Why airlines are failing?

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Rwy in Sight
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Why airlines are failing?

#1 Post by Rwy in Sight » Tue Oct 06, 2015 4:16 pm

I wanted to start a thread after a very active member decided to leave the sand pit. There was a feeling that there are some signs showing an airline has started its decline. So my question to those unfortunate to have worked in an airline that failed what are the reasons for an airline going from a world leader to a bankrupt one. Also are there any common indications that sooner or later the end is imminent. I understand it is an emotionally charged subject and I like to make sure I am not going to use them to evaluate the current trends but understand how and why things went wrong.

For instance did Pan Am failed because it did not have a decent feeder domestic network for its international flights?

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Re: Why airlines are failing?

#2 Post by Capetonian » Tue Oct 06, 2015 5:11 pm

SAA is an excellent case study for an airline that is failing, as are many European carriers, of course for many and entirely different reasons.

Swissair - different reasons again and a fascinating case study.

Rigas Doganis knows the answers.

McKinsey has been the kiss of death for a few airlines.

I am not sure that airlines that failed historically, such as PanAm, are relevant in the context of today's aviation world as so much has changed. You've opened a fascinating topic.
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Re: Why airlines are failing?

#3 Post by rgbrock1 » Tue Oct 06, 2015 5:19 pm

I know hardly anything at all about the inner-workings of airlines but as far as Pam Am was concerned I would think that both Lockerbie and Flt 800 together were the final nails in that airline's coffin, no?
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Re: Why airlines are failing?

#4 Post by Rwy in Sight » Tue Oct 06, 2015 6:11 pm

rgbrock1 wrote:I know hardly anything at all about the inner-workings of airlines but as far as Pam Am was concerned I would think that both Lockerbie and Flt 800 together were the final nails in that airline's coffin, no?


Thanks for the answer! FLt800 I think it was TWA. And as we have seen on the relevant thread a coffin takes a lot of work.

Capetoninan, loved the McKinsey aspect. May I point out that a common factor is that they did not read correctly the competition? And I like to keep it some what historical like talk about recent failures

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Re: Why airlines are failing?

#5 Post by rgbrock1 » Tue Oct 06, 2015 6:21 pm

Rwy in Sight wrote:
rgbrock1 wrote:I know hardly anything at all about the inner-workings of airlines but as far as Pam Am was concerned I would think that both Lockerbie and Flt 800 together were the final nails in that airline's coffin, no?


Thanks for the answer! FLt800 I think it was TWA. And as we have seen on the relevant thread a coffin takes a lot of work.

Capetoninan, loved the McKinsey aspect. May I point out that a common factor is that they did not read correctly the competition? And I like to keep it some what historical like talk about recent failures


Of course Flt800 was TWA, how could I have forgotten that? Especially considering I was living on Long Island, NY at the time and witnessed part of it. (As did the ex-Mrs.)
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Re: Why airlines are failing?

#6 Post by dubbleyew eight » Tue Oct 27, 2015 7:53 am

:-Q are there any successful airlines flying old aeroplanes?
there is an acknowledged 10 year grace period in the maintenance of a new aircraft.
most of the "successful" airlines these days seem to be using the grace period to cut operating costs and undercut the competition.
so ultimately there will be no real market for old airliners except in the freight dogs area.

of course in the world of aviation the "value" of an airline lies in the aggregate value of all the shares.
drive that share value low enough with a bugger of a CEO and it is quite amazing how many people will wait until it almost fails to buy it cheaply.
aviation aint always a fair or ethical world but thats business.

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Re: Why airlines are failing?

#7 Post by om15 » Tue Oct 27, 2015 5:28 pm

are there any successful airlines flying old aeroplanes?


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Acquiring and operating old cheaply bought aircraft has been their very successful modus operandi for thirty five years.
Turbo props and Airbus for cargo, and now B737 and B757 for bucket and spade pax, this needs to be supported by a good engineering team and contracted maintenance providers to work properly.
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Re: Why airlines are failing?

#8 Post by Rwy in Sight » Tue Oct 27, 2015 6:23 pm

Thanks for the new inputs and the new aspect regarding old aircraft. I am still curious why such symbols of the industry like Pan Am and Swissair failed while for a long period of time they appear to do everything correctly.

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Re: Why airlines are failing?

#9 Post by dubbleyew eight » Mon Nov 02, 2015 12:02 pm

how many airlines have survived the loss of an aircraft full of passengers?
malaysian have lost two and needed a major reorganise to survive.

the scuttlebutt seems to be that an airline will fail soon after a hull loss.
was locherbie the nemesis for Pan-Am ?
(genuine question. I don't know the answer)

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Re: Why airlines are failing?

#10 Post by Capetonian » Mon Nov 02, 2015 12:45 pm

Swissair is an interesting study.
Apart from financial mismanagement a major factor was the paradox that although at a strategic crossing point for connections, that contributed to their downfall as they were surrounded by countries with significant ATC problems, leading to poor reliability in connecting traffic. With a very small home market, their dependence on connecting traffic was a major problem.
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Re: Why airlines are failing?

#11 Post by 500N » Mon Nov 02, 2015 7:54 pm

dubbleyew eight wrote:how many airlines have survived the loss of an aircraft full of passengers?
malaysian have lost two and needed a major reorganise to survive.

the scuttlebutt seems to be that an airline will fail soon after a hull loss.
was locherbie the nemesis for Pan-Am ?
(genuine question. I don't know the answer)



No, I don't think that applies to all airlines.

I find it hard to believe Qantas would fail from a hull loss.

Maybe it partly depends on how the hull was lost and what state the airline was it prior.

Is the hull loss the straw that breaks the camels back ?

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Re: Why airlines are failing?

#12 Post by Rwy in Sight » Sun Nov 08, 2015 4:28 pm

Lockerbie was a mixed case. Pan Am to an extend was the target for being a major American carrier and there was a recession between the bombing and the company shutting down.

Also Mr. Hadjioannou pointed out that an accident may close down a small airline (I remembered this statement a day or two after the Helios accident) but he did not specify how "small" is defined.

But since Swissair and Pan American come to the discussion they overextend themselves with buying various business not closely related to the aviation. Pan Am had the Intercontinental hotel chain and Swissair was buying a lot of airlines not profitable and not really completing its network i.e. SABENA. Also it had two hubs one too many for such a small country.

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