Monarch Airlines has shut down operations following financial troubles caused by unfortunate market conditions and an inability to compete in a low-cost holidays market.
The airline announced its closure on Twitter writing:
“Monarch customers in the UK: don’t go to the airport. There will be no more Monarch flights. This page will no longer be monitored.”
The message was accompanied by a graphic informing passengers not to go to UK airports with a help-line number and dedicated website from the UK Civil Aviation Authority (CAA).
Administrators KPMG issued a statement on Monday afternoon, confirming staff redundancies.
“Regrettably, 1,858 employees have been made redundant. Of these, 1,760 were employees of Monarch Airlines, while 98 were employed by Monarch Travel Group.
“Between them the companies employed approximately 2,100 people.
“The remainder have been retained by the joint administrators to assist them in the administration process and importantly, to help collate critical information to assist the Civil Aviation Authority with the repatriation of customers who are currently overseas.”
Partner at KPMG and joint administrator Blair Nimmo commented on Monarch’s closure.
“The absolute priority for me and my team was to try and make contact with all members of staff as soon as possible, in order that we could communicate what the administration means for them.
“Regrettably, with the business no longer able to fly, a significant number of redundancies were made.
“Over the coming days, my team will be doing all it can to assist the employees in submitting claims to the Redundancy Payments Office for monies owed.”
— Monarch (@Monarch) October 2, 2017
Large investments come to nothing
The airline had narrowly avoided a revoking of its license to operate late last year when it could not meet its required CAA ATOL payment, insurance which covers repatriation for passengers stranded in the event of an airline collapse.
A £165 million investment from its majority shareholder, Greybull Capital, touted as the largest investment in the airline’s 48-year history, covered the expense and helped operations continue.
The airline also arranged a financial restructuring of an order Monarch had placed with Boeing in 2014 for 30 new 737 MAX-8 aircraft.
Monarch planned to use these aircraft to refresh its passenger offering and the efficiency of its operations. Deliveries were scheduled to begin in 2018.
The CAA then issued a statement saying:
“The CAA has renewed Monarch’s ATOL licences until the end of September 2017 following confirmation that all licence requirements have been met.
“Monarch’s licences permit them to sell ATOL protected holidays until 30 September 2017, after which they will be required to obtain a new licence in line with the annual process for all ATOL protected companies.”
However, the investment was not enough to save the business.
The CAA has been actively dealing with the aftermath of Monarch’s collapse, resulting in what is described by the Government as the biggest peacetime repatriation of travelers in UK history.
The authority made arrangements to repatriate more than 110,000 passengers stranded abroad.
In the first day of these emergency operations, the CAA reports, 11,843 Monarch customers had returned to the UK on 61 specially arranged flights.
The CAA says it has answered 13,000 calls on Monarch since Monday and continues to keep passengers informed through a dedicated website with information including how to claim refunds through ATOL.
The authority is also actively answering consumer questions on Twitter.
Where one aircraft door closes, a few others open. With skilled pilots in high demand, Aer Lingus wasted no time arranging a recruiting event for Monarch’s Airbus type-rated pilots at the Radisson Manchester Airport on Tuesday.
Ryanair could certainly use more pilots to help recover its operations, though it would require those type-rated to fly Boeing 737 aircraft.
The airline has fallen foul of the UK CAA recently after gaps in its pilot schedules led to mass flight cancellations.
The CAA launched enforcement action against the Irish carrier last week, for “persistently misleading passengers” following this service failure.
The Civil Aviation Authority’s CEO, Andrew Haines, says of the enforcement action on 27 September:
“There are clear laws in place, which are intended to assist passengers in the event of a cancellation, helping minimise both the frustration and inconvenience caused by circumstances completely out of their control.
“We have made this crystal clear to Ryanair, who are well aware of their legal obligations, which includes how and when they should reroute passengers, along with the level of information it provides its passengers.
“The information Ryanair published today again fails to makes this clear.
“In expediting our enforcement action we are seeking to ensure that Ryanair’s customers will receive the correct and necessary information, to make an informed choice about an alternative flight.”
Ryanair promptly responded with a statement saying that it had met with the Irish Commission for Aviation Regulation (CAR) and agreed to steps on handling the cancellations which complied with EU261 passenger rights and entitlements regulations.
