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64 airlines financially ‘crash and burn’ during pandemic

2023 was supposed to be the year that travel finally returns to normal after three years of the industry being on its knees. However, the airline bankruptcies and increase in prices have made it challenging for travellers to plan their trips.

Locally, Thai Airways has been grounded, let loose from Thai government ownership, rebooted, rerouted and, currently, battling its way out of bankruptcy.

The average economy fares for 2023 have already increased by 36%, according to UK-based booking agency Flight Centre. Some destinations are nearly impossible to visit on a budget, with fares to far-flung countries like New Zealand increasing by 81% and to South Africa from the UK increasing by 42% in economy and 70% in business.

The reasons for these increases vary, but the global bookings for the first quarter of 2023 are still down by 22% compared to 2019, according to ForwardKeys. The Caribbean has suffered the least, with only a 3% decrease in bookings, while Asia Pacific continues to lag behind with a 46% decrease.

The issue of airline failures is not new, as starting an airline has always been a high-risk business with a challenging business model. The pandemic has, however, been more damaging to the aviation sector than previous recessions, wars or terrorist incidents.

According to AllPlane.tv, 64 airlines have ceased operations since 2020, and only a handful have revived after announcing bankruptcy or changing names. Alitalia, Italy’s former national airline, and Air Namibia are among the big names that have gone under.

Other airlines that have either gone out of business, or currently in a state of legal bankruptcy include Flybe, Trans State Airlines, Compass Airlines, City Jet, Air Mauritius, German Airways, TAME, LATAM, Level Europe, One Airlines, NokScoot, South African Airways, Island Express Air, Philippine Airlines, Miami Air International, Cathay Dragon. There are plenty of others.

The founder and editor of AllPlane, Miquel Ros, believes that the pandemic has been more of a jolt to the industry that finally made already struggling engines cut out. He explains that the pandemic prompted many airlines in a delicate financial situation to give up and that most of the airlines that failed in 2020 were likely to have gone out of business anyway, just a bit later.

Murdo Morrison, head of strategic content at FlightGlobal, finds it counterintuitive that more airlines didn’t collapse during the pandemic. He believes that most airlines were saved from destruction by governments who put their airline industries into hibernation and paid their fixed costs and most of the wage bill.

He also mentions that there have been a lot of launches in the past three years, but the biggest problem has been the recovery, with airlines and airports struggling to cope with the bounce-back in passenger numbers.

Thailand’s long-haul tourist traffic has certainly dropped off compared to demand in the last full year of tourism before the Covid pandemic. Singapore, India and Malaysia have been a big part of the reboot of Thailand’s tourism traffic over the past 6 months. Russia, for completely separate reasons, is currently Thailand’s strongest tourist performer but there are multiple questions over the safety and maintenance of the aircraft flying in and out of Russia at this time, and the fares being demanded are much higher that they were in the past.

The travel industry is still facing many challenges in 2023, with airline bankruptcies and increased prices making it difficult for travelers to plan their trips. While the issue of airline failures is not new, the pandemic has had a significant impact on the aviation sector.

The past three years have seen a decline in global bookings, with the Caribbean being the least affected, and Asia Pacific lagging behind. Despite the challenges, the head of strategic content at FlightGlobal is cautiously optimistic about the summer season being extremely busy.

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