The collapse of Monarch Airlines was a disaster for passengers. But it was a victory for regulation

Sorry kids, holiday's cancelled. Image: Getty.

With the UK forced to conduct the biggest peacetime repatriation in history, of 110,000 customers following the collapse of Monarch Airlines – the biggest UK airline ever to cease trading – questions are quite rightly being asked about what went wrong.

Intense competition, terrorism, and Brexit-related sterling changes have already surfaced as the main culprits. But after the anger and recriminations have calmed down, attention should turn to the correct behaviour of the agency charged with protecting consumer rights. In this case the Civil Aviation Authority.

The CAA’s job is to ensure that “consumers have choice, value for money, are protected and treated fairly when they fly”. To this end, it has made 22 prosecutions against various operators under its Regulatory Enforcement Policy over the past six years.

It now falls to the CAA to charter flights to bring Monarch’s customers home and manage the 300,000 future bookings, which the airline sold before going into administration. Within 48 hours, more than 23,000 Monarch customers had been flown home to the UK on 119 flights.

Turbulent times

Monarch regularly required injections of cash, but its most recent troubles started in 2014 with losses of £210m. This triggered a major restructuring which included new owners and new management. A shift was also made from offering more high-end long-haul charter flights that formed part of package holidays to scheduled low-cost flights. And fleet renewal was a core component of the transformation too – a shift to more fuel-efficient planes that could reduce the cost per seat.

Image: Centre for Aviation.

The results of this restructuring were impressive. The company recorded its best results in 2015 for more than ten years – a pre-tax profit of £26m, compared to a loss of £210m in 2014.

Events outside of the airline’s control, however, quickly put the company back into the red. Brexit-induced currency fluctuations were costly. As Monarch’s chief executive, Andrew Swaffield, put it: “We take nearly all of our revenue in pounds and a lot of our costs go out in dollars and euros... so we get no revenue benefit from a decline in the pound but we get a big cost increase.”

Terrorist attacks in Egypt and Turkey also heightened competition between Monarch and its competitors to the more traditional destinations of Spain and Portugal. This led to more intense price competition. Monarch lost out because it was more dependent on the UK market and its aircraft were less fuel efficient.

By the end of summer 2016, rumours abounded about poor financial health. Monarch insisted things were fine but the CAA was so concerned that it spent £25m setting up a shadow airline in case Monarch folded. Planes were chartered and sent to Mediterranean airports to mimic Monarch’s schedule. Ultimately, they were not needed as Monarch’s majority owner came up with the £165m necessary to keep it afloat. But it was a precursor of things to come and demonstrated the CAA’s awareness and ability to take action.

The increased competition in the European airline industry this year has been felt by all the low-cost carriers. But the heavy losses reported in August by the Monarch Group reflected its relatively higher unit costs.


Putting consumers first

Despite calls from its unions for financial help from the UK government, no investors were forthcoming. Monarch failed to meet the financial standards required to renew its Air Travel Organisers’ Licence (Atol), despite being granted a 24-hour extension by the CAA from midnight on Saturday 30 September until midnight on Sunday 1 October. KPMG were then called in as liquidators at 4am on 2 October (when no aircraft were in the air).

By demonstrating that it was not prepared to accept poor compliance, the CAA explicitly signalled to other airlines that consumers’ rights came first. Had Monarch been allowed to continue trading, there was a very high likelihood that more of the 300,000 booked passengers would have become embroiled in the collapse, customers would continue to buy flights and holidays that had little prospect of happening, and suppliers would continue to provide services that may never be paid for. Kicking the can down the road would have led to far more customers losing out and potentially more job losses.

This was the second time in a few days that the CAA stepped in to protect the consumer. On 29 September, it ordered Ryanair to tell passengers that had been disrupted by cancelled flights how it would provide them with alternatives. By contrast, the Irish regulator was criticised for not taking the same kind of enforcement action against Ryanair.

With light-touch regulation blamed by many for the banking crisis of 2008, the UK government reviewed and executed a Better Regulation Framework aimed at both increasing consumer protection and reducing the burden imposed on industry. This applied to aviation, as well as banking.

The ConversationWhile the customers hit by the demise of Monarch Airlines may well feel aggrieved at the disruption to their plans, if the CAA did not adhere as strictly to its mandate, many more of the 142m passengers carried by UK airlines might go on to suffer.

Padraic Regan is a researcher in aviation at Trinity College Dublin.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

Owning public space is expensive. So why do developers want to do it?

Granary Yard, London. Image: Getty.

A great deal has been written about privately owned public space, or POPS. A Guardian investigation earlier this year revealed the proliferation of “pseudo-public spaces”. Tales of people being watched, removed from or told off in POPS have spread online. Activists have taken to monitoring POPS, and politicians on both sides of the pond are calling for reforms in how they are run.

Local authorities’ motives for selling off public spaces are normally simple: getting companies to buy and maintain public space saves precious public pounds. Less straightforward and often overlooked in this debate is why – given the maintenance costs, public safety concerns and increasingly unflattering media attention – developers would actually want to own public space in the first place.

To answer that question it’s important to note that POPS can’t be viewed as isolated places, like parks or other public spaces might be. For the companies that own them, public spaces are bound up in the business that takes place inside their private buildings; POPS are tools that allow them, in one way or another, to boost profits.

Trade-offs

In some cities, such as Hong Kong and New York, ownership of public space is a trade-off for the right to bend the rules in planning and zoning. In 1961 New York introduced a policy that came to be known as ‘incentive zoning’. Developers who took on the provision of some public space could build wider, taller buildings, ignoring restrictions that had previously required staggered vertical growth to let sunlight and air into streets.

