In the age of low-cost travel, does the world still need national carriers? The new competition has been challenging the airlines, who have been forced to adapt to stay alive. One of the most prominent examples is British Airways. Their program of cost-cutting over the past few years has been come to known as “enhancements” by frequent fliers.
The Beginning Of Low Cost
Low-cost airlines really began to sweep across Europe in 1995. Ryanair had been around for around 10 years, and EasyJet had just launched. They mirrored the successful business model of Southwest Airlines in the United States. Clearly, something went right as Ryanair has grown into a huge airline. In fact, they are dwarfing competition from some of the traditional big players in the short-haul market. While this success has been healthy for the low-cost industry, it hasn’t been as good for the flag carriers.
The Impact To National Carriers
The national carriers have been greatly affected by the rise in low-cost carriers. They face all the same challenges as any other airline. When you think of Britain, its hard to think of something more British than British Airways. This is the same with flag carriers the world over. They are seen as patriotic to the country they serve. Now while this is great for the image of the airline, it doesn’t have quite the same effect on seat sales.
Lots of economy passengers these days don’t really mind how they get around. Take the flight from London to Frankfurt. It is no longer than a long distance train ride. Passengers don’t need the luxury that was offered by the national carriers. If you go away for a weekend you can make do with a carry on case. Additionally, passengers can survive without a cup of tea or coffee for the short flight. The reason that passengers are choosing this option though is that of the cost. A single fare from London to Frankfurt with Ryanair costs from £13. In contrast, the cheapest flight with British Airways costs £52, while German national carrier Lufthansa slightly more at £57.
Fairly Safe For Now
Although the contrary may appear likely, most of the well known national airlines are safe for now. Airlines such as British Airways and Lufthansa are running fairly well at the moment. Singapore Airlines, the flag carrier of Singapore, this year posted a profit of $654 million USD. This marks its highest profit in 7 years.
It is instead some of the less well-known flag carriers now that are at risk. Following the African domination of Ethiopian Airlines, South African Airlines has been seriously struggling. Following a loss of almost $380m USD in the last fiscal year, the government-owned airline is hoping a new CEO can come to the rescue.
With Emirates looking to take over struggling UAE flag carrier Etihad, it seems like the day of the government-owned flag carrier could be numbered. In contrast, carriers that have split from the government seem fairly safe. Do you think national carriers are still needed? Let us know in the comments!