Friday, 19 October, 2001, 18:13 GMT 19:13 UK
European air travel in crisis: What should be done?
European countries will not be allowed to pump money into troubled airlines, except to cover losses immediately following last month's terror attacks, the European Commission has ruled
This follows an earlier decision that there would be a limited package of state aid for European airlines
The package will compensate the airlines for direct losses following the attacks in the US on 11 September and will also cover some insurance costs and allow the public sector to pay for extra security measures.
In the past weeks, US and European airlines have announced a total of more than 100,000 job losses, including cuts from British Airways and Virgin. Swiss Air has already cancelled all its flights and Aer Lingus and Sabena are in difficulty.
Some experts predict that only a handful of European flag carriers might survive the hard times - sending dozens into bankruptcy, merger or takeover.
Should national bodies step in to bail them out or is this unfair to other more successful carriers? What do you think?
This debate is now closed. Read a selection of your comments below.
I do not mind the European airlines being subsidised to balance the $15bn state aid that Bush is giving the American Airlines.
I believe that the governments should only compensate for the losses the airlines have incurred due to the tragic events of September 11. I do not believe in 'bail outs'. But lets not all forget that if your flag carrier goes bankrupt then you will be paying your hard earned pounds into a foreign carrier - from which the UK would benefit very little. Not to mention massive job losses and millions of pounds of lost investment. I think we are quite privileged here to have a flag carrier that is recognised worldwide and that is a symbol of British quality.(Although by no means perfect). Easyjet for national flag carrier? No thanks.
Notice that while airlines are complaining about lack of profitability, they pay executives millions of dollars each. Companies which are not profitable should eliminate unneeded luxuries rather than asking for taxpayers to subsidise expensive office furniture, expensive account meals and hotels, executives can stay in cheap hotels like the rest of us, and similarly wasteful practices.
Airlines are complaining about lack of profitability but pay executives millions of dollars each
Chad Williams, USA
Is it not time for the flag-carriers to combine their resources under a few "Air Europe" banners? Flights to less profitable airports should be subsidised through some EU Social scheme and let that "social responsibility" factor be the only instance for subsidy. In much the same way as Bus/Rail Services are in remote areas. Incidentally, carriers such as Ryanair and Easyjet have their faults too and are much less lenient to passengers who miss or who are a kilo over the baggage allowance than the national airlines are. They are also quick to cancel flights that do not fill, leaving passengers wait for hours until the next service can operate with a full load. Often these Airports have only skeletal Public Transport links with these cities. Yes, they are honest about the "no-frills" tag and that's fine. If two or three slimline "United European" Airlines fleets - made up of the now overstaffed and lethargic flag carriers - were to emerge from this crisis we may have what every consumer deserves - choice. Also, let's not forget that great bastion of privatisation, the USA, has no reservations about throwing subsidies at what it considers strategic industries when it feels like it.
The one big problem that all EU carriers will have is getting Insurance cover against terrorist attacks. I am not sure where this is going at present.
In reference to larger airlines subsidising smaller roots - Did the gentleman ever have to travel to Orkney or Shetland? I have and it cost me £218 return from Glasgow to Kirkwood. As for transatlantic flights, Why does it cost me twice as much to fly from Glasgow to Toronto by national carrier, as it does to travel from Toronto to Glasgow? As far as BA goes I have little sympathy. This trouble with air carriers was set by greedy companies more interested in profit than people. The vast majority was already in trouble well before September 11.
The basic fact is that the industry is not cost-effective
The basic fact is that the industry is not cost-effective and that is despite the tax-free status of aviation fuel. Airlines should charge fares that reflect that actual costs and neither they nor their customers should expect to be subsidised by taxpayers.
I hope this current crisis does mark the swansong of large national carriers such as BA. Let's give their 'slots' to the much healthier and 'in touch' independent airlines without delay and dispense with these unrealistic and detached companies.
It's time for the
countries to put their
money where their
If they really want
a federal Europe, it
makes no sense for
every tiny European
statelet to have its
own "flag" carrier.
They can't have it
Air fares in economy are cheap and so they should be - people are boxed in like cattle. It is one of the most uncomfortable ways to travel. "Flag Carriers" should either be nationalised or left to sink or swim. Is a hotel chain/ferry company/holiday company going to get compensation for the current downturn in business? No. So why should airlines be different.
If there is a case for the British Government to shore up flagging transport infrastructure it should focus upon those used by the many, not the few. Why should taxpayers effectively donate funds to individual shareholders in British Airways? I fly on average once a week but I get on a train four times as frequently. If there are £millions to give out, plough it into the railways and the Tube which are both a national embarrassment
Well, look at the good points. Less air travel; less pollution. The world is quickly deteriorating and air travel is a major contributing factor. Perhaps we can go back to sailing the oceans?
Less air travel; less pollutio
Aotearoa, New Zealand
Aotearoa, New Zealand
Learn a lesson from the US air industry. The deregulation was part of the problem on September 11th. Basically, there was no enforcement of any regulations anymore. Fines were so small that if they ever were paid they didn't mean anything. It is all about making the most profit.
I would like to see fares increased by 10-20% with the seat space increased accordingly. The same plane would generate the same income but cost less in fuel costs due to saving some 50 or so passengers (50 people x 150kg per person and baggage = 7.5 tonnes weight saved). If nothing else that 7.5 tonnes could be used for cargo shipment which would generate further revenue.
