Protecting your business in the face of rising airline insolvencies.

April 9, 2019

Air travel has seen a huge shift over the past decade; from the days of exclusive luxury airline travel with Concorde, to the emergence of mass market low-cost airlines such as easyJet and Ryanair. Flying is often the quickest and, in some cases, the cheapest form of travel. So much so that a total of 4.3 billion passengers flew in 2018, indicating a 6.1% increase from 2017 - a significant difference in just a year and certainly from the early days of aviation when flying was reserved for the wealthy.

Drivers for reduced air fares include the rise of Low-Cost Carriers (LCCs) as they pass on cost savings directly to passengers; greater levels of competition between airlines; as well as improved cost control techniques from better technology and better use of data.

However, while the increased affordability of air travel is great news for eager travellers, airlines continue to face mounting pressures. As a result, we’ve seen the steady flow of airlines going bust, with failures like Germania and Cobalt this year leaving many travellers stranded, and travel intermediaries out of pocket. And as recently as a fortnight ago, Iceland’s Wow Air, left thousands of passengers stranded after unexpectedly ceasing operations.

In fact, according to our latest assessment, over the last 15 years (between 2003 and 2018) an average of 52 airlines insolvencies have occurred each year. The failure with the biggest impact in recent years was Monarch airlines in late 2017, with almost 2,000 staff let go and the travel plans of 860,000 passengers disrupted.

So, why is this happening?

Increased competition: To stay ahead of the game, airlines have added more capacity in recent times, including when their operating costs were lower in 2018, but the industry may now be seeing excess capacity, particularly in Europe. In addition, the growing presence of budget carriers is creating an environment where weaker businesses are under heavy pressure and unable to compete.

Volatile fuel costs: An uptick in fuel costs tends to induce financial distress, particularly for airlines that are not well placed to compete, for example, because of a lack of ability to raise fares or lower other costs. In fact, the continuing rise in the cost of fuel has been a factor for the failure of many airlines, including Primera Air and Monarch, and in such an intensely competitive market, other airlines are expected to follow suit.

Other common triggers: There are many factors out of airlines’ control that negatively impact their financial growth. These include political uncertainty, the threat of war deterring tourists from travelling, and natural disasters such as earthquakes or hurricanes directly impacting the airport and locales. Each of these can sap demand for tickets and may force an airline into failure or into refocusing on new sources and destinations, potentially with more fierce competitors.

However, there is light at the end of the tunnel. Travel agents can protect themselves and their end travellers from airline failures by using virtual cards to facilitate their payments to suppliers. With sophisticated chargeback features, and backed by a Mastercard guarantee, eNett’s Virtual Account Numbers (VANs) protect against supplier default, such as prepaid but incomplete travel (if this is a fault of the airline). In fact, eNett has recovered almost USD4 million for our customers following the airline bankruptcies of Germania and Cobalt airline over the last six months – benefitting a total of 14,700 end travellers.

But the benefits of eNett’s VANs don’t stop there. They can positively impact all parties affected by an airline failure, from an end traveller more likely to be able to recover funds from their travel agency, to a government (taxpayers) incurring less of the direct and indirect costs. To find out more, read our guide on airline failures.


More Blog Posts

14 August 2019

How are travel brands staying relevant this summer (and beyond)?

The European summer is well under way. During a time when travel bookings are rife – especially in the UK, which has been coined as the ‘year of the last-minute summer’ for getaways – it’s important for travel companies to stand out from the crowd if they want to capitalise on the boost in demand. However, with the travel industry becoming more competitive than ever before, this begs the question: how do you stay relevant?

Read more

25 June 2019

eNett 10 years on: A decade of redefining payments

Cast your mind back to 2009, the year Spotify and Twitter became mainstream. When the phrase ‘there’s an app for that’ took off, thanks to the explosion of apps on iPhone, Android and even Blackberry. 10 years ago, also marks the point in time when eNett International entered into a joint venture with Travelport and Optal, which has been a key enabler of the growth and success we’ve enjoyed to date, and the start of our decade as a disruptor.

