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This blog is for students, managers and those lay people who are interested to contribute to, comment on or simply share their workplace problems and are keen to learn about issues relating to public finance, corporate finance and macro-economic management affecting their lives.

Saturday, June 26, 2010

Flying can still be fun....in spite of airlines...

I sometimes wonder why we keep accusing our national entities for everything wrong. Why don’t we consider the circumstances in which these entities operate? It is true that these entities can be buried under the weight of their own fats, yet there are so many other culprits which we must look for before coming to a conclusion.
 Take the example of our one and only national flag carrier, the great people to fly with.  Have we ever realized how they are trying to perform in the world where airlines are bound to make losses, not money? In a recent article giving a detailed analysis of airlines industry, Financial Times has concluded that it is not the airline alone which can be blamed for poor financial performance, it is so many other factors. It is now 16 years since the billionaire investor Warren Buffett said capitalism would have been better off if Orville Wright had been shot down at Kitty Hawk in 1903, because the industry had made a net loss ever since.
Things have only grown worse. Over the past decade, airlines have lost another $50bn thanks to the September 11 terrorist attacks, ­soaring fuel prices and recession. The situation is especially awful for many of the household-name international carriers in Europe and the US. Every other week seems to bring news of a real or longed-for merger as they ­struggle to fend off sprightly no-frills rivals, striking workers and deep-pocketed Middle East newcomers.
Last year, the biggest airline in the world in terms of the number of passengers carried was not the American Airlines of George Clooney’s hit film Up in the Air, or even its giant rival Delta, but Dallas-based budget carrier Southwest Airlines. The fifth biggest was Southwest’s rambunctious Irish love child, Ryanair. These airlines fly shorter distances compared with international companies such as British Airways. But unlike BA, which has lost nearly £1bn over the past two years, they have stayed profitable. And their rise has made flying possible for millions.
Please visit Financial Times to read the article.

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