The Travel Advisor: Airlines that disappear in the night

The airline has been throwing cheap fares onto the market, making it possible to fly between continents for very little money.

By
April 21, 2019 12:57
british airways

A BRITISH AIRWAYS flight lands at Heathrow Airport. (photo credit: AMY SPIRO)

 
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Those who follow the Israeli political scene will notice an eerie similarity to the airline industry. There are stalwart political parties that have been in the forefront since the creation of Israel in 1948. Their names may have changed, their ideology certainly has shifted, but the two major parties since then have been the Likud and Labor parties. For the first 19 years, Labor – under a variety of names – remained in power, until Menachem Begin and his Likud upset the balance in 1977.

It’s the fringe parties, those usurpers of tradition, just like those airlines that promise lower fares and better service, which interest me. It was in 1977 that Dash, the Democratic Movement for Changes, founded by famed archaeologist Yigal Yadin, was created, assisting Mr. Begin with his revolution. Dash won 15 seats, making it the third largest party after Likud and Labor. It lasted a whopping three years before disbanding.

In the airline industry, while British Airways was monopolizing the UK-to-US skies, Sir Freddie Laker came on the scene. Laker pioneered cheap air travel with his Skytrain Airlines to the United States in 1977. His first London to New York flight was one-third the cost of established carriers. The flying public loved the airline and had no idea if his business model could be sustained. Rivals actively worked to put him out of business. Surprise! They succeeded.

In February 1982, Laker Airways and Skytrain collapsed. Interestingly, the liquidators brought an anti-trust action against 10 major airlines, seeking billions in damages. Sir Freddie was awarded six million pounds, the flying public, zilch.

The Dash debacle did not put an end to Israeli fringe parties. If anything, it accelerated the ego of politicians who were certain only they and their parties would revolutionize the Israeli voting public. Moshe Dayan felt slighted by the Labor Party, and in 1981 formed Telem, along with two former Members of Knesset from Likud. Telem lasted two whole years before disbanding.

In the airline word, few airlines went belly up in the ‘80s, as very few start-ups were created. In fact, it wasn’t until 1991 that the largest US carrier, Pan American Airlines, finally called it quits. Its bloated schedule, its exuberance and fine dining, along with its other pricey elements were shattered after the 1973 oil crisis, brought on by the Yom Kippur War. By 1978, it flew to just 65 airports, and lumbered on for another decade or so before declaring bankruptcy in 1991.

In the Israeli political scene, hope was pinned on the Third Way, a breakaway party from Labor that formed in 1996 in opposition to withdrawing from the Golan Heights. Their four MKs kept the Golan in Israeli hands, and by the next election they were history. No surprise to Third Way historians: The Golan is still in Israel.

Remember Gesher, created by David Levy in 1996 as a breakaway from the Likud? Angered with Benjamin Netanyahu’s management tactics, Levy believed he could orchestrate a mass defection of Likud MKs. The voting public put into the Knesset five members of the party, which managed to sputter on until 2007, when it too was dissolved.

What goes around comes around, and last year it was resurrected by Levy’s daughter, Orly Levy-Abekasis. The party’s ideology was focused primarily on economic and cost-of-living issues, and aimed to reduce inequality. The voting public didn’t seem quite so concerned, and now Levy-Abekasis remains known for being a former MK.

The airline business is no less forgiving. US President Donald Trump, with his vast business acumen, tried starting an airline called the Trump Shuttle. Launched in 1989 in typical Trump style, the pledge was made to create the best transportation system of any kind in the world. He snapped up a fleet of old Boeing 727’s from an existing airline, along with many of its disgruntled staff, and launched flights from New York to Boston and Washington.

FANCY TRUMP-inspired features such as chrome seat belts and faux-marble bathrooms were added to the planes, courtesy of large loans from US banks. Despite grabbing a decent market share, the airline could not thrive in a tricky economic climate while saddled with so much debt. It never turned a profit, and in September 1990, the loans went into default and ownership of the airline passed to the banks, which sold the planes to another airline, thus ending the saga of Trump Shuttle. Trump himself insists he made money on the airline.

When Dash disintegrated, some former members broke away to create Shinui, which means “change” in Hebrew. Barely able to elect two or three Members of Knesset, its fringe status was altered when former TV celebrity Tommy Lapid took it over prior to the 1999 elections.

The silver-tongued speaker employed fierce rhetoric in railing against religious coercion, and his message resonated with the voting public. Shinui won six seats, and by 2003, the party held 15 seats, making it the third largest in the Knesset. Just three years later, Lapid left the party and in the next election could barely muster two MKs. No slate was offered in the election that followed.

The first few years of that decade saw many established airlines going out of business. Huge labor issues, high fuel costs and atrocious management helped such large airlines such as TWA, SWISSAIR and SABENA go out of business. And like most airlines that go bankrupt, the big loser – after the employees – was the public. Very few passengers who had tickets on those airlines were reimbursed. Only a few travel agencies stood up for their passengers and gave them full refunds. The other agencies simply let their clients flounder.

