Abta 2015: Charter flying will be confined to big two and specialists, claims Monarch boss

Charter flying will cease to exist in Europe outside the big two and some specialist brands, according to the boss of Monarch Group.

Andrew Swaffield told this week’s Abta Travel Convention in Costa Navarino, Greece, that there are too many airlines in Europe that have not restructured their cost base.

Monarch was saved from possible collapse last year after being sold to new owners Greybull Capital in a restructure that saw it shed 700 jobs, reduce salaries by 35% and end long-haul and charter flying.

“The charter model is going to be confined to the likes of Tui and Thomas Cook and specialists like Titan,” Swaffield said.

“I do not believe it’s possible to run a charter model and scheduled model with the same aircraft. It’s effectively disappearing as an option for independent tour operators.

“That, I suspect, brings challenges to some people. Tour operators and other intermediaries need to learn how to work with low cost scheduled carriers and they need to learn how to work with operators.

“There is a bit of a cultural gap there that needs to be bridged but we need to encourage that cooperation.

“I also believe there are too many airlines in Europe. There are about 86 and roughly half are challenged with cost cases that are too high.

“Only 30 of the top 150 airlines in the world are European. That’s disproportionately low. It’s very much a case of winners and losers that we are beginning to see.

“My prediction is there will be significant mergers and acquisition activity in Europe and you can pretty much distinguish between those who have restructured their cost base successfully and those who have not.

“I do not necessarily think the winners and losers will be determined by size but whether or not they have a clear brand, a distinctive customer segment and they have lowered their cost base to a sustainable level so they can drive sustainable profits.

“If you do not have those costs right you are going to face huge challenges. The haves and the have nots are going to be more distinct.”

Swaffield predicted these trends would be seen over the next five to 10 years although he said geo-political events have stifled this process of change in the aviation industry.

He said the main thing he learned from last year’s Monarch restructure was that cash is key to keeping businesses alive.

“provided you have enough cash your business will survive whatever is thrown at it. If you were to do a bit of cashflow planning I guarantee you you would find it a very enlightening experience.

“And it’s always best to do that when times are good and you are on the front foot.”

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