Monarch Airlines went bankrupt in Britain: feel the difference with the collapse of VIM-Avia. Monarch Airlines bankruptcy: Britain's biggest peacetime homecoming
Why doesn't the Queen save air passengers in England?
On October 2, a major UK airline, Monarch Airlines, stopped flying. On the same day, measures began to resolve the emergency with the least discomfort for passengers.
Unlike Vladimir Putin, who scolded the Minister of Transport, the Queen Elizabeth II or the Prime Minister of Great Britain Theresa May there was no need to make threatening statements. In a hurry, there was no need to find funds to take tourists out either - the system turned on ATOL, existing for such cases.
How does it work for them? Maybe we should create a similar tool in Russia instead of inventing another “bicycle” for delivering clients for the future?
Payment according to the usual scheme
Total by "VIM-Avia": another scandal caused by the collapse of an air carrier is being resolved manually - after the direct intervention of President V. Putin, which took place a week after the problem arose. Measures to prevent such collapses in the future are again being discussed.
Don't you have a feeling of deja vu? Owner of a troubled company Rashid Mursekaev, as they write in the media, left Russia, the general director and Chief Accountant detained in a fraud case. Ministry of Transport And Rosaviatsia are developing vigorous activity, operational headquarters meets twice a day. Meanwhile, tour operators - VIM-Avia's customers - are counting their losses.
To put it simply, to obtain a license, a company undergoes a financial stability test and makes annual contributions, the amounts of which vary depending on the scale of activity. In addition, you must also pay contributions for each passenger transported during the reporting year who purchased a product subject to ATOL licensing.
How the system works can be judged from publications in the British media, where representatives of the Office civil aviation explain to Monarch Airlines passengers their rights and prospects. In short: those who are abroad will be brought to England at the end of their vacation. Those who have tickets for later dates will be provided with financial compensation. No additional charges.
An indicative fact: none of the management of Monarch Airlines went on the run or was arrested. Obviously, the system insures not only the client, but also market participants in case something goes wrong. While ours are fleeing criminal prosecution. Who knows, maybe Rashid Mursekaev is already among them?
Experts are confident that if legislators take the English experience as an example and create some kind of analogue of ATOL in Russia, all costs will ultimately fall on the shoulders of consumers - either in the form of a separate fee, or by increasing the cost of an air ticket or tour. In this regard, we invite you to take part in the survey.
At the end of the high summer season Not only Russian carriers, represented by VIM-Avia, are experiencing problems - one of the oldest players in the British market and the country's fifth-largest airline in terms of traffic volume, Monarch Airlines, announced the cessation of flights due to economic difficulties.
It is worth noting that the English carrier, like VIM-avia, specialized in charter transportation of tourists to Mediterranean resorts. However, the aviation and tourism market in Britain is regulated by local officials much more correctly towards all its participants, as a result of which tourists with Monarch Airlines tickets will experience virtually no problems, unlike Russian tourists with VIM-Avia.
Thus, according to the BBC, the fact that the airline was suspending flights became known on the morning of Monday, October 2. At the same time, the carrier stopped all air ticket sales and all bookings for future flights were cancelled. According to the head of the company, Andrew Swalefield, the financial collapse of Monarch Airlines was caused by several factors - terrorist attacks in Egypt and Tunisia, as well as an attempted coup in Turkey, which led to a sharp decline in tourist traffic.
At that moment, there were about 110 thousand tourists abroad with Monarch Airlines tickets. Those. The failure of the British carrier affected a comparable number of tourists to VIM-Avia. However, this is the only coincidence in this analogy. All other actions of both the airline itself and the authorities are radically different.
Firstly, unlike VIM-Avia, the British airline did not hide its problems from the state - the carrier’s management reported the difficulties to the UK Civil Aviation Authority (CAA), after which they tried to reach certain agreements with creditors. The deadline to resolve the matter was set for Sunday evening. However, Monarch was unable to receive financial support, which is why it announced the cessation of flights on Monday morning.
But even here, the heads of relevant departments in the UK demonstrated that they do not receive their salaries in vain: on behalf of the Transport Secretary (analogous to our Minister of Transport), CAA chartered planes for the removal of tourists, who sent for travelers today. At the same time, all Monarch passengers will be returned to their homeland according to their vouchers - no one will have to shorten their vacation.
In turn, those who were just about to go on holiday on the wings of Britain's fifth largest carrier will be able to return 100% of the cost of their tickets. To protect tourists in such situations, the country has an Air Travel Organizer's License (ATOL) system, which is managed by the CAA. It guarantees a refund to the tourist for a paid tour or transportation, and also protects against the possibility of being “abandoned” abroad in the event of bankruptcy of a tour operator or airline. Moreover, in the event of unforeseen situations, nothing changes at all for travelers - funds from the reserve fund go to pay for accommodation in exactly those hotels that are specified in the contract. The travel dates also remain unchanged. Those. no one even evacuates tourists in an emergency!
