Noticias

Aviation experts ensure that the rise in oil prices along with the payment of compensations for cancellation or delay could cause the bankruptcy of more airlines. 

In the recent months, the airline sector is living a critical situation with the bankrupt of several airlines such as the Danish company First, the Cypriot company Cobalt Air or the Swiss SkyWork.

In one of the presentations developed within the World Travel Market, held in London on November 5, 6 and 7, JL Consulting Aviation expert John Strickland not only confirmed this situation, but assured that in the coming years more airlines could go bankrupt because of the price of fuel and the payment of compensation for cancellation and delay.

In the last 12 months, the fuel’s price has increased a 40%, reaching a cost of 69€ per barrel from 26€ it cost in 2016. This situation has led airlines to take measures, like the company VLM, which has ceased operations during this year.

On the other hand, the second cause of concern for the Airlines is the one referring to the payment of compensation. Due to the entry into force of regulation EU261, the European Union obliges airlines to pay for delayed and canceled flights.

In this context, Strickland comments that "some airlines, particularly regional airlines, have found themselves on the edge of the abyss because of the amount of compensation they have to pay", and that "a law that made sense to protect consumers" is having the opposite effect because "it leads to a decrease in competition if the airlines go bankrupt or decide not to operate some routes".

Finally, Strickland has concluded his intervention with the evolution of Midwest airlines, predicting that Emirates will continue as leader, followed by Etiah and Qatar Airways, warning at the same time, that "second level" airlines of the Midwest will have to face greater difficulties in the future than the previous three.