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Analyst predicts US airline failure
The crisis in the US airline industry will lead to the collapse of a major carrier, a leading analyst has predicted.
The drop-off in traffic has seen US Airways and United Airlines announce plans to enter Chapter 11 bankruptcy and American Airlines will shed thousands of jobs.
Mark Riseley of research and advisory body GartnerG2 says the situation will get worse before it gets better and culminate in the collapse of a major airline.
“I think it’s inevitable that one of them will fail and be sold off,’ Riseley told TravelMole. They’re all just borrowing money to pay off debt and it’s a big problem.”
Riseley said the ‘hub and spoke’ model of US airlines, where flights go in and out of one main airport, was no longer working.
“The trouble with hub and spoke airlines is that they have a tendency to bloat and become inefficient. The workers have strong trade unions which create a restriction to change.
“Also airlines which can offer you direct flights without having to transfer are more attractive to customers.’
Riseley said that although the tragic events of September 11 had hit demand for airline travel, it was not the sole reason the carriers are in trouble.
“These airlines were in trouble before September 11 and now their problems have just become bigger. In the US there is still a reluctance to fly and for short distances people are driving or going by coach instead of flying.
“The one good thing is the US airlines are not putting capacity back on as they did in the mid-1990s.”
Riseley said European airlines were in better shape than the US carriers. “Certainly they have not been as badly affected by the events of September 11,” he said.
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