On this background Russian tourists They look completely defenseless. After all, if you remember the story with VIM-avia, it becomes obvious that neither the Ministry of Transport, nor the Federal Air Transport Agency, nor the Federal Agency for Tourism had a clear idea of what they needed to do. And this despite the fact that until recently the heads of the relevant departments were in the dark or hid information about the serious problems of the airline. As a result, the collapse was avoided only due to the fact that Russian President Vladimir Putin personally intervened in the situation, and the problem began to be solved virtually manually. The Special Flight Detachment “Russia” joined in the return of VIM-Avia passengers, which provides transportation by air the first officials of our country. In addition, the planes of both other airlines and VIM-Avia itself were lifted into the air.
However, this approach certainly cannot be called civilized — instead of acting systematically according to clear and well-thought-out schemes, our officials, due to their negligence or some other reasons, rush from one extreme to another, bringing under the monastery not only themselves, but the industry, for which they are responsible.
The outcome of the high summer season brought problems not only Russian carriers represented by VIM-Avia. One of the oldest British airlines, Monarch Airlines, which was the fifth largest airline in the country, announced economic difficulties and the cessation of transportation.
It is worth noting that this airline has something in common with VIM-Avia - both specialized in charter transportation of tourists to Mediterranean resorts. It is no secret that the British tourism and aviation market is regulated somewhat differently. Tourists who bought tickets from Monarch Airlines experienced almost no problems from the carrier. Transportation was promptly redirected and everyone was delivered to their destinations on time.
According to the Air Force, information about the suspension of flights was received yesterday morning, October 2. At the same time, ticket sales by the carrier were stopped, and all existing bookings with flights in the near future were immediately cancelled. The director of the airline, E. Swalfield, in his interview regarding the incident, said that the problems arose against the backdrop of several nuances. The financial collapse was caused by terrorist attacks in Egypt and Tunisia. Many tourists had to change their plans, and the carrier lost money. Also, the coup attempts in Turkey did not pass without a trace. Decline tourist flow led to financial difficulties and then bankruptcy. The main thing is that everyone talks openly about the problem, no one is hiding.
At the time of the bankruptcy announcement, there were approximately 110 thousand tourists abroad who purchased tickets from Monarch Airlines. We can say that the problem of stranded tourists was comparable for the two carriers that ceased operations. This is where the similarities end, since the further actions of the carrier Monarch Airlines and the authorities differ significantly.
Let's start with the carrier. Monarch Airlines announced that financial difficulties had arisen as soon as they realized that collapse was imminent. The airline's management contacted the UK Civil Aviation Authority and only then made another attempt to find a compromise with creditors. The deadline for resolving the difficulties that arose was Sunday evening. The carrier was unable to obtain financing from creditors, so the suspension of operations was announced on Monday morning.
What did the heads of relevant departments do? They initially received instructions from the Transport Secretary, who is the equivalent of the Russian Minister of Transport, SSA to charter aircraft for the transport of passengers. Already on Tuesday, October 2, ships were sent to pick up vacationers. There is one more point: all passengers return home, as they say, according to the purchased tickets, that is, vouchers. No one had to cut long-awaited vacation days due to the bankruptcy of the carrier.
As for those who were just about to go on holiday by purchasing tickets from the UK's fifth largest carrier, they are being offered compensation of 100% of the cost. No actual expenses incurred will be charged. To find a way out during such problems, Britain introduced the “Air Travel Organizer’s License” system, which is managed by the CAA. This system is designed to protect tourists and guarantee them a refund. They also come here when there is a possibility of being “abandoned” due to the bankruptcy of a carrier or travel service provider. When unforeseen circumstances arise, tourists should not feel anything at all. These are problems that are not their responsibility and arise through no fault of theirs. The Reserve Fund allocates funding, which is used for accommodation in those hotels with which an agreement has been concluded. No one changes the timing of the trip - the tourist flies out exactly when he planned.
The example of the bankruptcy of a British carrier shows that Russian tourists, unfortunately, cannot be so protected. If we recall the same “VIM-Avia”, the conclusion appears on its own. Neither the Federal Air Transport Agency, nor the Ministry of Transport, nor the Federal Tourism Agency really understood what needed to be done. Moreover, information about problems with the carrier’s finances was not disseminated until recently. To be specific, until the president personally intervened in the situation, it was not developing in the most rosy way. In fact, everything was decided manually.
In order for the tourists who were supposed to return on the wings of VIM-Avia to get home, the Special Flight Detachment “Russia” was involved, which is engaged in transporting the first officials. In addition, the ships of many other carriers, including the bankrupt company, were lifted into the air. Now the bankruptcy of the carrier is bringing the monastery under pressure and tour operators, against whom administrative cases are ultimately initiated.
Do you think the situation with the problematic carrier in Britain was really resolved so easily? Could this be the case with VIM-Avia passengers?
Monarch Airlines is the fourth largest airline in the United Kingdom. The British air regulator, the Civil Aviation Authority (CAA), extended the deadline for the company to find funds a couple of times, but Monarch was never able to find investors willing to save it from bankruptcy. As a result, the CAA was forced to cancel the airline's license to air transport and introduce external control in it from four o'clock on Monday morning.
