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.

 
 
 
 

In South Africa's cities, evictions are happening despite a national ban

An aerial view shows a destroyed house in Lawley, south of Johannesburg, on April 20, 2020. The city has been demolishing informal structures on vacant land despite a moratorium on evictions. (Marco Longari/AFP via Getty Images)

On the morning of 15 July, a South African High Court judge ruled that the city of Cape Town’s Anti-Land Invasion Unit had illegally evicted a man when it destroyed the shack where he was living.

That afternoon, the Anti-Land Invasion Unit was out again, removing shacks in another informal settlement.

Evictions were banned in South Africa for nine weeks, after the national government placed the country under a strict Covid-19 lockdown in late March. At present, eviction orders are automatically suspended until the country moves to a lower “alert level” and can only be carried out with a special order from a judge.

Yet major cities including Cape Town, Johannesburg and eThekwini (created through the merger of Durban with several surrounding communities), have continued to use municipal law enforcement agencies and private security companies to remove people from informal housing. In many cases those operations have been conducted without a court order – something required under regular South African law.

Around 900 people were evicted from three informal settlements in eThekwini during the eviction ban, according to the Church Land Programme, a local NGO. Its director, Graham Philpott, says it’s also aware of evictions in other informal settlements.

While evictions aren’t a “new experience” in these communities, the NGO released a report on lockdown evictions because they were “so explicitly illegal”. “There was a moratorium in place,” Philpott says, “and the local municipality acted quite flagrantly against it. There’s no confusion, there’s no doubt whatsoever, it is illegal. But it is part of a trend where the eThekwini municipality has acted illegally in evicting the poor from informal settlements.”

Evictions also took place in Cape Town and Johannesburg during so-called “hard lockdown” according to local activists. In eThekwini and other municipalities, the evictions have continued despite restrictions. In Cape Town, authorities pulled a naked man, Bulelani Qholani, from his shack. That incident, which was captured on video, drew condemnation from the national government and four members of the Anti-Land Invasion unit were suspended. 


The cities say they’re fighting “land invasions” – illegal occupations without permission from the land owner.

“Land invasions derail housing and service projects, lead to the pollution of waterways, severely prejudice deserving housing beneficiaries and cause property owners to lose their investments over night,” Cape Town’s executive mayor, Dan Plato said in a statement. (Plato has also claimed that Qholani did not live in the shack he was pulled from and that he disrobed when municipal authorities arrived.)

South African municipalities often claim that the shacks they destroy are unoccupied. 

If they were occupied, says Msawakhe Mayisela, a spokesman for the eThekwini municipality, the city would get a court order before conducting an eviction. “Everything we’re doing is within the ambit of the law,” Mayisela says. But “rogue elements” are taking advantage of Covid-19, he added.

“We fully understand that people are desperately in need of land, but the number of people that are flocking to the cities is too much, the city won’t be able to provide housing or accommodation for everyone overnight,” he says. 

While eThekwini claims to be a caring city, local activists say the evictions show otherwise.

In one case, 29 women were evicted from shacks during the hard lockdown. With nowhere to go, they slept in an open field and were arrested by the South African Police Service for violating the lockdown, Philpott says.

“These evictions are dehumanizing people whose dignity is already compromised in many ways,” says S’bu Zikode, the president of Abahlali baseMjondolo, a community organization whose Zulu name translates to “the people of the shacks”. 

“It has reminded us that we are the people that do not count in our society.”

Municipal law enforcement and private security contractors hired by cities regularly fire rubber bullets, or even live ammunition, at residents during evictions. Some 18 Abahlali baseMjondolo activists have been killed since the organization was founded in 2005, Zikode says, most by the eThekwini Land Invasion Unit and Metro Police.

(Mayisela says that if city employees have broken the law, Abahlali baseMjondolo can file a complaint with the police. “There is no conclusive evidence to the effect that our members have killed them,”  he says.)

