It’s become nearly a cliché in just a few short weeks: “You never want a serious crisis to go to waste.” Thus spoke Rahm Emanuel, President-elect Obama’s chief-of-staff, in an interview last month. A crisis, Emanuel explained, represents “an opportunity to do things you think you could not do before.” And it’s true, a crisis galvanizes focused debate and action like few other events can do. Sir Richard Branson had a slightly different spin on the sentiment Tuesday, where he hinted that his Virgin Group and Lufthansa (LHAG) may seek closer ties as a counterbalance to recent moves by British Airways (BAY) to bolster its market position.
“I would urge governments to beware of companies who use what is going to be a temporary financial crisis to try to bring about mergers that would be against the public interest,” Branson said at a conference in Paris, according to the Associated Press. Now, of course, Branson did not become a billionaire by being a zealous guardian of the commonweal, and his comments on BA are, naturally, enormously conflicted by self-interest.
But Branson did build a business empire anchored by a firm customer orientation, with a view to the long-term, and the public responded. I think his caution is worth heeding, given the steady stream of weak revenue outlooks besetting the industry, including the dour prediction Dec. 9 by the International Air Transport Association of a $2.5 billion global loss next year. In the first three quarters of 2008, airlines lost $8 billion, the group said. “Deep recession and the most challenging revenue environment for fifty years will lead to larger losses during 2009 in all regions except the U.S.,” according to the report. The very same day, the U.S. ATA scrubbed a major two-day conference planned for early March, citing “the extremely fragile state of the U.S. economy and the uncertainty facing the aviation community with fuel price volatility and softening demand.” (Registration fees were as high as $1,200, and that was just for ATA members.)
So it’s quite possible that the current recession could be nasty, brutish and long. Let’s just hope that fundamental structural changes aren’t permitted in haste, under the pressure of crisis, as airline executives, politicians, and unions strive to accomplish certain things they thought they could not do.
“I would urge governments to beware of companies who use what is going to be a temporary financial crisis to try to bring about mergers that would be against the public interest,” Branson said at a conference in Paris, according to the Associated Press. Now, of course, Branson did not become a billionaire by being a zealous guardian of the commonweal, and his comments on BA are, naturally, enormously conflicted by self-interest.
But Branson did build a business empire anchored by a firm customer orientation, with a view to the long-term, and the public responded. I think his caution is worth heeding, given the steady stream of weak revenue outlooks besetting the industry, including the dour prediction Dec. 9 by the International Air Transport Association of a $2.5 billion global loss next year. In the first three quarters of 2008, airlines lost $8 billion, the group said. “Deep recession and the most challenging revenue environment for fifty years will lead to larger losses during 2009 in all regions except the U.S.,” according to the report. The very same day, the U.S. ATA scrubbed a major two-day conference planned for early March, citing “the extremely fragile state of the U.S. economy and the uncertainty facing the aviation community with fuel price volatility and softening demand.” (Registration fees were as high as $1,200, and that was just for ATA members.)
So it’s quite possible that the current recession could be nasty, brutish and long. Let’s just hope that fundamental structural changes aren’t permitted in haste, under the pressure of crisis, as airline executives, politicians, and unions strive to accomplish certain things they thought they could not do.
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