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.

 
 
 
 

America's cities can't police their way out of this crisis

Police deployed tear gas during anti-racism demonstrations in Los Angeles over the weekend. (Mario Tama/Getty Images)

As protesters took to the streets across the United States over the weekend to express their anger at police killings of unarmed black Americans, it was hard to miss the hypocrisy coming from local authorities – including the otherwise progressive, left-leaning officials who are in power in most major American cities. 

Many US mayors and their police chiefs had issued public statements over the past week that seemed – only briefly, as it turned out – to signal a meaningful shift in the extent to which the Black Lives Matters movement is being taken seriously by those who are in a position to enact reforms. 

The sheer depravity of the most recent high-profile killing had left little room for equivocation. George Floyd, 46, died last Monday under the knee of white Minneapolis police officer Derek Chauvin, while three additional officers helped to hold Floyd down, doing nothing to aid him as he begged for them to stop and eventually lost consciousness. The officers had been attempting to arrest Floyd on suspicion of having used a counterfeit $20 bill at a deli. All four have since been fired, and Chauvin was arrested Friday on charges of third-degree murder and second-degree manslaughter. 

“The lack of compassion, use of excessive force, or going beyond the scope of the law, doesn’t just tarnish our badge—it tears at the very fabric of race relations in this country,” Los Angeles Police Chief Michel Moore told the Washington Post in response to the Floyd case. Meanwhile Moore’s boss, Los Angeles Mayor Eric Garcetti, on Friday claimed that he understood why his city, which is no stranger to police brutality, was protesting. “We absolutely need as a nation, certainly as a city, to voice our outrage, it’s our patriotic duty to not only stand up for George Floyd but for everybody who has been killed unnecessarily, who’s been murdered for the structural racism that we have in our country,” Garcetti said. 

Normally, US police chiefs and mayors tend to ask citizens to withhold judgment on these types of cases until full investigations can be completed. But a 10-minute video recording of Floyd’s killing had made what happened plain. Police chiefs across the country – and even the nation’s largest police union, which is notorious for defending officer abuses – similarly condemned the actions of the Minneapolis officers, in a rare show of moral clarity that, combined with the arrest of Chauvin, offered at least a glimmer of hope that this time things might be different. 

As the events of the weekend have since shown, that glimmer was all too fleeting. 

In city after city over the past three days, US mayors and their police chiefs made a series of the same decisions – starting with the deployment of large, heavily armed riot units – that ultimately escalated violent confrontations between officers and protesters. Images widely shared on social media Saturday and Sunday nights made it clear that members of law enforcement were often initiating the worst of the violence, and appeared to treat protesters as enemy combatants, rather than citizens they were sworn to protect. 


In New York City, two police SUVs were seen plowing into a crowd of protesters, while elsewhere an officer was recorded pulling down a young protester’s coronavirus mask in order to pepper spray his face

In Louisville, the city where Breonna Taylor, a 26-year-old black woman was fatally shot by police on 13 March, state police in riot gear were captured confiscating and destroying protesters’ supplies

In Minneapolis, forces opened fire with nonlethal rounds on residential streets, much to the shock of homeowners standing on their own front porches. 

Images of police pushing or shoving peaceful protesters were almost too numerous to count, including, in Salt Lake City, an elderly man with a cane

In many places, police also targeted journalists who were covering the protests, firing at clearly identifiable media crews with rubber bullets, injuring and even arresting reporters

Some protesters did commit acts of vandalism and looting, and the leaders of cities where that happened generally responded in the same ways. 

First, they blamed “outside agitators” for the worst protester behaviour, a claim that harkens all the way back to the civil rights era and for which the evidence is murky at best

Next, they enacted sudden curfews with little to no warning, which gave law enforcement an excuse to make mass arrests, in some cases violently. 

In a pair of widely criticized moves, Garcetti of Los Angeles closed the city’s Covid-19 testing centers and suspended the entire mass transit system Saturday evening, stranding essential workers on their way home from daytime shifts. Late Sunday night in Chicago, the city’s public school system halted its free meal distribution service for low-income children, citing “the evolving nature of activity across the city”.  

Governors in at least 12 US states, in coordination with city leaders, have since called in National Guard troops to “help”. 

At this point it’s clear that the leaders of America’s cities are in desperate need of a radically different playbook to respond to these protests. A heavily armed, militarised response to long-simmering anger toward the heavily armed, militarised approach to American policing is more than ironic – it’s ineffective. Granting police officers wider latitude to make arrests via curfews also seems destined to increase the chances of precisely the tragic, racially biased outcomes to which the protesters are reacting. 

There are other options. In places such as Flint, Michigan, and Camden, New Jersey – both poor cities home to large black populations – local law enforcement officials chose to put down their weapons and march alongside protesters, rather than face off against them. In the case of Camden, that the city was able to avoid violent clashes is in no small part related to the fact that it took the drastic step of disbanding its former police department altogether several years ago, replacing it with an entirely new structure. 

America’s cities are in crisis, in more ways than one. It’s not a coincidence that the country has tipped into chaos following months of emotionally draining stay-at-home orders and job losses that now top 40 million. Low-income Americans of colour have borne a disproportionate share of the pandemic’s ravages, and public health officials are already worried about the potential for protests to become Covid-19 super-spreading events.

All of this has of course been spurred on by the US president, who in addition to calling Sunday for mayors and governors to “get tough” on protesters, has made emboldening white nationalists his signature. Notably, Trump didn’t call on officials to get tough on the heavily armed white protesters who stormed the Michigan Capitol building over coronavirus stay-at-home orders just a few weeks ago. 

US mayors and their police chiefs have publicly claimed that they do understand – agree with, even – the anger currently spilling out onto their streets. But as long as they continue to respond to that anger by deploying large numbers of armed and armored law enforcement personnel who do not actually live in the cities they serve, who appear to be more outraged by property damage and verbal insults than by the killings of black Americans at the hands of their peers, and who are enmeshed in a dangerously violent and racist policing culture that perceives itself to be the real victim, it is hard to see how this crisis will improve anytime soon. 

Sommer Mathis is the editor of CityMetric.