The consequences of this step by the regulator are as serious as the result of the bankruptcy of the Russian air carrier VIM-Avia: 110 thousand British tourists remained abroad, for whom it is now necessary to organize the largest, according to British Transport Minister Chris Grayling, evacuation in peacetime. For this purpose, CAA director Andrew Haynes told reporters, 34 airliners were leased from 16 airlines, including Qatar Airways.
Over the next two weeks they will make more than 700 flights. Most tourists will have to be taken from Spain, whose resorts have been particularly popular in the world for many years. British Isles. Monarch's bankruptcy affected another three-quarters of a million Britons who intended to use its services and booked tickets with it.
Political risk
Serious problems for Monarch Airlines arose after last year's referendum on Britain's membership in the European Union. Investors willing to invest in airlines are not difficult to find, but many are put off by the uncertainty associated with Brexit and, above all, the uncertainty as to whether British airlines will be able to fly to Europe after the UK leaves the EU and under what conditions.
The investment company Greybull Capital, which has owned the airline since 2014, considers terrorism and the depreciation of the pound sterling caused by the referendum to be the main factors that triggered the bankruptcy. Monarch's two largest markets, Egypt and Tunisia, were closed to British tourists for a long time due to terrorist attacks in 2015. The financial situation of the airline was greatly affected by the unrest and terrorist attacks in Turkey.
As for the British currency, in the year after the referendum the pound sterling depreciated against the dollar by 10%, and against the euro by 12%. Because of this, the company has to overpay 50 million pounds annually in dollars for fuel alone. A particularly large overpayment arose for a large order for the Boeing 737 Max. We also had to pay in dollars, and we are talking about $3 billion. As a result of all these turmoil, as the company's director Andrew Swaffield explained in a letter to employees, last year it carried 14% more passengers and reduced revenue by £100 million.
For some time, Monarch Airlines was struggling, as they say, to make ends meet, but in the fall there was a collapse. Now is a busy time not only for Monarch and CAA clients, but also for insurance companies who will have to pay insurance and penalties. CAA believes that approximately half of the passengers of the bankrupt low-cost airline are covered by the Atol full compensation program.
For Atol, the main criterion is the date of booking the ticket. If it was booked after December 15, 2016, then the passenger is not covered by the program. However, experts believe that most other Monarch clients will also receive compensation.
Not reaching half a century
Monarch's headquarters are located at London Luton Airport. The company was founded in 1968 and was supposed to celebrate its half-century anniversary next year. Its aircraft flew on 40 overseas routes from four British airports: London Gatwick, Manchester, Birmingham and Leeds. Monarch employs approximately 2,750 people. They will now have to look for a new job.
Russian tourists stuck abroad due to the bankruptcy of VIM-Avia can only console themselves with the fact that their British colleagues will also have to suffer. Moreover, for them the torment is just beginning. It is little consolation that the bankruptcy of Monarch and VIM-Avia followed the bankruptcies of Air Berlin and Alitalia.
British travel airline Monarch Airlines filed for bankruptcy this morning, the biggest collapse of a British airline in recent memory. Its problems could affect the 110 thousand British tourists who are currently in various resorts. The government is already taking measures to remove people. The bankruptcy of Monarch Airlines was the third bankruptcy of an airline in Western Europe this year. Alitalia and AirBerlin previously reported such problems.
This morning, British tour operator Monarch Travel Group Limited and Monarch Airlines Limited were placed under administration with the immediate cancellation of all tours and flights from today. This was stated by the auditing company KPMG, which became the external manager of the bankrupt tour operator and airline. Auditors recommend that company clients do not go to airports and wait for a special notification about how they will be removed from the resorts. KPMG attributed Monarch Airlines' bankruptcy to "accumulated costs and increasing competition in the European short-haul market, which has caused the Monarch Group to experience operating losses for some time." External managers are now working closely with the UK government and aviation regulator Civil Aviation Authority (CAA) to organize flights that can take British tourists out. KPMG estimates the number of affected Monarch clients at 110 thousand.
British media call the bankruptcy of Monarch Air the largest bankruptcy in the British passenger air transport sector in recent times. The company served about 40 destinations and flew from five British hubs - Gatwick, Birmingham, Manchester, Leeds and Luton. The company also canceled about 300,000 future bookings. According to KPMG, the company's annual tour turnover is about 200 thousand people. The company itself employs 2.1 thousand people. Monarch management has already expressed its deepest apologies to customers and admitted its mistakes in management. According to the CAA, about 30 aircraft have already been allocated to transport tourists. UK Transport Secretary Chris Grayling said that "this is extremely unpleasant situation, and now our main task is to get people out and help them return to the UK." Experts note that against the backdrop of competition that flared up after the fall in oil prices, this is already the third bankruptcy major airline in Western Europe this year - earlier, the German AirBerlin and the Italian Alitalia began bankruptcy proceedings.
However, British trade unions blamed part of the emergency situation surrounding Monarch's bankruptcy on the British authorities. Representatives of the Unite trade union noted that if ministers from Theresa May’s government “had not sat idly by” and provided Monarch with state aid in a timely manner, as the German authorities did in the case of AirBerlin, a situation would not have developed around the bankruptcy of the British company in which it was necessary urgently take people home.