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The Rise and Fall of airlines
January 6, 2014, 12:02 pm
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An airline company should have a long history of endurable and concrete business which is an important certification as it emphasizes the passenger confidence and trust for a safe and reliable journey with the airline.

To achieve this certification, the company should strive to build a tangible business in the long run whereas it is noticed in the current situation that airline companies are shirking off their standings in the aviation platform. Over the last few years, we have witnessed the downfall of few carriers from the MENA region apart from the other side of the world.

These days the starting of an aviation company has become like establishing a trading or contracting company that everyone would want to give it a try. It is a very good scene if
all the aspects are appropriately studied and the challenges of safety, infrastructure, government involvement, environment and the basic ethics of commitment to the passengers are considered.

The companies start off with one aircraft in operation and schedules and gateways more than their capacities, which push the aircrafts to fly without the minimum requirements of preventive maintenance. With the dawn of the New Year, the recent blow to the industry from MENA region has been the reason for the closure of one of the private aircraft companies based in Bahrain; however newcomers in the industry still want to start new airlines to get the maximum return for their investment.

The survival of such smaller companies are yet to be assessed as number of major airlines have declared bankruptcy and have either ceased operations, or reorganized under bankruptcy protection. Airline companies, like any business, are susceptible to market fluctuations and economic difficulties.

The economic structure of the airline industry may contribute to airline bankruptcies as well. The recent strategy of airline companies are to attract passengers by offering cheap fares and the questions remains can they afford to offer it, and if not why are they coming out such unhealthy business strategies which pushes them to close down their companies. When an airline company suddenly ceases business, there will be more chaos at airports since passengers are not intimated and many inconvenienced passengers have to rebook, repurchase and sometime reroute and go through all the difficulties that they have already done once.

Waiting for their refunds for indefinite period to the limited income passenger is also a double burden on their pockets and there is no assurance from the concerned airline in such a scenario. There is also the likelihood that many passengers may not get seats on other carriers if it is for a short holiday and finally, end up as a total disaster of their travel plans. Who should be held responsible for such negligent approach of an airline – this is the frequent question always raised by the passengers.

“Who will bell the cat?” When reacting to a complete halt in flight operations of a beleaguered airline, the passengers can only vent out their feelings at various social networking platforms as no proper guidelines are given by an airline to passengers even after putting them in a volatile situation. One of the burning questions from the year’s bankruptcies is: Why do consumers get dumped? Most of the airlines gave absolutely no notice of their demise and passengers were stranded.

No one seems to take responsibility when there is a collapse. The cessation of business is one side of the coin and the other is the laid-back attitude of the currently operating airline companies due to their deteriorating culture; don’t guarantee their schedules, prices or routes to assist the passenger plan a trip well in advance. Flight cancellations have become so unpredictable and ongoing, due to various reasons from technical to security reasons but the end result is that the passengers have to pay for it.

All this is having a huge impact on customer confidence. At this point the Governments or any of its appointed agencies should step in with stiff regulations to check the airline flight schedules adherence, if they falter, warnings to be given to the concerned airline and only a certain number of cancelations to be permitted of which a record to be maintained, the cancelation of the AOC certificate should be one of the penalty if the track record is poor.

This will definitely ensure the passengers to have an airline with punctual flying standards as the airline companies will take utmost care to maintain their schedules without interruption since an AOC certificate is at stake here. Most of the increase in airline prices has been due to higher fuel prices or government taxes. Those have been drivers of higher ticket prices for
consumers. Consolidation in the airline industry is not new, and airlines have come a long way since they have realized that rather than starting new airlines, mergers always keeps them in one platform to economize their operations.

Many people assume a merger like this means higher ticket prices but the reality is that the consolidated airline has a monopoly as the competition is reduced. Moreover, the airline will be in a position to make improvements in terms of equipment and aircraft and schedules and destinations which always benefits the passengers. Therefore, Governments should give preference to merger process which will have a good impact to the aviation safety and the levels of maintaining the commitments to passengers as naturally; they are big in size once a merger takes place rather than single owned aircraft company who has no such infrastructure for meeting the challenges from time to time.

The next step is that Airlines should have developed the Airline Passenger Service Commitment following consultation with representatives of Air Travelers. It describes the level of service air travelers may expect consistently from signatory airlines. It will enable air travelers to make a more informed choice of airline when planning their travel arrangements.

They will endeavour to achieve the standards set out in this Airline Passenger Service Commitment on a consistent basis. Each airline should also notify passengers that in the event of closing down the company or operations, what would be the next steps to follow passengers to rebook their seats/reimbursement of the cost of tickets which should also cover in the passenger service commitment and the concerned Governments should be strict with them for implementing such service commitment rules before the launching of an airline.

Finally, when new airlines start, surely airline regulators need to ensure that they have sufficient capital to survive. Airlines and passengers are always having a symbolic relationship. Airlines throughout the world strive to provide the best level of service and facilities that enable passengers to enjoy it in an increasingly competitive environment and the passengers always looking towards it with a competitive cost. Through innovation, and outof-the-box thinking, aviation industry will continue to meet its eco-efficiency goals, and ensure that air travel continues to be one of the safest, and most eco-efficient, means of transportation. Even a few decades from now, the world will be very different from today.

Our lives and travel needs will have changed and, because the global population will increase, looking after the planet will be even more important than ever. So what will this world look like? How will we get around? And how will we take care of the environment?

The world will be very different in many ways by 2050, but one thing will not change. We will still need great people to make it even better! And, aircrafts need passengers however the state-ofart techniques on it. In brief, airlines v/s passengers – can this marriage be made more interesting and saved for a long run?

Moreover, will it be possible to have a strict adherence towards starting new airline companies to make sure the passengers safety and reliability of the so called airline and especially to the travel agents who are the middle men between passenger and the airline, suffering both financially and facing humiliation from passengers due to the unprofessional approach of airlines when closing down their companies without giving proper information/time-frame to the travel agents to protect the passengers from these sorts of untimely decisions from the demised airline companies.

By P.N.J. Kumar,
CEO, Caesars Travel Group

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