One of the more heartwarming things to watch, as the world grapples with the global health crisis has been seeing airline staff, from pilots to baggage handlers and crew showing each other a sense of unity. Social media posts displaying the tails of all traditionally competing regional airlines are everywhere, and the message is clear: it doesn’t matter which airline you work for, we’re all in this together.
And then you have the airline bosses, working tirelessly to bankrupt rival airlines and eliminate competition in the worlds greatest time of need…
Airline executives are using potential bailouts and government help discussions as an opportunity to put large work forces out of business entirely, and while we live in a cutthroat world, it’s disgusting to watch just how manipulative its all become.
The Alligator Approach
Airlines need money now, as cash flows in the wrong direction like Iguazu Falls, with no sign of imminent change.
It’s so bad, even those in the most advantageous positions are calling for employee layoffs and proclaiming this the greatest fight for survival in their company history. Everyone is taking massive cost reductions and unprecedented measures, just to stay afloat.
But that doesn’t mean these airlines are banding together to keep the world as it was before covid-19, at least not in the board rooms.
Naturally, some airlines need cash injection sooner than others, and anything short of government action could mean imminent collapse. Seeing this opportunity, airlines in slightly stronger positions are purposefully stalling government action, or actively lobbying against it in hopes of killing off pesky airline competition, for once and for all.
Like an alligator trying to kill a sizable foe, these airlines are hoping to drag the fight underwater, with the hope that their competitors will run out of air before they do, or before a government can act.
It turns out, many legacy airlines haven’t enjoyed competing on price, or needing to invest in new seats, technology and other consumer friendly bits in recent years; and while airline employees around the world unite, airline leaders are squaring off in their greatest fight.
Under boom market times, it seems fair enough to try and proverbially slit the throat of an airline competitor, but as the world and its economies grapple with the greatest human crisis since WWII, it seems like an awful time to try and put people out of work.
Virgin Vs The World
In Australia, Qantas is actively lobbying the government to let Virgin Australia die, and leave its employees jobless. Alan Joyce went as far as to remark, in regards to potential Virgin Australia assistance from the Australian Government…
“It would be completely unfair to our sector. We’d be competing against the Australian government. Qantas couldn’t do that, it would be an unbalanced, uncompetitive environment.”
The idea of boosting Qantas’ only airline competition being an “uncompetitive” move is a classic of historic proportion, since it would leave Qantas with a monopoly on flight routes both domestic and international in Australia, if Virgin Australia were to fold.
Of course, there’s also no guarantee that if this global crisis were to drag on, that Qantas would be able to survive without a bailout, which would add ultimate irony. If the government were to refuse a Virgin Australia bailout, but then give one to Qantas months down the road… wow, just wow.
In the UK, the same fight is waging between the IAG Group, parent company to Iberia and British Airways and Virgin Atlantic. Virgin Atlantic made clear wishes for government assistance to help the entire aviation sector weather the current climate, and British Airways made clear if it does happen, they want in on the money – but they don’t want it to happen.
British Airways desperately wants Virgin Atlantic, and all of its workforce out of business, so that it can then enjoy a similar uncompetitive monopoly in the UK, virtually identical to what Qantas is seeking in Australia.
It’s worth noting that both Iberia and British Airways are among the five worst offenders in trying to deny customers legally due refunds during this time of flight cancellation.
EasyJet’s ownership incompetence stalled what was believed to be an imminent airline stimulus in the UK, but its understood among those privy to the discussions that British Airways and IAG are taking every possible measure to drag their feet and prevent near term relief from being granted.
Don’t We Need Competition?
Bailouts are not amusing to anyone, and shouldn’t ever be taken lightly. In many cases, a case could be made that airlines did not plan for a rainy day, or save appropriately and the best airline should win. The market likes rampant, wild investment and finds holding cash to be a waste of resources.
Doing things like responsibly holding cash is how a CEO gets fired by the board, as investors and market speculators lose excitement.
But at the same time, no one except a brilliant doctor in Wuhan saw the full effects of Covid-19 coming, and these are absolutely unprecedented times. The world was just beginning to witness the fruits of competition, with ultra low fares all over the globe, better seats or experiences in every cabin and more direct flights to the places they want to go.
Letting airlines which were succeeding fail, in places where robust competition doesn’t exist would set the aviation industry back decades, and almost assuredly bring a rise to airfare prices and a slow down in innovation.
And above all else, at a time when people around the world are helping neighbors and lending a hand to keep people safe, doesn’t it feel a little dirty to put peoples livelihoods in jeopardy, for a few extra jolts into the ole’ stock price?
“ Letting airlines which were succeeding fail, in places where robust competition doesn’t exist would set the aviation industry back decades, and almost assuredly bring a rise to airfare prices and a slow down in innovation.”
This.
UK aviation without Virgin would not be an “uncompetitive monopoly”. Very few other major hub has a second hub carrier. Amsterdam doesn’t have one, Paris doesn’t need have, Frankfurt doesn’t have one… would you call these airports “uncompetitive monopolies”? Without Virgin, BA would still be competing against many many other airlines.
BA: the shareholder focused airline, profiting from your misery. By design (but their marketing is quite good)
Paris, Amsterdam & Frankfurt are home to carriers that have maintained basic standards and invested in infrastructure appropriate to their scale. BA has not.