. As Head of Airline Relations Management, he is in daily contact with European airlines. He understands the pressure that the airlines are under. In this interview, he reveals the reasons for the current bankruptcies and talks about the consequences that he is worried about.


There is a dangerous mix of various factors that the airline industry is currently up against. "On the one hand, we have so-called low-cost carriers which generate enormous cost pressure and handle overcapacity on certain routes," reports Handlos. These cheap airlines often undercut prices, thus forgoing things like comfort and other services. And this is not the only threat. "Meanwhile, there are also political decisions and social trends that pose a threat to the existence of airlines." So along with high kerosene prices, home-made causes are also significant in this case. "The impending Brexit alone has enormous implications. Due to Brexit, Thomas Cook directly felt the resulting reluctance of consumers. Once this kind of chain reaction is put in motion, then this can quickly put several other companies into difficulty. Even those which were actually economically successful." The success of airlines is thus not always directly coupled with the success of their major clients – or in the case of Thomas Cook the joint owners. 


"The market is currently in disarray," says Marcus Handlos. "The grounding of the Boeing 737-MAX alone had devastating consequences." This model was slapped with a flight ban after two crashes. "These planes have been grounded for six months. Along with the economic losses, the loss of trust is a major problem. And it is not the case that other airlines simply profit from this. All are affected. The ones who ordered these models, but also those that are using other types of planes." 


"Current developments are definitely having a major influence on the current airline market," says Marcus Handlos. But what will it actually mean if an airline such as Condor has to file for bankruptcy? "The industry will not feel the full extent of the consequences immediately. There is always a time lag. It is usually mainly the next season that is affected. What this means specifically for the market situation is that there will be a shortage of supply compared to demand, which will probably stay the same. This will result in capacity problems for high-demand travel periods. This could result in a shortage of flights," explains Handlos. "Naturally, this will also have an effect on prices. Flights will become more expensive during these periods." 

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"Just think about how many planes are actually being affected by the insolvency of Thomas Cook. Twenty-eight A321s, seven A330s, eight A321s, one A330-200, and three A330-300s. That is over 11,600 seats! And each plane flies several times a day. And Condor, as well as other airlines still active, are not calculated into this." It quickly becomes clear that each individual insolvency has drastic consequences. "If other large airlines file for bankruptcy, then this could significantly alter the airline industry." It is still too early to say what exactly this would mean, says Marcus Handlos. "But additional insolvencies would have a lasting effect on the business."


"When an agency or company has booked a flight with an airline that suddenly files for bankruptcy, then other concerns take precedence," reports Marcus Handlos. "Those who need a quick replacement should be open to new solutions. Perhaps passengers can be split up onto two smaller planes, a different day may be possible for the journey or another start and destination airport may be possible. Once the needs are clear, you have to be able to quickly and effectively reach a compromise." Having experienced flight consultants take a look is a good idea – especially in these kinds of extreme situations. "When the market is already in turmoil, years of experience can make a decisive difference," says Handlos.

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Read now about how to protect yourself from airline insolvencies and how you can react in emergency situations: Airline insolvencies: How to protect yourself!


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Marcus Handlos

Senior Project Manager
Aircraft Charters

PRO SKY Germany