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With another national airline on the brink, are we seeing the slow death of the flag carrier?

Adria Airways – the flag carrier of Slovenia – has suspended almost all of its flights
Adria Airways – the flag carrier of Slovenia – has suspended almost all of its flights Credit: istock

If it wasn’t obvious already, this week offered further evidence that a proud history is not enough to keep an airline in the sky. 

Adria Airways – the flag carrier of Slovenia – has suspended almost all of its flights, and is on the brink of collapse, due to financial problems. Founded in 1961, its fleet of 20 jets serves around 25 destinations across Europe (including Liverpool), but now it has just a week to find a solution to its economic woes or face closure. 

“Adria Airways is still leading active discussions with potential new owners and major creditors and remains dedicated in reaching positive solution for all,” a statement read.

Slovenia is by no means the first nation to see its flag carrier – a label that in times gone by indicated a government-owned airline, and one that embodied a country’s national identity – teeter on the brink. 

The future of Malaysian Airlines, founded in 1937, was called into question earlier this year in the wake of continued losses. State-owned, burdened by politics, and hurt by the twin disasters of MH370 and MH17 in 2014, it has fallen well behind south-east Asia’s agile low-cost carriers.

The same forces are at play in Europe. Last year, attention was turned to the travails of another venerable airline: Air France was on the ropes.

In the wake of the resignation of Jean-Marc Janaillac, chief executive of Air France-KLM (the airline merged with the Dutch carrier in 2004), after he failed to quell strike action, Bruno Le Maire, the French economic minister, warned that Air France, owned in part by the state, would not be bailed out. “Air France will disappear if it does not make the necessary efforts to be competitive,” he said.

Founded in 1933, Air France was one of only three Allied carriers that flew to West Berlin during the Cold War, while its involvement in the running of the supersonic Concorde will forever be a part of aviation history. In 2004, Air France was the largest European airline, with a 25.5 per cent market share. Then came the budget boom, with Ryanair at the vanguard, pushing a clutch of European flag carriers into history. 

The collapse of Swissair had the nation in mourning Credit: GETTY

Swissair went bust in 2002.

So did Belgium’s flag carrier, Sabena, in 2001.

Also in the cemetery are Cyprus Airways (2015), Malev (Hungary, 2012), flyLAL (Lithuania, 2009), Slovak Airlines (2007), Armenian Airlines (2003), Air Bosna (Bosnia and Herzegovina, 2015) and Estonian Air (2015).

Alitalia, the Italian flag carrier and papal airline, went bankrupt in 2017, but limps on.

Air France is still here, but earlier this year it was forced to call time on Joon, its short-lived offshoot aimed at millennials.

Meanwhile, those that do try to compete with the low-cost carriers, by charging passengers who travel with hold baggage more, for example, risk alienating their traditional customers. Just look at the backlash British Airways has faced in recent years.

BA passengers now have to pay for snacks on short-haul services Credit: BRITISH AIRWAYS 2016/NICK MORRISH

Why are flag carriers struggling?

Broadly speaking, such airlines were around long before the low-cost revolution, and so had an established way of flying. The so-called “golden age” of air travel infused the experiences aboard these carriers. 

Beyond simply ferrying passengers from a home nation around the world, flag carriers were burdened with national ambition and perception. Brian Sumers, senior aviation business editor at Skift, sums it up nicely: “For decades, nearly every large national airline within 12 hours of New York flew to John F. Kennedy International Airport, or wanted to –whether the flights lost money or not.”

The airlines, funded by the state and without too much concern about profitability, flew around the world looking good.

When times changed and no-frills carriers enjoyed exponential growth, selling the simplicity of a seat on a cheap plane with little else included, flag carriers had a choice between success or sovereignty.

“The best examples of success is where countries have recognised it is not always in their own interest to retain a flag carrier, contrary to their emotional feeling, and so, to protect the carrier, have let commercial management make the best decisions,” explains aviation expert John Strickland. “What happened at Alitalia was evidence of the opposite of that.

“One flag carrier that still exists and which has been very successful is Finnair. The CEO is very realistic and has been quoted as saying that the days of every country having its own carrier are gone.”

Strickland points to both British Airways and Iberia, of the UK and Spain, respectively, as two airlines that have adapted to market conditions in the wake of privatisation.

“There was a lot of tension and friction, workforce-wise, when Iberia became part of the IAG group, but it had to do so to survive and now there is a new pride in the airline,” he said.

What is perhaps worth noting is that when a flag carrier fails, it comes with an added sense of ignominy thanks to its national links. When Swissair grounded its flights in 2001, stranding passengers and flight crews around the world, there followed two days of demonstrations first in Glattbrugg and then in Bern.

At the time, a BBC correspondent said of the collapse: “Something did die in Switzerland that day: not just an airline but an image the Swiss had of themselves and, more importantly, of their business leaders.”

A poster for the defunct Belgian flag carrier Credit: GETTY

What does the future hold?

With legacy carriers facing competition from budget airlines, it is already hard to tell the difference between the likes BA and Air France and low-cost behemoths such as EasyJet and Ryanair. They all charge more if you want to take luggage, meals on board usually cost extra, and there is a fee to pick your seat or board first. The trend of flag carriers mimicking low-cost rivals in a bid to stay profitable looks certain to continue – how long till BA starts flogging scratchcards?

The last few years have seen a raft of airline failures – 284 since 2007 – with Flybmi, Monarch, Thomas Cook Airlines, Transaero, Air Berlin and Primera all disapperaing in the last five years. And more collapses are predicted. 

“There are perhaps too many airlines in Europe today relative to the size of the market, with too many struggling to keep market share,” says John Grant of the aviation analyst OAG. “In the United States, five major airlines provide some 80 per cent plus of scheduled capacity and that may be where the European market will head over time.”

Lufthansa, Ryanair, IAG, Air France-KLM, EasyJet currently sit at Europe’s top table, with Turkish Airlines, Aeroflot, Norwegian and Wizz Air occupying the second tier, and each fresh failure only strengthens their positions. EasyJet, for example, took advantage of Air Berlin’s collapse and is now the dominant carrier in the German capital.  

Whether Adria Airways can be saved remains to be seen, but one thing is certain: should it fail, Ryanair – and, perhaps, Wizz – will waste little time before flying into the breach.