Editorial: "COMMERCIAL AIRLINES: SURVIVAL OF THE FITTEST"

Abstract

Most industries suffer from adverse events but none has experienced the type of shocks endured by the air transport sector over the past two decades. It began with the deregulation of the industry in the 1980s when governments around the world privatized previously state-owned airlines companies. This led to the emergence of low cost airlines and fierce competition. With the first Gulf War in 1990s, oil prices started to increase adding operational costs and slashing profits. Then, there were fears about Y2K at the beginning of the new millennium, which caused concerns that did not materialize. The terrorists attack on New York on September 11, 2001 was perhaps the most devastating shock. Passengers deserted airlines for almost a year. Between these major crises, natural disasters such as the SARS pandemic in Asia, the Tsunami and hurricanes (Katrina, Rita, Wilma) turned many regions of the world into virtual no-fly zones. The effects on the sector and more specifically commercial companies throughout the world have been devastating. A lot of airlines have gone out of business while some went into full scale restructuring. Even huge injection of public funds could not rescue the weakest airlines and eventually Bankruptcy Courts stepped in to sort out arguments between creditors, suppliers and employees. The outcome of restructuring efforts have been mixed and is raising questions about the basis of airlines economics and business, their management and restructuring strategies. 1. The Global Landscape of the Crisis in the Air Transport Industry