Competition is high, fuel prices are higher, and political uncertainty is making everyone stay home.
10 airlines that have filed for bankruptcy this year
It's been a particularly bad year to be an airline. A string of bankruptcies has plagued the aviation industry this year, with at least 10 airlines abruptly going under and leaving thousands stranded in airports across the world. Reasons for their closure range from fuel price hikes to Brexit, and it seems as if political uncertainty, rising gas prices, and the boom and bust nature of seasonal tourism have created the perfect storm for bankruptcies across the board. Find out why these 10 airlines went under, and whether there's any hope of them flying high again.
UK-based tour company Thomas Cook closed its doors on September 23 after 178 years in business. Around 150,000 of its customers were stuck at vacation hotspots around the globe in what's set to be the largest peacetime repatriation effort in Britain's history.
Brexit is partially to blame, but significant debts and an outdated travel model also contributed to the firm's demise. The company's business model relied on in-person bookings and had a tiny online presence compared to its competitors. Thomas Cook closed a number of its brick and mortar travel agencies, but it wasn't enough to make up for the company's mounting debt. They were denied a last-minute bail out of around two million pounds by both the UK government and their own lenders.
Many British holidaymakers decided to delay their vacation plans due to uncertainty over Brexit, piling onto the company's debt problems.
Slovenia's flag carrier Adria went into insolvency on September 30 this year. The airline ran into financial problems and was unable to continue operations, grounding most of its flights in the weeks leading up to September 30.
According to Slovenia's Economy Minister, the loss of Adria is a blow to the tiny country's rapidly expanding tourism industry. The airline was bought from the Slovenian government in TK, with 96 percent of it being privately owned. Due to EU regulations, the Slovenian government was unable to come to its aid with a bailout as it was in private hands. The government also stated that it was mismanaged prior to its sale to German turn-around fund 4K Invest, and that its owners did little to prevent its ultimate collapse.
The airline had been operating since 1961.
High fuel prices and an inability to make good on its leasing payments led to the demise of Avianca Brasil this year. Some of its jets were on the brink of repossession due to the airline's inability to make payments on them, causing the carrier to ground most operations.
This June, Avianca Argentina was also forced to ground much of its fleet for what 90 days due to restructuring its business model.
Just last weekend, Peruvian Airlines announced that they would be ceasing operations. Although they did not declare bankruptcy like the other airlines on this list, the carrier's accounts were frozen due to what authorities believe is unlawful activity. Peruvian Airlines declared on paper that two of its imported commercial aircraft were worth less than their actual value, causing the National Superintendence of Customs and Tax Administration (SUNAT) to freeze the airline's bank accounts. This left the airline unable to pay staff, unable to pay fuel providers and led to a number of cancellations that caused uncertainty with travel agents.