‘301 airline failures’ and counting… but the industry has learnt to quickly recover
In the first week of Oct-2018, Robert Martin, managing director and chief executive officer, BOC Aviation, revealed at the CAPA – Centre for Aviation Low Cost Long Haul Global Summit in Seville that this decade alone there have been ‘301 airline failures’. Just a couple of weeks along and we can add Cypriot carrier Cobalt Air and UK charter operator Cello Aviation to that list and there are numerous rumours that many other operators are on the brink of collapse.
That number is rather alarming and equates to more than two airline failures per month during the 2010s. However, Mr Martin notes that many of these would have escaped widespread media attention. Adding context to the numbers, he highlighted that most of these were operators that were unable to reach a level of critical mass and many only had small aircraft fleets. “Around 90% didn’t hit the point of critical mass,” he stated.
We are currently at two of the big windows for collapses with February and October/November the most likely times that an airline will fail, according to the executive. “We tend to watch those periods very, very carefully,” he explained. “We also watch, in particular, the liability side of the balance sheets. That’s the crucial part. Airlines don’t tend to fall over due to lack of revenue. They fall over because they can’t meet their liabilities.”
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