In 2012, Tommy Lapid’s son, Yair, formed Yesh Atid, a secularist, centrist, liberal-Zionist party that won 19 seats in the 2013 election, making it the second-largest party, eclipsing Labor. But it fell to 11 seats in 2015. Now merged with the newest flavor of the month, Blue and White snagged an impressive 35 seats in the recent Knesset election. Has Labor finally been relegated to the fringes of Israeli society? Time will tell. The patchwork quilt of Blue and White politicians will soon be tested.

In the airline industry, the last 15 years saw legacy carriers maintain their existence among a preponderance of small carriers, which capture the public’s imagination before disappearing into the void after taking millions of dollars from clients’ pocketbooks.


Europe seems to attract the majority of these airlines, and whether or not journalists enjoy writing about David vs. Goliath airlines, the disservice done to the consumer is vast. Monarch Air ceased flying in 2017. Until its collapse, Monarch served 43 destinations with a fleet of 35 aircraft. It flew 5.43 million passengers and employed 2,300 people in 2016.

Just one week after the collapse of Monarch, Air Berlin, Germany’s second-largest carrier and Europe’s 10th biggest overall (it flew 28.9 million passengers in 2016), announced its closure. It had declared bankruptcy two months earlier, following years of losses and a decision by its biggest shareholder, Etihad, to cease bankrolling it.   

ANOTHER UK carrier, East Midlands-based Flybmi, ceased trading in February, leaving thousands stranded abroad and ruining the holiday plans of many more. The airline’s fleet of 17 aircraft flew 522,000 passengers to 25 European cities in 2018. It blamed the collapse on fuel prices and “Brexit uncertainty,” but it was simply unable to compete in a saturated market.

Air Berlin’s demise brought about another Berlin airline, Germania. It began by focusing on charter operations, then moved toward becoming a scheduled carrier. The change in strategy led to growth over its last few years, and Germania has flown to destinations in Europe, North Africa and the Middle East from several German bases. It carried 2.5 million passengers in 2009, and had around 850 employees as of summer 2014.

Then, on February 4th, 2019, Germania declared bankruptcy, and ceased operations the very next day. Consumers, as they did with every other failed airline, saw whatever money they paid for unused tickets go up in smoke.

I have never understood the allure of third parties in the political system. Growing up in the US, I observed up close how a Ross Perot could mesmerize the voting public with the idea that his party could shake up the existing Democratic and Republican parties. Raised to believe in the big-tent idea that a party’s ideology should be broad enough to house a variety of opinions, I’ve always been wary of newcomers who tell me they will reinvent the wheel.

Take Wow Air, an Icelandic ultra-low-cost carrier founded in 2011 that operated services between Iceland, Europe, Asia and North America. Headquartered in Reykjavik, the press couldn’t stop fawning about the airline and its entertaining entrepreneur, Skúli Mogensen. Sure, reports came out that Wow Air was creating fake news when its claims of super-low fares could not be found on its website. Nonetheless, the “If it’s too good to be true, it probably isn’t” adage fell by the wayside after Wow Air served more than 1.6 million passengers.

It ceased operations in March of this year.

So who’s next on the horizon? Which airlines should you avoid no matter how cheap their fares are? Here are two airlines on which I beseech you not to risk your money: Jet Airways and Norwegian Air. I’m not saying they deserve to go bust, but simply feel the odds of their continued existence are too high.

India-based Jet Airways has already canceled most of its flights as they furtively seek some salvation. Some of its aircraft have already been seized as creditors demand restitution. Management is waiting for serious bidders. I wish them great luck but will not put any of my clients on their planes.

Norwegian has shaken up the long-haul market by offering flights at knockdown prices, with some of its most popular deals, including £99 trips from Edinburgh and Dublin to New York. But it has struggled to contain costs amid a rapid expansion, and had around £2 billion of net debt at the end of last year. Norwegian has already sold off five of its Airbus aircraft and will reduce its schedule as it increases the actual flying time of the remaining fleet. This measure has calmed the mood of investors a bit, though it might not be enough to return Norwegian to good fortunes.

The airline has been throwing cheap fares onto the market, making it possible to fly between continents for very little money. But given how cheap economy-class travel is these days, even on legacy airlines, I’d probably refrain from locking myself into a long-term plan with Norwegian. Why take the risk, worry and potential hassle?
There are very few steps to protect yourself but taking these steps should help you.

1. Buy tickets using a credit card that gives you full protection if you don’t receive the purchased goods or services.
2. Take out travel insurance that covers airline failure.
3. Keep informed.
4. Have a backup plan.
Just remember: If something looks too good to be true, it probably isn’t.

Mark Feldman is the CEO of Ziontours, Jerusalem. Email to Mark.feldman@ziontours.co.il.

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