Perfect Storm

[atuk]

[quote=Ekally1 post_id=6437 time=<a href="tel:1650312474">1650312474</a> user_id=50]
Can we stop all this political chat ... getting annoying and only causes arguments . We get people have political preference but this is about glasgow airport

I think 1-11 was saying that the air travel industry is finished.

It’s not.
[/quote]

I agree with Clive, aviation isn’t finished -=but there may be a shake out on low cost routes and frequency.

Why do I say this? Tour operating history shows those with the lowest selling costs have the least reserves. That means they simply don’t have sufficient fat to see them through the lean times. Their tried and trusted weapon to economic downturn is slash fares to minimum levels to generate more bums on seats. That’s fine until revenue doesn’t cover costs - then red ink flows and chickens come home to roost. Add into the equation multiple deliveries of new aircraft ordered during boom times and there is the issue of finding routes on which to deploy your fleet. One way out is use the new, more fuel efficient aircraft and retire older inefficient models or sell them for freighter conversion.

That would generate smaller more efficient fleets but impact frequency and so generate higher prices and better returns. Less travelling paying more is strangely better than more paying less.

Ergo I agree with Clive: aviation isn’t dead. I also agree with 1-11: the aviation industry will face challenges but rise to meet them. Just look at the past two years. Your case is a worst case scenario, I honestly don’t think things will be that bad but, like following the Court Line collapse in 1974, it will take another three or four years to fully recover.

[Clive]

I know that Jet2 are highly confident. They maintain high air fares and high loads and sell rather expensive package holidays, their on board sales are phenomenal, they have a growing fleet and more aircraft on order which are ever more cost effective. They have low staff turnover because they are a well run company who look after their people. So for them and their product the future looks rosy.

[atuk]

I know that Jet2 are highly confident. They maintain high air fares and high loads and sell rather expensive package holidays, their on board sales are phenomenal, they have a growing fleet and more aircraft on order which are ever more cost effective. They have low staff turnover because they are a well run company who look after their people. So for them and their product the future looks rosy.

Absolutely agree. An industry icon run by those who know and understand the tour operating business inside out. Award winner and never heard a bad word about them.and our holiday in Gran Canaria with them in November was ace.

[1-11]

I think 1-11 was saying that the air travel industry is finished.

Thank you. This is a constructive comment.

But, please do not mis-quote me. Concentrate on what I am saying and not on what you think I am saying.
You may have missed the bit in my original post where I said, "

( - allow me a wee bit of hyperbole )

Now, that said, I think we all need to take a step back and look at the reality of our economic situation.
Many of you will already have noticed that subscriptions to things like Netflix, Amazon Prime and many other such services, are being cancelled left right and centre. There is no hiding the fact that money is getting tight all around, and that Discretionary Spending is dropping like a stone, as people concentrate more money on Essentials and less on frivolities.
Foreign Holidays and flights to the sun are discretionary, there is no doubt about that.
Discretionary spending is drying up, because prices of essentials are going up, but wages and salaries are not.
Your money is buying you less and less.
So the result is that the Airline business is going to be very severely impacted.

The airlines themselves will no doubt continue with their Pollyanna narrative until the day before they go bust.
If they were to admit to reality then their investors would bale out today and their lines of credit would be withdrawn on the spot.

I honestly don’t think things will be that bad but, like following the Court Line collapse in 1974, it will take another three or four years to fully recover.

Now this is very relevant.
Many of us will remember the 1970's and the economic hardships brought on by the Opec "Oil Shock".
This is probably as close an example as we can get to what is happening now.
However, to say that things will shake out in 3-4 years is again a bit McCawberish, ( I've already used Pollyanna ).
Consider that in the 1970's we had North Sea oil coming onstream to boost the economy, this time around, there is no such boost waiting for us. In fact the overall economy is in worse shape. Add to that the fact that we are strangling ourselves with environmental regulations which prevent us from using the few energy resources which we do have. It all adds up to a pretty dire picture.

Like I said in my first contribution to this thread,
We are not going back to "Normality" !

PS. "Normality" is a relative term, so what I mean is, there is no going back to what we knew in the 1990's/2000's.
There is a chance however, that a "New Normality" will emerge, and that it will be more akin to the 1960's.

[viscount]

I agree with 1 11 To a point the aviation industrial as we new it BC will not come back in the same format.
I believe for some time to come they are going to be a lot of changes in the industry. Airlines will start going burst and routes disappearing. With airlines going back to using Hubs again.

