This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-41466722
The article has changed 3 times. There is an RSS feed of changes available.
Version 1 | Version 2 |
---|---|
Monarch: Four reasons behind its failure | Monarch: Four reasons behind its failure |
(2 days later) | |
The collapse of Monarch Airlines has affected hundreds of thousands of customers and cast doubt over the future of its 2,100 staff. | The collapse of Monarch Airlines has affected hundreds of thousands of customers and cast doubt over the future of its 2,100 staff. |
The carrier's been around for 50 years and was once one of the leading airlines to fly people on their package holidays around Europe. | The carrier's been around for 50 years and was once one of the leading airlines to fly people on their package holidays around Europe. |
"It's a sad day really for chartered airlines, obviously a lot of history there. People will have some fond memories of flying with Monarch over the years," says Oliver Clark, senior reporter with Flight Global. | "It's a sad day really for chartered airlines, obviously a lot of history there. People will have some fond memories of flying with Monarch over the years," says Oliver Clark, senior reporter with Flight Global. |
We look at four reasons why the airline collapsed. | We look at four reasons why the airline collapsed. |
1. Fuel prices | 1. Fuel prices |
Monarch's problems can be summed up very succinctly: Falling revenues and rising costs, says Blair Nimmo of the airline's administrator, KPMG. | Monarch's problems can be summed up very succinctly: Falling revenues and rising costs, says Blair Nimmo of the airline's administrator, KPMG. |
Many of the big costs of running Monarch, such as fuel and handling charges, are denominated in dollars. | Many of the big costs of running Monarch, such as fuel and handling charges, are denominated in dollars. |
But the pound has fallen by about 10% against the dollar since the Brexit vote, meaning the airline is having to pay more to buy its fuel. | But the pound has fallen by about 10% against the dollar since the Brexit vote, meaning the airline is having to pay more to buy its fuel. |
At the same time, Monarch's sales have fallen due to increased competition. | At the same time, Monarch's sales have fallen due to increased competition. |
"Prices have been depressed for some time," says Mr Nimmo. Monarch's revenues fell £100m last year, he added. | |
2. Competition from rivals | 2. Competition from rivals |
One of the key problems besetting Monarch was the sheer amount of competition it faced in the low-cost market. | One of the key problems besetting Monarch was the sheer amount of competition it faced in the low-cost market. |
"They were trying to be a low-cost carrier - a bit like EasyJet or Wizz - but there just isn't enough room for all of these airlines in the same market," says Flight Global's Mr Clark. | "They were trying to be a low-cost carrier - a bit like EasyJet or Wizz - but there just isn't enough room for all of these airlines in the same market," says Flight Global's Mr Clark. |
"There's just too much competition... and Monarch wasn't really offering anything new." | "There's just too much competition... and Monarch wasn't really offering anything new." |
Put another way Monarch's demise is a "symptom of over-capacity and overly-aggressive pricing", according to Neil Wilson, senior market analyst at ETX Capital. | Put another way Monarch's demise is a "symptom of over-capacity and overly-aggressive pricing", according to Neil Wilson, senior market analyst at ETX Capital. |
3. It moved away from long-haul flights | 3. It moved away from long-haul flights |
Greybull, which took control of Monarch in 2014, decided it would move away from long-haul holiday flights for some of its package holidays. | Greybull, which took control of Monarch in 2014, decided it would move away from long-haul holiday flights for some of its package holidays. |
"[It] become a low-cost airline of the model that is used by say Ryanair and EasyJet, but therein lies a challenge," said John Strickland of JLS Consulting. | "[It] become a low-cost airline of the model that is used by say Ryanair and EasyJet, but therein lies a challenge," said John Strickland of JLS Consulting. |
"These are big established airlines, real giants. This is a relative minnow in its size compared to these airlines. | "These are big established airlines, real giants. This is a relative minnow in its size compared to these airlines. |
"Just recently it said it wanted to go back into that (long-haul) market. Now it all looked a little bit late, a little bit uncertain in terms of management planning." | "Just recently it said it wanted to go back into that (long-haul) market. Now it all looked a little bit late, a little bit uncertain in terms of management planning." |
Mr Clark points out that rivals such as Norwegian have moved faster. | Mr Clark points out that rivals such as Norwegian have moved faster. |
"They've experimented with long-haul, low-cost flights on the transatlantic and that's something that Monarch perhaps might have looked to have done instead of concentrating on those traditional short-haul markets." | "They've experimented with long-haul, low-cost flights on the transatlantic and that's something that Monarch perhaps might have looked to have done instead of concentrating on those traditional short-haul markets." |
4. Terror attacks in Egypt and Turkey | 4. Terror attacks in Egypt and Turkey |
Terror attacks in Egypt, Turkey and Tunisia have seen travel firms and airlines concentrating their efforts on Monarch's traditional stamping grounds - Spain and Portugal - upping the pressure on the airline still further. | Terror attacks in Egypt, Turkey and Tunisia have seen travel firms and airlines concentrating their efforts on Monarch's traditional stamping grounds - Spain and Portugal - upping the pressure on the airline still further. |
"Airlines have seen terror attacks dry up demand for markets like Egypt and Turkey," says Mr Strickland. | "Airlines have seen terror attacks dry up demand for markets like Egypt and Turkey," says Mr Strickland. |
He says this has meant that Monarch's has had to reduce prices for travel to its key markets. | He says this has meant that Monarch's has had to reduce prices for travel to its key markets. |
"That's meant with overcapacity prices have come down, which has only worsened the situation in terms of Monarch's own revenues," says Mr Strickland. | "That's meant with overcapacity prices have come down, which has only worsened the situation in terms of Monarch's own revenues," says Mr Strickland. |