blog: Flying Scared
Today Concorde is back in service for the first time in fifteen months. But it will take more than this to help beleaguered British Airways.
Simultaneously Sabena - one of the world’s oldest airlines - has stopped flying. Following the attacks in America, the flag carriers are in crisis.
It is eight weeks since the devastating attacks on New York and the consequences for business are becoming clear. It is far worse than they first thought.
deep crisis
As Chris Avery, Analyst for JP Morgan Chase says: “There’s no question that the industry is entering the deepest crisis it’s ever faced since the start of the jet age. It’s difficult to see how the industry is going to survive if it continues to incur the kinds of losses that we’re just starting to see reported.”
And in the latest of those reports, British Airways’ quarterly results spell out the scale of the problem. BA profits are down over 97% on this time last year. Over 7,000 staff have already been laid off.
Airlines like BA have suffered because they rely on the transatlantic market. Since September 11th that market has been in trauma.
In the immediate aftermath, of all businesses, airlines suffered the most. After all it was commercial passenger aircraft that were used as weapons of mass murder and destruction. Many people are now quite simply refusing to fly.
gloom spreading
That fear and uncertainty has kept Americans off planes and spread gloom throughout the airline industry - and not just in the USA.
Yet, at the same time, budget carriers such as Ryanair and Jet Blue in the US are booming.
Since September 11th Ryanair has come up with an astonishing campaign. As Michael O’Leary, Chief Executive of Ryanair points out: “Unlike almost every other airline in Europe, Ryanair responded the following week by introducing our largest ever seat sale. We put a million seats on sale throughout the UK at £9.99 one way and we’ve been deluged in the rush.”
Latest results show both Ryanair’s passenger numbers and profits up by nearly 40%. The constant lure of low prices is winning new customers by the day. Low cost carriers now fly one in five of British passengers.
Ryanair strategy
Michael O’Leary uses clear and simple financial principles: “At heart, it’s all about selling low fares and then desperately, we work all the time to make sure that the costs are lower than the fares.”
The shock being dealt to British Airlines is dwarfed by the havoc being reeked on another UK industry which is three times as big: tourism. Already reeling from the effects of foot and mouth and a looming recession, the tourism industry here is fearful of a catastrophic slump that could last for years.
If anywhere is feeling the pinch right now its Bath in the West Country. It’s a major contributor to our £64 billion tourist trade which supports 2 million jobs.
As a visitor attraction, Bath proudly sits near the top of the UK Premier League. The tourist industry here is worth nearly two hundred million pounds to the City. When you think of Bath inevitably you think of the past: splendid Georgian architecture and classical Roman antiquities, but the present is all about American tourists and right now, there aren’t any.
Lynn Moorhouse is vice president of the Bath chamber of commerce. She’s desperate to help her fellow Bath businesses, she travelled to New York to find out what will get Americans over to Bath again.