[GeorgeNTravels]

I keep hearing people say, “they want to get back to normal”.
It’s a bit like longing for your childhood again, getting back once more to those days of carefree innocence.
Sadly, like childhood, “Normal” is not coming back.
The reason for this is simple. We’re skint, and we cannot afford it. We actually never could afford it.
That “we” is we as a country, the UK, not “we” as in us individuals.
Some of us still have money, enough for a few pints or to see us through our dottage, but as a country we are bankrupt. Our Economy is in ruins, due to decades of mis-management and also a blatant lack of understanding as to what an economy actually is and how it works.

Now, I could go on about the Brexit and Covid debacles, but what these events actually did was only accelerate the inevitable decline of the UK.
Brexit and Covid in themselves were not the fundamental reasons for the decline that we are experiencing. The UK economy was already mortally wounded before either of these events came along.

An economy is essentially an Energy system. The more energy you have, the bigger and faster you can grow or sustain your economy.
Money as most people understand it, does not come into it. Governments can print as much of the folding stuff as they want, but it does not increase the wealth of the nation. For the past 20yrs or more, that is exactly what has been happening. Governments have been printing money Willy-Nilly and giving it to people just to keep their economies rolling on.
In that time however, no new wealth was created, ( - allow me a wee bit of hyperbole ), so our lifestyles were essentially funded on Tick.
All those planes full of punters heading off to the sun, paid for by an abstract increase in the value of their houses. It was never real.

It’s now Chickens coming home time.
Energy prices are going up,
Hell – Everything is going up !

The aviation industry which we all knew and loved, is now a dead man walking.
It just does not know it yet.

What the above posts have been describing are just the death throes of an industry that is trying to make an old business model work in a fundamentally and permanently changed world.

I think this winter will be a challenge for the industry with high fares across the board.

I think airlines like Wizz and Ryanair will be ok as they have extra capacity to flood into their systems to lower fares.

The airlines I see struggling are easyJet, Jet2 and TUI. I think the 3 of them will see early success with low fares, but as their prices rise people will not be able to keep up.

I personally believe that another major EU airline will go bust, my guessing is SAS or Norwegian (again).

Across the UK airports will be fighting to get passengers through their doors and onto planes, airports close to each other such as GLA/EDI, MAN/LPL & BRS/CWL have the most to lose as it will ultimately become a battle of airport fees to attract investment.

IMHO the team at GLA (yes they aren’t great) must be doing something right to attract VY, TO, XC & BE to the airport in a 12 month period, but will they be able to keep that momentum going, that I’m not so sure about.

[1-11]

Here is a link to an article I found on a blog, which sort of sums up where we are with regard to the Aviation industry.
https://consciousnessofsheep.co.uk/2022 ... -over-50s/

I tend to agree with the authors interpretation of what is going on.
He's not an aviation expert or anything like that. He comments mainly on economic and geopolitic issues.

[hads]

Interpretation of anything is personal of course. Humans love to have something to concern them. Its nature. Ive lived through the Thatcher Years. Ive lived through most of the Cold War. 2008 Financial crash. Coivid. And Ill live through whatever comes next. If your glass is always half empty then there is much for you to worry about. Im a full glass lad and everything will be just fine.

[atuk]

Interpretation of anything is personal of course. Humans love to have something to concern them. Its nature. Ive lived through the Thatcher Years. Ive lived through most of the Cold War. 2008 Financial crash. Coivid. And Ill live through whatever comes next. If your glass is always half empty then there is much for you to worry about. Im a full glass lad and everything will be just fine.

Hear,hear. Anyone who lived through the 1970s - I was at school until mid decade then in full time employment from mid 1975 will know these bad old days.

Inflation, Exchange Control, interest rates sky high, strikes a plenty, power cuts, three day week, weak government and strong unions. The 1980s brought a complete reverse, but unemployment rose in industries as the economy became Service centred. Despite this the IT airlines flourished -with exception of Laker in 1982. Scheduled airlines struggled though: BCal and Dan Air being bought by BA with AircEurope doing a Laker with an airline and tour operation collapse.

The1990s brought EZY and FR and low costs boomed. Now they dominate the leisure market big style leaving BA as the legacy carrier.

I’m no pessimist but am realistic. Folks will still want to travel and their budgets will be hit by increasedlivingcostshowever, just like after the crash14days become 9or 10 and 7nights May become 5.

[viscount]

I remember the 70s well 15% interest rates high unemployment, Glasgow Airport engineering strike.