At the same time, the airline called on the UK CAA to require UK carriers to comply with the same regulations, saying that the authority had failed to enforce these rules against British Airways during its computer meltdown earlier this year.
The CAA’s Haines replied to this claim on 28 September in a detailed letter and issued a further statement:
“Our job is to protect passengers’ rights and ensure that all airlines operating in the UK are fully compliant with important consumer laws.
“Where we find that an airline is systematically flouting these rules, we will not hesitate to take action, to minimise the harm and detriment caused to passengers, as we have done with Ryanair in recent days.
“It appears that Ryanair has now capitulated. We will review their position in detail and monitor this situation to ensure that passengers get what they are entitled to in practice.
“We are consistent in this approach, and in the last six years the CAA has secured 22 legal undertakings from airlines and other travel companies on a range of issues to protect consumers.
“Furthermore, as part of our ongoing work to protect consumers, earlier this month we wrote to over 30 airlines seeking confirmation that they too are complying with the re-routing elements of EC261 legislation.”
While enforcing consumer protections are a critical part of the service civil aviation authorities provide, airline oversight which might prevent unexpected crises is also critical.
There is cause to wonder whether the CAA should have known before the weekend that Monarch would be forced to cease operations.
Given the airline’s history of financial difficulties and the airline’s near-miss on ATOL insurance last year, the authority would certainly have had cause to question the long-term viability of the business and more closely monitor its ability to provide service.
We asked a representative of the UK CAA whether Monarch had made its second payment due this September for ATOL coverage and how much information the Authority had about conditions at Monarch prior to its closure.
Richard Taylor, Communications Department of the Civil Aviation Authority replied:
“We provided Monarch with a 24 hour extension of their ATOL on 30 September. However, they made the decision to cease trading the next day.
“We were advised by Monarch that they would cease trading on 1 October. We had a number of conversations with them in the run up to this date.”
Asked whether there were discussions ongoing at the CAA on how to better prevent unpleasant surprises from airlines in trouble, perhaps through closer monitoring and auditing of operations, Taylor told Tnooz:
“At the moment we are concentrating our resources on the repatriation of 110,000 passengers to the UK.”
We also asked the UK CAA about issues with Ryanair’s operations. Taylor saysdiscussions are ongoing regarding the airlines’ obligations under EC261.
While the airline has taken responsibility for the scheduling mix-up which prompted the cancellations of flights in the autumn and winter schedule affecting more than 700,000 passengers, there are signs that there is may be more amiss with Ryanair’s pilots roster than mere scheduling conflicts.
Pilots turned down the airline’s proposal of a one-time £12,000 bonus to forfeit their scheduled holidays in order to keep planes flying, and have recently taken more aggressive actions to re-negotiate pay.
This is not to suggest that Ryanair is at any imminent risk of a halt to operations due to the pilot schedule crisis.
To the contrary, it seems to be operating the bulk of its schedule on time.
But the airline’s operations are disrupted, as are the plans of hundreds of thousands of travelers.
The pilot situation, as it stands, is not easily resolved.
We asked Taylor whether, in the UK CAA’s view, there is a legitimate pilot shortage in the industry and what that might mean for future airline operations as passenger traffic figures increase, but he said that the UK CAA does not have oversight over pilot recruiting practices.
He also says there are no facilities for rapid type rating in the case of an experienced pilot wanting to switch employment from an airline that operates one single aircraft type or another.
“Of course, some Monarch pilots may have current B737 ratings from previous jobs.”
While ensuring that the airline does its duty by consumers is good, it might benefit consumers in the long term for regulators to more closely investigate the ongoing dispute with pilots on pay, and the airline’s methodology for compliance with work hour restrictions.
Asked what future regulatory changes will result from recent, highly disruptive airline failures, Taylor replied:
“It is too early to discuss this. We are currently concentrating our resources on dealing with the situations.”
The airline industry around the world is highly competitive, and bound be aggressive in years to come. We have seen many majors fail and consolidation intensify. Now that there are fewer, larger players, it is more critical for industry governing bodies to watch airline performance closely and look for warning signs before they surface.
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