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Why Airlines Fail: Find the Historical Reasons Behind Aviation Disasters

Why Airlines Fail: Find the Historical Reasons Behind Aviation Disasters

BY LIPSY GRACE LUCAS Published on June 12, 2024 0 COMMENTS

Almost 20 airlines went out of business in 2023. The defunct services ranged from the late 80s airlines to startup carriers.  

 

While some air companies bounced back in the past year with strong growth in passenger rates following the end of travel restrictions, others joined the long list of “Failed Airlines.”

 

Travel data company Cirium found that at least 40 commercial airlines failed in 2020; 46 in 2019; and, 56 in 2018.

 

Failed airlines are those that have completely ceased or suspended operations.

 

To Stay Afloat Amid the Increasing Competition 

 

The struggling airlines might lower prices to survive against their low-budget competitor airlines. But it tends to reduce their profit margins too.

 



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Airlines usually have to adapt to market prices instead of determining their own. Those airlines that went out of business did not effectively manage the gap between achievable revenues and their costs.

 

Fuel and the regular maintenance of aircraft are among the largest expenses for airlines. Fees for landing, takeoff, parking, and terminal usage add up, especially at major airports. Pilots, cabin crew, maintenance staff, and other personnel make up the lion’s share of operational costs. Unionized labor can drive up these costs with demands for higher wages and benefits.

 

One of the factors that killed Icelandic low-cost carrier WOW Air was the increasing competition in the low-cost, long-haul market.

 

Photo: Courtesy WOW Air Facebook

 

WOW Air struggled to maintain low prices while covering its operational costs, resulting in financial strain. Despite efforts to secure additional funding and restructure its operations, the airline was unable to sustain its business model. It abruptly ceased all operations in March.

 

From Zero to Overwhelmed

 

Drastic scaling up can also be extremely challenging. Hiring and training staff, acquiring new aircraft, and establishing new routes all require time and financial resources.

 

With shrinking resources, maintaining high-quality customer service becomes challenging. This would result in longer wait times, crowded flights, and service disruptions, leading to customer dissatisfaction.

 



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Ensuring the safety and maintenance of an expanded fleet can also be challenging. Abrupt acquisitions of new aircraft may lead to inadequate maintenance schedules or insufficient personnel training.

 

The Danish Primera Air Scandinavia is a glaring example of an airline failure due to reckless expansion. The Primera Travel Group-owned company ceased operations due to bankruptcy in 2018.

 

Photo: Courtesy Primera Air Facebook

 

Primera Air aimed to capitalize on the growing demand for low-cost transatlantic travel by launching new routes between Europe and North America. These routes included destinations like New York, Boston, Washington D.C., and Toronto.

 

To support its expansion plans, Primera Air placed orders for new fuel-efficient aircraft, including Boeing 737 MAX and Airbus A321neo aircraft.

 

The Danish airline—originally established in 2003 in Iceland as JetX—also formed partnerships with tour operators and travel agencies to increase its presence in key markets and boost passenger bookings. In addition, the airline offered limited-time promotional fares and advertised its low-cost air travel.

 

Primera Air’s rapid growth ultimately outpaced its financial resources, leading the company to cease operations on Oct. 1, 2018.

 

One-Star Score on Customer Experience

 

Bad customer experience can also bring an end to an airline’s lifespan.

 

Pan American World Airways—or Pan Am—was once one of the most iconic airlines in the world, known for its pioneering role in international air travel.

 

However, in its later years, the Florida-based airline needed help to maintain its reputation for high-quality service. Customers complained about aging aircraft, deteriorating service standards, and inconsistent experiences. Additionally, the airline faced criticism for its handling of safety incidents and security concerns.

 

Photo: AeroXplorer | Panteley Shmelev

 

Various factors, including financial challenges and increased competition, influenced Pan Am's closure in December 1991. However, declining customer satisfaction played a significant role in its downfall.

 

An airline that fails to pay attention to customer experience may overlook critical operational aspects such as maintenance schedules, safety protocols, financial management, and customer service standards. Over time, these issues can accumulate, eroding the airline's reputation and ultimately leading to its end.

 

Leading Airlines of Yesteryears

 

Several notable airlines have collapsed over the past decades. The mid-20th century giant Eastern Air Lines ceased operations in 1991.

 

Despite its ultimate demise, Eastern was known for its effective marketing strategies. The airline created strong brand recognition through memorable advertising campaigns and sponsorships. Those marketing strategies helped build customer loyalty.

 



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Eastern was a pioneer in adopting new technologies to improve operations. This included the use of computerized reservation systems, which streamlined booking processes and improved efficiency.

 

Another iconic airline that was later shut down was Trans World Airlines (TWA). It became one of the first airlines to establish a robust international route network. This global presence helped TWA become a leader in transatlantic travel and set a standard for international aviation connectivity.

 

Photo: AeroXplorer | Alex H

 

It also focused on providing a high-quality in-flight experience, including gourmet meals, comfortable seating and attentive service. TWA’s luxury-oriented approach made it stand out from the competition.

 

The New York-based airline was among the first to introduce frequent flyer programs, rewarding loyal customers with miles that could be redeemed for flights and other perks. This helped foster customer loyalty and repeat business.

 

In 2001, TWA was acquired by American Airlines, marking the end of its magnificent journey that started in 1930.

 

Swiss Air Collapse

 

Across the Atlantic, Swissair faced a dramatic collapse in 2002. Despite its downfall, its best practices remain influential today.

 

Photo: AeroXplorer | Panteley Shmelev
 

 

Known as the "Flying Bank," Swissair maintained strong financial health for many years. The airline's prudent financial management and conservative investment strategies contributed to its long-term stability.

 

Swissair formed strategic alliances and partnerships with other airlines, enhancing its global connectivity and offering passengers more travel options. These alliances also helped improve operational efficiency.

 

The airline implemented comprehensive quality management systems across all operations. This systematic approach to quality control helped maintain high levels of passenger satisfaction.

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INFORMATIONAL Airlines failure WOW Air Primera Air Pan American World Airways Pan Am Eastern Air Lines Swissair

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