Despite announcing record profits a couple of weeks ago, I am wondering how the price of fuel/oil and the effects of the on-going global credit crunch could affect British Airways (BA) financially in the future, especially with what seems to be an ever-increasing number of airlines that have already declared bankruptcy or are currently facing financial difficulty.
In case anyone was not already aware, BA have increased their fuel surcharges on all flights yet again, even though the last increase happened in April…!
From TravelMole:
The surcharge for short haul flights will go up by £3 per flight (£6 return) from £13 per flight (£26 return) to £16 per flight (£32 return).
The fee for long haul flights of less than nine hours will increase by £15 per flight from £63 per flight (£126 return) to £78 per flight (£156 return)
The surcharge for long haul flights of more than nine hours will rise by £30 per flight from £79 per flight (£158 return) to £109 per flight (£218).
With this is mind, I am wondering whether BA could ever go bust/bankrupt, or would the UK Government decide to come to its rescue if they were to find themselves in any sort of financial difficulty, especially as they are seen by many as the national carrier?
Any thoughts or opinions, please post below.
By: zoot horn rollo - 5th June 2008 at 17:51
Interestingly, this wasn’t the view at the last ICAO meeting I attended where somebody from their regulation department came along and expressed the view that the question of airline share ownership was a real problem on bilateral agreements where named airlines are still specified.
As I said above it is less of a problem with Open Skies agreements and within the EU, but there are still a large number of bilateral agreements around.
By: OneLeft - 5th June 2008 at 17:04
what would happen to BA’s flag carrier status
As has previously been discussed somewhere on this forum, and despite Sir RB’s claim on his aircraft, there is in fact no such thing as a flag carrier.
At one time the government would decide which airline, generally Imperial Airways which shows how far back we are going, would ‘carry the flag’ or represent the country on a given route. British Airways and its predecessors were generally considered to be THE flag carrier as they were the biggest airline and carried the most flags as it were.
The concept is long outdated and was abandoned many years ago.
1L.
By: zoot horn rollo - 5th June 2008 at 16:49
An interesting scenario is what would happen to BA’s flag carrier status if they did go bust (or even worse if more than 50% of their shares were owned by people/organisations overseas). OK, bilateral agreements are less important than they were but the idea of an airline being a country’s flag carrier still carries kudos.
By: swerve - 5th June 2008 at 16:17
…
There is another question that the current climate in aviation makes me ponder. Do you think we are heading back to the days when the cost of an airline ticket will have to truly reflect the costs involved? Could the end be in sight for ’99p plus taxes’ fares?1L.
I think that depends on whether you mean total price charged, or headline fare. Expect “99p plus taxes, luggage charge, check-in charge, boarding charge, toilet charge, aisle seat charge, window seat charge, bus fare from terminal to plane. Have a nice flight.” :diablo:
By: bring_it_on - 1st June 2008 at 20:43
Ofcourse BA (any airline for that matter) can go bust , Bad managment , coupled with a slow down in global airline travel can cause havoc , and factor in high oil prices and you have the catalyst required right their. However BA is one of the premium airlines along with SQ , LH , QA , etc etc , they have excellent slots @ some of the most busy airports around the world , aslong as they cater well to their customer base they will reap good benefits.
By: nordjet415 - 1st June 2008 at 19:29
Any airline could go bust in the current climate, however, I feel B.A. are in a stronger position than most purely because they keep costs and waste as low as possible, scrap unprofitable routes, they are better run than stuggling airlines like Alitalia, Olympic and many more.
In the current climate, and if oil prices surge to $200 a barrell as some predict, then only the strong airlines will survive, B.A. being one of them, I can see alot of the low cost airlines going though.
By: Ren Frew - 30th May 2008 at 22:10
Do you think we are heading back to the days when the cost of an airline ticket will have to truly reflect the costs involved? Could the end be in sight for ’99p plus taxes’ fares?
In a word ‘YES’.
Not just because of the ongoing global recession, but also because the novelty factor of that sort of pricing is well worn out, and I think that people are getting fed up with having to take the time to downsize a booking to reflect the advertised price.
By: Newforest - 30th May 2008 at 17:35
There is another question that the current climate in aviation makes me ponder. Do you think we are heading back to the days when the cost of an airline ticket will have to truly reflect the costs involved? Could the end be in sight for ’99p plus taxes’ fares?
1L.
I see this year or maybe last year even as the apogee of the LCC’s if the gas speculators continue their market shenanigans. Even if world markets do go into a slight recession, the explosive expansion of India and China are going to continue. I flew ten times last year, this year I have yet to fly. The train and bicycle are my friends.
By: OneLeft - 30th May 2008 at 14:43
Could BA go bust? Of course. Would the government step in? I would think not, but they have come to the rescue of companies in the past that I would not have expected them to.
There is another question that the current climate in aviation makes me ponder. Do you think we are heading back to the days when the cost of an airline ticket will have to truly reflect the costs involved? Could the end be in sight for ’99p plus taxes’ fares?
1L.
By: Distiller - 30th May 2008 at 14:33
I guess only in case the travel culture undergoes cataclysmic changes.
Basically if the lack of resources cause society to go back to pre-mass-society state.
Chapter 11 is nothing but communism (talking about US), obstructing the survival of the, well, fittest. The same people who stress free markets when the going is good, cry for tax money if things look bleak.
But Lufthansa, Air France and British will probably survive (talking about EU), even if they might look more pre-widebody and pre-tourist-class.
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May 30, 2008 at 2:26 pm