Like most of the world, I watched in shock as the details of Malaysia Airlines Flight 17 emerged last week. Many questions ran through my mind. How could another major incident happen to Malaysia Airlines again in less than six months? How can a commercial jetliner reportedly be blown out of the sky by a surface-air-missile? Can Malaysia Airlines survive this latest incident? If this plane can be shot down, what about others? And hitting more close to home, what long term impact might this have on the travel industry as a whole?
There is no doubt in my mind that Malaysia Airlines will not be around for too long—at least in the Malaysian incarnation. Minor mishaps and even a crash might be sustainable. A missing airliner and another one shot down will likely not be seen as accidents allowing the airline to recover. I suspect that much like ValuJet and their devastating 1996 crash, a merger and re-branding may be in their future. With these two incidents, I am not sure many people will be willing to fly on the carrier.
At the time of this writing, the world leaders are hemming and hawing trying to figure out who is responsible for this act of terror. Perhaps it might even be considered an act of war. But until more is known, other airliners could possibly be targets. It is completely unknown and uncharted territory, but you can see from the flight paths, other carriers are concerned as well and are avoiding the Ukraine. How many other countries or factions have this capability?
As for the US travel industry, it is a complete unknown. The last time there was a major threat to aviation in this country was in 2001 and it put many agencies under, and damaged many others. My small agencies experienced an 84% drop in revenue between 4Q 2001 and 4Q 2002. If there are any more incidents similar to this, you can bet that the US travelers will once again stay stateside and likely change their habits to avoid air travel.
In 2001 we were all taken by surprise and it has been said that 2001 was a catalyst for the industry. I hate to be an alarmist (and I’d like nothing more than to be 100% wrong), but I think the chance of some trying times ahead is significant. As an agency owner, you need to be prepared. Review your current travel business and find out how much you depend on air travel and foreign travel. Take it a step further and identify your top destinations for foreign travel.
Do some exercises with your numbers—see how you would fare without that business. Or see how you would fare if it were reduced by 50%, 25%, 10%. If you were in business in 2001, take a look at your clients’ past travel history. See if you can identify some potential new “hot spots” in another “new” travel world.
Can you make up any losses operationally? Cutting staff? Renegotiating rents? Moving to a smaller location? Eliminating phone lines?
Hopefully, any financial modeling you do will be for naught; but as 2001 taught me, it is much better to be prepared than to be caught with your pants down. And if it is all for nothing—at the bare minimum, you will have a deeper look into your agency than you had before; and that will be of great benefit to you.
But now, with the downing of Malaysia Flight 17 in the Ukraine, a figurative and literal warning shot has been fired across the bow of the industry. Listen up.