Airlines in Trouble: Survival of the Fittest Bottom Line

American Airlines has had some trouble of late: more than 300 canceled flights and 4,000 delayed take-offs during last week alone, and I know because I was on one of those delayed flights.

American Apologizes, Delays Continue

Fittest Bottom Line

The origin appears to be unauthorized labor strife which is the latest tremor in the earthquake that is American’s ongoing bankruptcy proceedings.

I’m sure American will survive this – after all, airlines have survived worse. On the other hand, sometimes airlines are killed off. Survival seems to be a matter of how hard an airline works at re-inventing itself to bring in enough revenue. In other words, survival of the fittest bottom line.

Terrorism and the Airlines

The terror attacks of 9/11 affected all air travel in this country but United and American were dealt especially personal blows since the terrorists used four of their planes as weapons. Not long afterwards, it was said United could only break even financially if it could fill its planes to an impossible 103 percent of capacity.

Are We Safer Since 9/11?

Yet United and the other airlines did survive those dark days by making tough choices to cut capacity and costs, dropping meals and more which stood them in good stead for the coming financial crises of the late 2000s which led the current Fee Generation. Most airlines no longer offer free checked-bags and I doubt that’ll ever return. But the airlines did return, fortunately, helped by a merger or two along the way.

It doesn’t always turn out that way though. A convincing argument has been made that the Lockerbie bombing of 1989 was what pushed failing Pan Am over the edge. Within two years of that terrible act, the iconic carrier declared bankruptcy and began selling off its assets.

How Nature can Really Screw-up a Flight

Natural Disasters

From volcanoes in Iceland to hurricanes and more, most airlines have learned to adapt to nature’s nasty pranks. Although U.S. travel was mostly unaffected by all the spewing ash from the Icelandic disaster, for Europe it constituted the biggest disruption in air travel since World War II. Most airlines, luckily, made it through while hanging on to customers by providing vouchers for their inconvenience.

Man-made Disasters

Plane crashes can damage an airline’s reputation and sometimes its bottom line – but usually it’s only temporary, even for the worst aviation disaster when two 747s collided on the Canary Islands killing more than 500 people.  The good news is, today flying is safer than it’s ever been – ever.

Labor Troubles

Now we come full circle back to labor problems and they can cause trouble. A couple of years ago when Spirit pilots threatened to walk, the airline said it would keep flying. The pilots walked and the airline was grounded – and quickly came to terms with its crews. American will survive, but possibly in a different form – it’s already signaled that’s it’s at least open to the idea of discussing a merger and US Airways is chomping at the bit, but will it happen? And will the current delays and cancelations continue? Sometimes you just have to resort to a cliché as I do now: only time will tell.

More from Rick Seaney:

Turbulence in the Airline Industry Through the Years


Published: September 25, 2012