Marketers often wonder how long it takes for a company that has ceased trading to lose their number one spot on a Google search. This thought comes as Monarch Airlines, from 2nd October, has indefinitely grounded all their flights. But what happened to the company that had been flying passengers around the world for almost half a century? Let’s find out.  

Pioneers of Modern Aviation

Far from being a backwards looking company that’s been tied to tradition, Monarch were in fact pioneers in the field of aviation that changed the way customers travel. The airline introduced an all-jet fleet in the early 70s (uncommon during this period) and in 1985 began offering flights independent of package holidays. It’s during this period that airlines like Ryanair and EasyJet were established (1984 and 1995 respectively). 

Too Little, Too Late

It appears Monarch’s need to compete with other budget airlines eventually squeezed the company beyond the point of no return. 2014 should have marked a financial turning point as Greybull Capital, a private investment company, acquired a 90% stake in Monarch; this was quickly followed by an initial investment that a Telegraph report said, “rescued [the airline] from the brink of collapse.” This investment was followed shortly by an aggressive restructuring programme that saw the company cut back on 700 jobs, scrap unprofitable routes and introduce a 30% pay cut for pilots. But was it too little, too late for the airline?  

In an attempt to win back passengers, Monarch decided in 2004 to adopt a “low-cost model… to keep pace with rivals EasyJet.” Whereas other airlines were cutting prices (apparently making “a profit of $10 (£6.90) – at most,”) and increasing their market share, Monarch’s previous decade has been defined by decreasing their market share (by cutting routes) and being unable to quite compete on price. According to a report by Business Insider UK, “The Brexit vote seemingly provided the final nail in the coffin, as the weak pound impacted on handling charges.” Any profit the company had been making appears to have been drained by Brexit and its impact on the pound – “Sterling has fallen… more than 12% against the euro,” according to the Guardian. 

Good News for the Big-boys of Budget

The good news for passengers in the short-term is that Monarch had such a small share of the market, as well as a relatively limited set of destinations they fly to, that prices are unlikely to rise. Expect to see the economy flight giants (EasyJet and Ryanair) increase their market share by picking up the space left by Monarch. The bad news for Greybull Capital is that they’re set to lose £250 million.  

Interested in learning more about the travel and tourism industry? Our HND diploma in Travel and Tourism and top-up Bachelor’s degree in Business Management (Tourism Management) might be the perfect choice for you. Contact UKCBC today to speak with a course advisor about your professional options. 

Leave a Reply

Your email address will not be published. Required fields are marked *

77 − = 70