The events of 11th September have not turned aviation upside down. They merely accelerated the inevitable, and brought reality to bear on 'basket case' airlines sooner than would have otherwise happened. The archaic foreign ownership regulations need relaxation, to allow a certain amount of consolidation in the industry. Together with further liberalization of traffic rights, perhaps the current grey cloud will show a silver lining.
The fact is economy class is too cheap,
business class is too expensive.
With low budget and small margins,
airlines will not be able to survive
any minor 'cold'. There is no such
thing as 'robust' American airlines.
They trimmed down and 'liberalised'
their market years ago and still find
it hard to survive. Of course, it is
easier in the States to compensate the
loss of carriers by getting rid of
'human liabilities (i.e. employees)'.
It's a question of demand and supply
so some carriers will have to go.
The so-called flag carriers seem to think they have a divine right to exist. In the 21st century competition and market forces are the key. They should stop whingeing and give some ground to the more efficient and profitable small airlines.
Events within the industry are certainly leading to big changes. The biggest difference being Government policy. The US Federal Government seems happy to help and bail out airlines whereas in Europe it is very much 'sink or swim'. Even though I agree with the European viewpoint I cannot help but look five or ten years down the line and see the robust US airlines ready to pick up any increase in air passenger traffic. Imagine 'Delta European' or 'European United'. So American dominance then extends to our air space as well as what we drink and wear.
Events within the industry are certainly leading to big changes
It's all very well saying goodbye to loss making carriers, but who is going to fly passengers on unprofitable routes?
Choice will disappear and some cities could find themselves without any direct routes to major places. It's the larger airlines who subsidise these routes to keep them flying, will Ryanair or Easyjet fly to the Shetlands? Not a lot of money to be made so simple answer is no. No carrier should be subsidised by its respective government but without large carriers - communities will suffer.
Yes, it's the end. Most of these airlines were kept going only by government help because of some national demand. Once the useless and unprofitable airlines have been closed down it will only make the remaining ones stronger. We have been paying excessively large airfares to pay for bloated, overstaffed and wasteful national airlines. I have no sympathy for them.
What is this situation where airlines get huge amounts of money from 'their' governments? The people who pay the taxes are subsidising the travel of a minority (however widespread flying is among the public). Do taxpayers get their 'investment' back when those airlines do well?
The golden days are far from over. As statistics show (from the World Travel Organisation), after a big slump in tourism activity comes a significant boom. A year after the recession of 1982 there was a huge boom in tourism arrivals in the UK. The same thing happened after the Gulf crisis in 1991. People will continue to fly and the large European airlines have nothing to fear. It is just a shame to see Swissair suffer this much because it is (or was) the best airline in the world. The Swiss will do everything in their power to save their beloved carrier!
The golden days are far from over
I'd say we Canadians have the same problem with the airline industry as Europe does: one bloated, ex-government "flag" carrier (Err Canada), still propped up by tax dollars, still arrogant, still whinging that it is an "essential service". And with totally inflexible labour arrangements to boot - a thumb in the eye to the rest of us who have to live with uncertainty. But even our smallest northern communities get better service from private carriers (with admittedly hokey names like Bearskin Air). We all just need a little more faith in the market.
When flying long haul I would rather pay a little more and get quality service. I hope the airlines will not cut customer care when they cut costs. I have flown economy to the USA on many different carriers and always return to BA.
More people are flying on planes than ever before so maybe the golden age of air-travel is now. Airline service is poor because it is also (comparatively) inexpensive. In the 1950's, a transatlantic flight would have cost $400 which would be $2000 in today's money.
I believe that very soon the only major carriers in Europe will be British Airways, Air France and Lufthansa. Budget airlines will increase in size but won't dominate. I know companies must cut back but no-one wants to invite a possible large investor to your headquarters travelling in a small box with no food included.
The time of obscure national European airlines should be well past. It is about time that the air passenger industry joined every other industry and covered its own costs, a so-called 'hard budget constraint', rather than existing as millennium domes - nice in theory for our country's pride but a massive waste of money.
The time of obscure national European airlines should be well past
Amongst the frequent-flyer community Sabena was known to stand for "Such a bad experience, never again". They won't be missed. It is only a pity that the slump also affects quality services like KLM and Virgin Atlantic too.
Yes the so-called golden days are gone as the cheap operators take over. And quite right too - after all flying nowadays is no more akin than travelling by bus or train. However as we experience more delays hanging around waiting for hours in the terminals and waiting to take off there are many who will increasingly use the high-speed trains such as the Eurostar, TGV etc. As those operators see the potential I believe that they too will start to lower prices. It all augurs well for the traveller. I used to fly on a regular basis but now for me it is a last resort - too much aggravation and baggage restrictions.
Too much aggravation and baggage restrictions
Such is the way of all industries, they over-expand in times of boom and contract in times of feared recession. In five years time we will all wonder what the fuss was about as we climb aboard the 0730 to the office or take the Friday night special to our apartment in Spain. Probably the only long-term effect of the current retrenchment will be an increase in bulk carrying away from the 'club class' flights of today.
I think it is. And to be brutal, I don't have a lot of sympathy for any of them.
When you have to pay £500+ for a return flight from Manchester to Frankfurt on a European carrier but can fly return to Los Angeles for £299, something's badly wrong.
Long live Ryanair and Easyjet for short-haul flights.
And long live Virgin on transatlantic routes......
Either the number of European airlines is reduced through attrition or they will have to significantly curtail their operations. There is simply not enough passengers there, especially after September 11.
The BBC is not responsible for the content of external internet sites
Other Talking Points: