Air tickets prices should begin to decline in the near future due to the global financial crisis, industry experts are predicting, adding that the fall in prices should not endanger the financial stability of the airlines.
Airfare sales are coming at us from every which way. Virgin America has discount fares starting at $159 round-trip (including tax) this month between Los Angeles (LAX) and Seattle (SEA). A United Airlines sale brought up competitive fares to Austin, Texas, and elsewhere, but if you’re headed to New York (JFK) from LAX, try American Airlines, where you can score a return fare of just under $300 this month.
Apart from big airlines, low cost carriers are also learning to believe the fact that if they keep airline tickets prices too high than they are going to lose more passengers. Recent press release from European low-cost carrier Ryanair suggests that average airline tickets prices will come down by 15-20 per cent by the end of March 2009. Ryanair further added that airline will continue to attract customers from more conventional carriers, such as British Airways.
Today, the majority of airlines set prices using the yield management system, which involves computer adjustments of pricing on a daily basis, related to demand. Prices start at relatively low levels and rise as a flight fills – or drop if it doesn’t.
Very few airlines have adopted aggressive pricing strategies, as they work on recovering from the record high price of fuel earlier in the year that led to add fuel surcharges on to ticket prices.
The collapse of XL Leisure Group, Britain’s third-biggest holiday company, has hit more than 300,000 customers
On Thursday night XL Airways flight JN1121 pushed back from the terminal at Sanford International, the Orlando airport that is the gateway to Florida for thousands of British holidaymakers every year.
For the 266 passengers on board it was the end of all inclusive holidays– two weeks spent basking on the beach or squealing with delight on the rides at Disneyland.
A massive airlift was under way to bring some of the 85,000 tourists who were caught out by the shut-down of Britain’s third largest tour operator. Those who opted for Tour Operators like Directline Holidays were feeling safe as their cheap holidays as promised to them were cheap indeed as ever. Many holidaymakers came to know about the truth behind true discount holidays.
This morning, passengers flew into Gatwick Airport on a specially-chartered Monarch Airlines flight from Sharm El Sheikh in Egypt, and spoke of their joy at getting home. Alison Hill, 37, said she was left in tears as she worried she would not be able to find a flight back to the UK.
Ms Hill, from Redditch, Worcestershire, who spent 10 days in the resort with her two-year-old son, Samuel, said she found out that XL had gone into administration as she lay in bed in her hotel room watching the news.
She said: “No one actually told me, I had to find it out for myself. I spent the whole day in tears in reception with a very unhappy two-year-old, wondering if I was ever going to get home. A woman staying in the same hotel as me went to the airport and she found out from Thomson about this flight.
“We were meant to leave at 11pm last night and ended up getting this flight at 3.30am this morning, so you could say we were one of the lucky ones. There was another flight that was meant to go to Luton yesterday afternoon before ours, and they are still there.”
Ms Hill, a lawyer, added: “We had a fantastic holiday but the last day was ruined, which left a bitter taste in the mouth. It was all the worse as it was just the two of us, I thought I was going to be stranded in a foreign country with a two-year-old.”
Friends Kirsty Grant and Kelly Thompson, who were also on the Monarch flight, said they spent the last day of their holiday in a “mad panic.” Ms Grant, 20, said: “My mum sent me a text yesterday morning telling me I might have trouble getting home. We immediately went to find our rep but she couldn’t tell us anything; no one could tell us anything.
“We were all in a mad panic, as none of us had enough money to pay for extra accommodation if we had to stay longer. We went to the airport last night and waited there and then we were told about this flight.”
The women, both nursery nurses from Chessington, Surrey, said they were relieved to be home as they believed there were many other XL passengers still left in Sharm El Sheikh. Ms Thompson, 25, added: “It’s horrible thinking you’re stranded in a foreign country.”
The airlift operation is being supervised by the Civil Aviation Authority (CAA) but involves help from dozens of airlines and travel companies. XL Leisure Group went into administration in the early hours of Friday morning with debts of £143 million.
The CCA chartered seven flights from foreign destinations including Orlando, Florida; Dalaman, Turkey; and Malaga, Parma and Alicante, Spain. Other passengers travelled home on scheduled flights.
The collapse of XL has left tens of thousands of people stranded throughout Europe, the United States, the Caribbean and Africa. A further 200,000 planned holidays have been wrecked and 1,700 staff have lost their jobs.
There are growing fears the high price of fuel and the credit crunch will force dozens of other travel firms into liquidation. Some operators say the economic outlook is even worse than the aftermath of 9/11 in 2001.
Of the 85,000 stranded tourists, some 75,000 are protected by the industry’s Air Travel Organisers’ Licence (Atol) agreement and will be airlifted home free of charge.
However, another 10,000 will have to make their own arrangements – and at their own cost – because they are not covered under the rules of the agreement.
An Atol spokesman said many passengers were expected to be returning to the UK, both on specially chartered flights and on already scheduled flights that have spare seats on board.
British holidaymaker David Halligan landed at Manchester Airport this morning having spent £880 on new flights after he and his family were stranded in Florida. The 50-year-old engineer from Bradford spent £2,000 on a two-week XL villa holiday in the “sunshine state” for his family of four.
Mr Halligan found out about the firm’s collapse from friends in the UK. “We were rung early morning by friends saying XL had gone under so we proceeded to get ourselves sorted out. We got on the internet. We were lucky to be in a villa with internet access.”
He said he used contacts and took advantage of a friend’s frequent flyer status to get cheaper-than-normal Virgin flights.
Their XL flight was from Orlando Sanford International Airport but they had to travel 34 miles to Orlando International Airport to pick up their Virgin Atlantic flight.
Virgin Atlantic has said XL passengers who find themselves stuck at airports in Florida and the Caribbean will be offered special one-way fares to fly home until the end of September.
Peter Long, the chief executive of Thomson and First Choice owner TUI Travel, said the two firms would also joining the effort to help stranded passengers.
Phil Wyatt, chief executive of XL Leisure Group, described arranging flights to accommodate those affected as “the most challenging airlift that anyone has undertaken”.
In an emotional statement, Mr Wyatt said he was “devastated” at the company’s collapse and apologised to his customers and employees.
Speaking at a press conference at the Hilton Hotel at Gatwick Airport, XL’s chief executive said: “Ultimately I blame myself, I’m the CEO, I take legal responsibility for it.”
But he added that the withdrawal of support from lenders had left them with no option than to call in administrators.
Mr Wyatt said: “We have made every effort to refinance the principal debt of the group but, despite significant interest, the group was unsuccessful.
More recently, record oil prices and a worsening economic environment has meant our economic requirements have increased and our efforts have been overwhelmed.”
He expressed his “gratitude” to XL’s 1,700 staff, who will now face an uncertain future.
The collapse of XL Leisure Group prompted a prediction by Willie Walsh, British Airways chief executive, that another 30 airlines would go out of business within the next four months.
Administrators now have an uphill battle to save the profitable part of the firm. Stuart Mackellar, a partner at Kroll appointed as joint administrator, said: “We are not thinking about liquidation at the moment. We are thinking about a rescue plan for the survival of parts of the business.”
XL’s administrators said most people who booked holidays with the troubled tour operator should be eligible for a refund.
Those who paid by credit card or used a tour operator affiliated to the Atol scheme should get their money back.
Sri Lankan Government has pledged to pay for the air tickets of female workers returning home from Bahrain’s prisons. Migrant Workers Protection Society (MWPS) action committee head Marietta Dias said the vow was made to the society by Sri Lankan Foreign Ministry officials.
“We have spoken with the Sri Lankan Government and they have said they will arrange the air tickets for the repatriation of women in prison,” she told the SecondCity News Desk.
“They told us not to pay for any more air tickets and let them know if any new cases come up.”
Dias said the Sri Lankan Government had also agreed to fund the air tickets of runaway housemaids Ismail Nisvika, 26, and Chitra Kodikara, 35, who have been staying at the MWPS shelter for several months.
Dias said she had no idea why the Government suddenly decided to take financial responsibility for female prisoners, or how the plan would work.
But she welcomed the offer to improve the support available to the 12,000-strong Sri Lankan population in Bahrain.
“It is a step in the right direction because it is becoming too expensive for us to buy tickets for these people,” Dias said.
The Sri Lankan Embassy in Kuwait looks after the affairs of its citizens in Bahrain, although some visa and consular services are offered through honorary Consul-General P B Higgoda at the Sri Lanka Club.
Meanwhile, Dias said the number of housemaids of all nationalities running away from their sponsors was on the rise and called for the recruitment of highly-skilled workers.
“It is a fact that more are running away and we have noticed that,” she said.
“Many have never dealt with household gadgets and equipment and are not used to the size of the houses.
“It is unfair to the sponsors also, as they see that these people are not capable and there is also the language and cultural barrier,” she added.
Kingfisher Airlines is close to acquiring a controlling stake in another low-cost carrier SpiceJet.
The deal will value SpiceJet around $300 million dollars. It is likely to be a cash-and- share swap deal.
Mallya is likely to acquire 26% stake in SpiceJet, and make an open offer for an additional 20% stake. He is also likely to retain Spice as the low-cost carrier of Kingfisher Airlines
If the deal goes through, Mallya, through Kingfisher Airlines, Deccan and Spice, will control 40% market share beating Jet (along with Sahara), which has a market share of 33%.
It will also give Mallya the position to dominate fares in the marketplace. Currently, because of the low cost airline fares, Kingfisher and Jet are forced to sell tickets below cost.
SpiceJet is a fairly well run, lean operation with the smallest loss in the industry. Experts say it will give Kingfisher the right product in the low cost space. And, of course, access to trained manpower.
What may not work too well for the two airlines is the fact that they operate different fleets. Spice flies Boeing while Kingfisher is an Airbus customer. So, there are no clear synergies in operations. Analysts say if the two airlines continue to function separately, it will not pose a big challenge for Mallya.
If the deal does fructify, it could change the aviation landscape in the country and make the airline industry more viable.