Yet another airline decided to shut down. Skybus, headquartered in Columbus, OH, is ceasing all operations today. Let’s review:
March 31: Aloha Airlines ceases passenger operations after 61 years of operation
April 2: American Trans Air (ATA) ceases operations after 35 years of operation
April 5: Skybus Airlines ceased operations after less than 1 year of operation
Can anyone remember another single week when three U.S. scheduled passenger airlines actually ceased operations? There have been multiple bankruptcies in a week, but I don’t think there’s ever been a single week with three shutdowns.
It’s a sad and challenging time to be in this business…
V-
Airline industry net loss
The airline business seems to be a strange one. From the numbers I have seen, if you add up all of the profits and losses of all airlines from the time the industry started, there is a large net loss.
I have an interest in aviation and I considered becoming a pilot at one time, although not a professional pilot. However, I would certainly not want to invest in the industry.
Do you have any insight as to why this is?
Re: Airline industry net loss
The saying goes, to make a small fortune in the airline business, start with a large one. I think that there is some element of glamor about the airline business which attracts people to it. That includes business people and investors. They make irrational choices based on the notion that they can attract more passengers than they really can, or that they can keep costs lower than they really can. Rarely does anyone enter the business with a truly sustainable model designed around consistent profitability. And when there is a profit (which there sometimes is), they don’t seem to handle it responsibly.
If you look at airlines that are managed in a way that a good non-airline business would be managed (deploy your capital profitably, treat your employees with respect, consistently trim unprofitable operations), then you’ll see a more profitable enterprise. Southwest has mostly operated that way. Continental after Lorenzo has done a reasonably good job operating that way (they and American were the only legacy carriers to avoid bankruptcy post-9/11). And that’s about it…
So I guess the short answer is, irrational decision making…
V-
I’m just glad Alaska Air hasn’t added itself to that list!
Me too!!!