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Airlines

Airline Failures May Increase Soon

Airline Failures May Increase Soon
Jennifer Billock

In the aftermath of Monarch and Air Berlin’s collapse, we learned that getting passengers home after an airline fails can be incredibly expensive for the government and tax payers—and although there’s no good solution, we can likely expect more airline failures in the coming years.

According to the Airline Insolvency Review, an initiative launched after the airline Monarch failed last year, one of every 200 passengers—approximately 900,000 of them—over the next 15 years will fall victim to an airline going out of business. The report showed that passenger demand is growing even as increased risk for airline failure rises.

It is extremely expensive when an airline fails. For Monarch, the Civil Aviation Authority had to fly each Monarch passenger home, for a total cost of about $79.4 million. Air Berlin had a similar issue when the airline collapsed, though in that case the German government lent support to allow the airline to operate long enough to get everyone safely home.

“Two insolvencies with two different responses,” Peter Buck, the chair of the Insolvency Review, told The Independent. “Both managing to avoid thousands of passengers being left to fend for themselves, both costing the taxpayer significant amounts of money.”

The report highlights that there are options, but there is no one standard procedure for how to handle stranded passengers when an airline tanks.

“ABTA has been highlighting for some time that the lack of any formal protection arrangements for scheduled flights leaves many passengers at risk, and the government and taxpayer with a potential repatriation cost,” Mark Tanzer, chief executive of the travel association ABTA, told The Independent. “This review is an opportunity to set this right.”

[Photo: Shutterstock]

View Comments (2)

2 Comments

  1. southpac

    July 13, 2018 at 9:09 pm

    “For Monarch, the Civil Aviation Authority had to fly each Monarch passenger home, for a total cost of about $79.4 million”

    What a joke. Govts are hopeless. Should have cost less than 1/4 of this amount.

    Govts should have disruption deals in advance with many airlines. Plenty of charter aircraft sit around doing stuff all, a lot of the time.

    With a massive worldwide recession coming fast, there are going to be a lot more failures very soon & some big ones, much bigger than Air Berlin & Monarch.

  2. edgewood49

    July 14, 2018 at 10:59 am

    so what are you saying other than repeating something we all know?

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