TALES OF TWO AIRLINES

In my report I am going to discuss how two similar airlines with similar management and similar system ended up with one closing and the other one remaining successful even though it had more incidents and accidents through the years. The two airlines that I am going to talk about are the Monarch airline and the British Airways.

I believe that the theme I chose is particularly relevant and interesting for my degree because from the research I can learn how the airlines are managed and specially what in Monarch airline went wrong when the collapsed happened and how did United Kingdom managed with that situation as they had to bring back the passengers and regain financially and identifying the causes of the failure. The company became the biggest airline failure in the history of British aviation and left approximately 110,000 travellers stranded abroad. In contrast, British Airways is a successful airline and the largest airline in United Kingdom based on the fleet size or the second largest when measured by the number of passengers carried and also has been running from the past 100 years this year.

MONARCH AIRLINES

Monarch Airlines, also known as Monarch, was a British charter and scheduled airline founded by Bill Hodgson in 5 June 1967 and Don Peacock and financed by the Swiss Sergio Mantegazza family. The company later became a low-cost airline in 2004 before abandoning charter flying completely. The airline’s headquarters were at Luton, and it had operating bases at Birmingham, Leeds/Bradford, Gatwick and Manchester. The company held a United Kingdom Civil Aviation Authority (CAA) Type A Operating License, meaning it could carry passengers, cargo and mail on aircraft with 20 or more seats.

When Monarch entered administration in 2017, it was the biggest airline collapse in UK history, after 50 years of service leaving nearly 100,000 passengers and holidaymakers stranded. Monarch Airlines was one of the first established operators to respond to changes in travel trends and move to a more cost-conscious service model, with fewer frills or added extras.

HISTORY

Origins and success of the company

The Monarch airline began operating in early April 1968 inaugurating charters flights from Luton to Madrid. During 1969, it transported 250,000 passengers, operating with a fleet of six aircraft. It took delivery of its first Boeing jet 720 B and first jet service began 1971. By 1972 it was carrying no less than 500,000 passengers. The airline was really successful in 1980’s. During 1981 it transported over 1 million passengers. Succeeded by opening their offices in Gatwick, Manchester and Glasgow and in 1985 Airline acquires scheduled operating licences departing from Luton to Minorca named Monarch Crown services. During 1988 it carried no less than 2.5 million passengers.

Changes to operating model

In 2001 it launched its first tool for online booking without the need to book through a travel agent or to speak to a call centre. In the following years, Monarch Scheduled opens base at Gatwick and began to follow low-cost model by charging for food and drink and new bases were opened in Manchester and Birmingham becoming the second largest airline by passengers carried at Manchester Airport in 2005.

Finance

The owner of Monarch Airlines posted a loss for the first time in 2009. This necessitated the Mantegazza family to inject £45 million into the group. The injection of money also came with a strategy that saw Monarch Airlines changing its focus from being primarily a charter airline to becoming a predominantly “scheduled leisure airline”, with a target of 80% of its business being scheduled. Because of this loss the airline started investing heavily in services around the Mediterranean, including destinations in North Africa. This made a small profit of £1.4 million in 2010 but experienced a loss of £45 million at the end of next year because of the increasing price of the fuel and political turmoil in the Middle East. The airline announced that they were returned on profit in 2013 by continuing increasing aircraft. It received a funding injection from private investment company called Greybull Capital. So as a part of the deal, Monarch announced that it would downsize its fleet from 42 to 34 aircraft. In September of 2016, the airline received fresh investment and was awarded a renewal of its ATOL license. In addition, the carrier only avoided administration after Greybull pledged £165 million investment.

Despite

On October 2, the CAA announced that the airline had entered administration and was declared bankrupt. Passengers abroad were rescued 38 aircraft to rescue travellers abroad such as Qatar Airways, Titan Airways, Air Transat and many more. Unfortunately, collapsed in December 2017 after years of financial difficulty. From the fifth largest airline in the U.K., to the largest failure in U.K. history.

WHAT BROUGHT DOWN THE MONARCH AIRLINE?

The terror happened in Egypt, Turkey and Tunisia firms the travel effecting the economy as these destinations were heavily committed. “Airlines have seen terror attacks dry up demand for markets like Egypt and Turkey,” says Mr Strickland. This statement shows that the airline had to reduce prices for travel because of this terror attacks happened in most popular destinations and “That’s meant with overcapacity prices have come down, which has only worsened the situation in terms of Monarch’s own revenues,” This is why they try to move away from long-haul to short haul-flights to reduce their losses but they were unable to find a buyer for the short haul operations or assets which cause employments. However, in Tunisia the UK government banned airlines from flying there amid security concerns. One of the reasons was when the airline was trying to reinvent itself as a low-cost carrier adopted in 2004 without offering anything new in the market when there were already successful low-cost airlines, pushing Monarch into difficulty. The fall in the pound by 10% when the Brexit referendum began, and this was reason of increasing the airline’s fuel costs as lot of costs go out in dollars and euros. After years of financial difficulty Monarch collapsed.

BRITISH AIRWAYS

British airways, differently from the Monarch Airlines, is one of the most successful airlines with the longest carrier in United Kingdom. history. It flies to more than 200 destinations in 75 countries across the globe.

It was born in 1974 by the merged of two nationalised airline corporations British Overseas Airways Corporation, British European Airways and their associated company called Cambrian Airways, and Northeast Airlines. The headquartered is in Waterside, Harmondsworth. Their main hubs are Heathrow airport and Gatwick airport.

British Airways has created the International Airlines Group merged with Iberia in January 2011 becoming the second largest airline group in Europe and the world’s third-largest airline group in terms of annual revenue. It is also a founding member of the Oneworld airline alliance.

HISTORY OF BRITISH AIRWAYS

On 31 March 1974 British Airways was effectively establishing as an airline when the British Overseas Airways Corporation (BOAC) and British European Airways Corporation (BEA) managements were combined and the reasons why they made this decision was because of the difficulties in attempts by BOAC and BEA to negotiate air rights through the British colony of Cyprus.

Aerospatiale-BAC Concorde was the supersonic airliner operated by British Airways and Air France flew in January 1976 from London Heathrow to Bahrain for the first time but ceased in 2003 after the Air France Concorde crash in Paris and terrorist attack happened in 11/09/2001.

Sir John King was appointed Chairman charged to bringing the airline back into profitability as the airline was instructed to prepare for privatisation in 1981, succeeding it in February 1987 unlike the other large airlines which were struggling becoming the most profitable air carriers in the world and was also floated on the London Stock Exchange. In the same year in July, British Airways took over UK’s “second” airline called British Caledonia.

One of the biggest competitors of BA is Virgin Atlantic. BA management had to apologize to Virgin Atlantic paying £110,000 for damages, £500,000 to Branson personally and £3 million legal costs because BA had allegations of poaching Virgin Atlantic customers, tampering with private files belonging to Virgin and undermining Virgin’s reputation in the City.

During the early 90’s, British Airways became world’s most profitable airline.

BUSINESS TREND OF THE TWO UK AIRLINES.

Monarch airline

British Airways