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red750

Two national flag carriers on the brink of collapse

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From Monday's Herald-Sun:

 

Two of the world’s major national airlines have hurtled closer to the possibility of going bust after a difficult weekend that’s left both with even more uncertain futures.

Italy’s flag carrier Alitalia and South African Airways, which flies to Perth, have been haemorrhaging money for years but a series of fresh blows have raised concerns of collapse for both.

On Friday, the South African arm of Flight Centre announced it would no longer sell tickets for South African Airways flights due a lack of faith in its future, while Alitalia, which has struggled for years with money woes, is in limbo again this week after a rescue plan fell through.

Now the airlines, both former symbols of national pride for both their respective countries, may be the latest flag carriers to crumble in the wake of low-cost competition, rising fuel prices and global economic uncertainty.

And they risk joining a long list of airlines that went belly-up in 2019, including the UK’s Thomas Cook and Flybmi, Iceland’s WOW and India’s Jet Airways.

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Unrealistically low airfares will inevitably take their toll, with airfares lower than trains or buses. People buy just on price without considering much else. and many state airlines are subsidised but continuing subsidies can't be assured. Airlines  heave always been risky with high cashflows and low profit margins on capital placing tight conditions for profitability on operations.  Nev

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Ryanair seems to survive. I have just compared prices for getting from the UK to SW France and Ryanair are far cheaper than bus or rail.

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There maybe some pressure from budget airlines but my bet is on entrenched systems and cultures that are unable or unwilling to change and adapt to new business enviroments.

 

Look at the taxi industry. Once a price gouging monopoly.

Now being cut down by various "ride sharing" services.

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Thomas Cook in particular came into question over its late and poorly executed digital transformation. It wasn't the package holidays they were selling as much as the desire by the client to move away from bricks-and-mortar trade to a web presence. This meant a lot fewer travel agents (who knew the package holidays well) and a lot more "men in grey cardigans". I doubt TC senior management were capable of the change in thinking required to survive.

 

On the other hand ... [one airline with a frequent flyer program] Is in its fifth year of a project to deliver discretionary pricing on airfares. That means two people can go to the booking website and if [airline] figures out who one person is, the price will be adjusted to take advantage of their known preferences. The other person will get a different airfare. The longer they browse the more likely the airfares are to be adjusted up.

 

I'm not 100% certain all of the features are turned on yet but it was designed to be very powerful and dynamic. The yield management component used by AA and United is just one feature. They adjust fares in real time as people make enquiries about city pairs ... For example once the teams in the Super Bowl are known.

 

Budget airlines just don't have the money for these sorts of things, or access to the more profitable city pairs. In th case of TC, they never made a return on the cost of their back end system transformation 

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This is where the personal data companies and tracking sites are making a massive killing - and where we, personally, are being shafted.

The tracking and data companies can supply everything the airline booking programme requires to figure out what your preferences are, how many airline booking websites you've looked at recently (and what destinations you've been looking at), and the fare can be adjusted accordingly, usually upwards, to incur a sense of panic and FOMO in the person booking.

Meantimes, we get nothing for handing over all our 'net data and history, and providing reviews - except maybe something virtually worthless, like Google points.

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RyanAir stays profitable by using a well-understood bait-and-switch marketing method. Examples include using the phrase "London Luton" in its communication. If I was a German pilot in WW2 and I got told to go photo London  but I came back with a photo of Luton I think people would get upset with me.

 

Londo and Luton airports are an hour apart by train.

 

Then there is Avalon (friends don't let friends fly DeathStar) 

 

Another example RyanAir is famous for is their bag check policy which changes every 7 weeks in order to keep catching people out. Many complaints have arisen where UK travellers have bought an airfare under one checked bag policy and had it changed (then brutally enforced) on the return leg of their trip. Plus the complaints feed the news cycle invariably. This is just free advertising for Mister O'Leary.

 

If this is what it takes to keep an airline in business, thanks but no. Leisure travel was never risk free. Remember the cheap seats on the Titanic. 

 

 

Edited by mnewbery
Typo
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