Spanair's collapse: a few notes

End of the story for Spanair

End of the story for Spanair

When I wrote my latest post a few days ago, I was not expecting to write again so soon about the Spanish aviation industry, but the events of last Friday, despite not being entirely unexpected, have shaken to the core the Spanish airline industry, nothing less than the collapse of Spanair.

I have been following the Spanair saga almost since the day I started this blog and a lot has been said already about Spanair's demise (the Spanish and, particularly, the Catalan press are packed with news, reports and comments about the Spanair case), so this won't be a long post...

The fact is that Spanair was fighting an uphill battle from the very start (by "start" I refer to the date when Spanair was acquired and re-founded by a consortium of government-back Catalan institutions after its near bankruptcy in 2008):

1) When it was acquired by its current owners, Spanair was already in a difficult financial situation and under-capitalized

2) The financial crisis has hit very hard its main markets

3) It was a not-particularly-efficient airline that had to face formidable competitors such as Vueling and Ryanair at its own home base

4) It lacked any significant source of differentiation, it was neither strong enough to develop a viable network or superior service, nor efficient enough to deliver value, plus it lacked a strong brand.

5) It was acquired with government-backed funds because it was expected to help in the development of a long-haul hub at Barcelona airport, a mission that it was totally uncapable to fulfil since it lacked the fleet or the feeder routes to do it. Governments and business do not usually mix very well, but it becomes even more difficult to justify such support when there aren't any tangible results in the form of a greater return to the overall economy and the government itself is going through a round of public spending cuts.

Then there is Spanair's membership of Star Alliance: there was the expectation, that, if not alone, at least with the support of its partners, Spanair would be able to consolidate some sort of hub at BCN, while giving Star Alliance a solid foothold in South-Western Europe.

None of this is going to happen, no Qatar Airways last minute rescue either, although judging by Vueling's quick reaction, I think this supply shock will be quickly absorbed by other carriers (I have written already about the adaptability and resilience of air travel markets).

Vueling is, indeed, the airline that benefits the most from Spanair's demise and emerges from this situation undisputedly as Barcelona's home airline, with an expanding network and a product that has been evolving from the pure low-cost model to that of an hybrid carrier, able to appeal to both business and leisure passengers.