Since then, the city has allowed developers to build 20m square feet of private space in exchange for 80 acres of POPS, or 525 individual spaces, according to watchdog Advocates for Privately Owned Public Space (APOPS).

Several of those spaces lie in Trump Tower. Before the King of the Deal began construction on his new headquarters in 1979, he secured a pretty good deal with the city: Trump Tower would provide two atriums, two gardens, some restrooms and some benches for public use; in exchange 20 floors could be added to the top of the skyscraper. That’s quite a lot of condos.

Shockingly, the current president has not always kept up his end of the bargain and has been fined multiple times for dissuading members of the public from using POPS by doing things like placing flower pots on top of benches – violating a 1975 rule which said that companies had to provide amenities that actually make public spaces useable. The incident might suggest the failure of the ‘honour system’ under which POPS operate day-to-day. Once developers have secured their extra square footage, they might be tempted to undermine, subtly, the ‘public’ nature of their public spaces.

But what about where there aren’t necessarily planning benefits to providing public space? Why would companies go to the trouble of managing spaces that the council would otherwise take care of?


Attracting the ‘right sort’

Granary Square, part of the £5bn redevelopment of London’s Kings Cross, has been open since 2012. It is one of Europe’s largest privately-owned public spaces and has become a focal point for concerns over corporate control of public space. Yet developers of the neighbouring Coal Drop Yards site, due to open in October 2018, are also making their “dynamic new public space” a key point in marketing.

Cushman Wakefield, the real estate company in charge of Coal Drops Yard, says that the vision of the developers, Argent, has been to “retain the historical architecture to create a dramatic environment that will attract visitors to the 100,000 square feet of boutiques”. The key word here is “attract”. By designing and managing POPS, developers can attract the consumers who are essential to the success of their sites and who might be put off by a grubby council-managed square – or by a sterile shopping mall door.

A 2011 London Assembly Report found that the expansion of Canary Wharf in the 1990s was a turning point for developers who now “assume that they themselves will take ownership of an open space, with absolute control, in order to protect the value of the development as a whole”. In many ways this is a win-win situation; who doesn’t appreciate a nice water feature or shrub or whatever else big developer money can buy?

The caveat is, as academic Tridib Banerjee pointed out back in 2001: “The public is welcome as long as they are patrons of shops and restaurants, office workers, or clients of businesses located on the premises. But access to and use of the space is only a privilege and not a right” – hence the stories of security guards removing protesters or homeless people who threaten the aspirational appeal of places like Granary Square.

In the US, developers have taken this kind of space-curation even further, using public spaces as part of their formula for attracting the right kind of worker, as well as consumer, for nearby businesses. In Cincinnati, developer 3CDC transformed the notoriously crime-ridden Over-The-Rhine (OTR) neighbourhood into a young professional paradise. Pouring $47m into an initial make-over in 2010, 3CDC beautified parks and public space as well as private buildings.

To do so, the firm received $50 million  in funding from corporations like Procter and Gamble, whose Cincinnati headquarters sits to the South-West of OTR. This kind of hyper-gentrification has profoundly change the demographics of the neighbourhood – to the anger of many long-term residents – attracting, essentially, the kind of people who work at Procter and Gamble.

Elsewhere, in cities like Alpharetta, Georgia, 3CDC have taken their public space management even further, running events and entertainment designed to attract productive young people to otherwise dull neighbourhoods.

Data pools

The proposed partnership between the city of Toronto and Sidewalk Labs (owned by Google’s parent company Alphabet) has highlighted another motive for companies to own public space: the most modern of all resources, data.

Data collection is at the heart of the ‘smart city’ utopia: the idea that by turning public spaces and the people into them into a vast data pool, tech companies can find ways to improve transport, the environment and urban quality of life. If approved next year, Sidewalk would take over the mostly derelict east waterfront area, developing public and private space filled with sensors.

 Of course, this isn’t altruism. The Globe and Mail describe Sidewalk’s desired role as “the private garbage collectors of data”. It’s an apt phrase that reflects the merging of public service and private opportunity in Toronto’s future public space.

The data that Sidewalk could collect in Toronto would be used by Google in its commercial projects. Indeed, they’ve already done so in New York’s LinkNYC and London’s LinkUK. Kiosks installed around the cities provide the public with wifi and charging points, whilst monitoring traffic and pedestrians and generating data to feed into Google Maps.

The subway station at Hudson Yards, New York City. Image: Getty.

This is all pretty anodyne stuff. Data on how we move around public spaces is probably a small price to pay for more efficient transport information, and of course Sidewalk don’t own the areas around their Link Kiosks. But elsewhere companies’ plans to collect data in their POPS have sparked controversy. In New York’s Hudson Yards development – which Sidewalk also has a stake in – ambiguity over how visitors and residents can opt out of sharing their data when in its public square, have raised concerns over privacy.

In Toronto, Sidewalk have already offered to share their data with the city. However, Martin Kenney, researcher at the University of California at Davis and co-author of 2016’s ‘The Rise of the Platform Economy’, has warned that the potential value of a tech company collecting a community’s data should not be underestimated. “What’s really important is the deals Toronto cuts with Sidewalk may set terms and conditions for the rest of the world," he said after the announcement in October.

The project could crystallise all three motives behind the ownership of POPS. Alongside data collection, Sidewalk will likely have some leeway over planning regulations and will certainly tailor its public spaces to its ideal workers and consumers – Google have already announced that it would move its Canadian headquarters, from their current location in Downton Toronto, into the first pilot phase of the development.

Even if the Sidewalks Lab project never happens, the motives behind companies’ ownership of POPS tell us that cities’ public realms are of increasing interest to private hands.

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