Other Abahlali baseMjondolo activists have been killed by what Zikode calls “izinkabi,” hitmen hired by politicians. Two eThekwini city councillors were sentenced to life in prison 2016 after they organized the killing of Thuli Ndlovu, an Abahlali baseMjondolo organizer. A member of the Land Invasion Unit who is currently facing a charge of attempted murder after severely injuring a person during an eviction remains on the job, Zikode says.

South Africa’s 1996 constitution is intended to protect the public from arbitrary state violence and guarantees a right to housing, as well as due process in evictions. But for Zikode, the South African constitution is a “beautiful document on a shelf”.

“For the working class and the poor, it’s still difficult to have access to court. You’ve got to have money to get to court,” he says. 

The actions by municipal law enforcement are breaking down social trust, says Buhle Booi, a member of the Khayelitsha Community Action Network, a community group in the largest township in Cape Town.

“There’s a lack of police resources and those very few police resources that they have, they use to destroy people’s homes, to destroy people’s peace, rather than fighting crime, real criminal elements that we see in our society,” Booi says.

For him, it’s a continuation of the practices of the colonial and apartheid governments, pushing poor people, most of whom are Black, to the periphery of cities.

Around one-fifth of South Africa’s urban population live in shacks or informal dwellings, according to a 2018 report by SERI. Many more live in substandard housing. City governments maintain that the shacks destroyed during anti-land invasion operations are unfinished and unoccupied. But Edward Molopi, a research and advocacy officer at SERI, says that this claim is an attempt to escape their legal obligations to get a court order and to find alternative accommodation for affected people. 

The roots of the current eviction crisis go back to apartheid, which barred non-white people from living in cities. Between the 1940s and 1970s, tens of thousands of people were forcibly relocated from neighbourhoods like Johannesburg’s Sophiatown and Cape Town’s District Six to remote townships.

In the 26 years following the end of apartheid, deepening economic inequality and rampant unemployment have limited access to formal housing for millions of South Africans. Government housing programs have mostly focused on building small stand-alone homes, often on the peripheries of cities far from jobs and amenities.

While these well-intentioned projects have built millions of homes, they’ve failed to keep up with demand, says Marie Huchzermeyer, a professor at the Centre for Urbanism & Built Environment Studies at the University of the Witwatersrand in Johannesburg. Government-funded housing projects “will never on it’s own be enough,” she says. “It has to be accompanied by land release.”

Government policies call for the “upgrading” of informal settlements and the formalization of residents’ occupation. But “there are still very, very, very few projects” of that nature in South Africa, Huchzermeyer says. “Even if it’s an informal settlement that’s been around for 20 years, there still seems to be a political wish to punish people for having done that.” The government wants people to go through the formal process of being given a house, she says – and for them to be thankful to the government for providing it.

At the municipal level, change will require “real leadership around informal settlement upgrading and around ensuring that land is available for people to occupy,” she says. 

Despite the end of enforced racial segregation, spacial apartheid remains a factor in South Africa. There are few mixed-income neighbourhoods. Those who can afford to often live behind walls in sprawling low-density suburbs, while the poor live in overcrowded slums and apartment buildings.

The creation of the apartheid city “didn't happen by chance,” says Amira Osman, a professor of architecture at the Tshwane University of Technology. “It was a deliberate, structured approach to the design of the city. We need a deliberate, structured approach that will undo that.”

Since last fall, Johannesburg’s Inclusionary Housing Policy has required developments of 20 or more units to set aside 30% of those units for low-income housing.

The policy, which faced significant opposition from private developers, won’t lead to dramatic change, says Sarah Charlton, a professor at the Centre for Urbanism and Built Environment Studies, but it is “an important and significant step.”

Zikode isn’t optimistic that change will come for shack dwellers, however.

“People in the high positions of authority pretend that everything is normal,” he says. “They pretend that everyone is treated justly, they pretend that everyone has homes with running water, that everyone has a piece of land – and hide the truth and the lies of our democracy.”

Jacob Serebrin is a freelance journalist currently based in Johannesburg. Follow him on Twitter.