Read more

19 June 2019

How hotels can solve payment challenges using virtual cards

In our latest “Virtues of VANs for Hotels” report, we outlined the top pain points that hotels are experiencing as a result of payment complexity when using invoices.

Read more

14 May 2019

Our key takeaways from Money 2020 Asia

Money2020 is one of the most influential fintech events across the globe, gathering the world’s decision makers to discuss the disruptive technologies taking hold of the market today and in the future. Read our key takeaways from the event.

Read more

13 March 2019

With the 2019 Rugby World Cup on the horizon, how should travel companies prepare for big ticketed events?

Travel businesses around the world are in the midst of selling travel, accommodation and packages to the 2019 Rugby World Cup. Read what your travel agency can do to leverage prominent events and ensure your team is ready.

Read more

14 February 2019

Why travel businesses need to be prepared for further PSD2 legislation.

This time last year the travel industry raised concerns around the process of surcharging being banned under the European Payment Services Directive (PSD2). Later this year there’s still more to come from PSD2. Read about how this will impact consumer and B2B payments.

Read more

25 January 2019

2018 was a rollercoaster for the travel industry. So what’s in store for travel in 2019? Here are some trends and predictions from eNett’s CEO, Anthony Hynes.

Read more

05 December 2018

Why travel agents (and airlines!) should jump aboard the VAN wagon

If you work in travel and tourism, you’ll no doubt have heard at least some discussion around the acceptance of payments between airlines and travel agents. Click here to read the view of our CEO Anthony Hynes.

Read more

14 November 2018


According to the World Travel and Tourism Council, five of the world’s ten fastest growing tourism cities are in Asia, putting the region at the forefront of tourism in the foreseeable future. Compared to major western economies, such as the U.S., U.K. and Germany, where GDP grew at less than 2.5% year-on-year in 2017, the APAC market grew at a much faster pace. China’s GDP, the second largest worldwide, increased by 6.9% in 2017, whilst India, rose by 6.6% during the same period.

Read more

26 September 2018

Technology and travel – the past, present and future.

Over the past 20 years, technology has played a role in the growth of the tourism and travel industry. This blog explores recent technological advances and how technologies like big data, artificial intelligence and digital platforms can be harnessed to boost growth and improve the customer experience.

Read more

03 September 2018

Why the travel industry should take a leaf out of Amazon’s book

It’s predicted that Amazon, the $900+ billion tech giant that is revolutionising customer experience , may disrupt the online travel industry next. So what can online travel agents (OTAs) learn from the retail giant to ensure they too do not get left behind?

Read more

31 July 2018

European summer 2018: experience trends are changing travel industry traditions

European summertime is a notoriously busy period for the travel industry, as travellers all over the continent jump at the chance to book flights to seek out sunnier destinations. In the UK, some airports have claimed that 2018 will be the “busiest summer ever”, expecting millions to pass through their doors between July and September.

Read more

25 June 2018

Nine milestones since 2009

Yesterday marked nine years since we started the eNett journey back in 2009. From day one, our aim has always been to shake up the industry by helping travel companies take the cost and complexity out of payments. And the proof is in the pudding, as the uptake for Virtual Account Number (VAN) technology has taken eNett from strength to strength.

Read more

29 May 2018

Our Vision for GDPR

The European Union General Data Protection Regulation is coming into effect on 25 May 2018. eNett believes personal data, privacy and security are of the utmost importance for all. In line with this, we are in the process of making changes globally.

Read more

17 May 2018

How OTAs are navigating the changing landscape of the travel industry

Nowadays, travellers have many options available to them to help choose destinations, compare prices and make reservations independently and easily. Competition in the travel industry is high, and margins are low. It’s clear that online travel agencies (OTAs) can’t do business in the way they used to.

Read more

11 April 2018

How fraudsters are targeting OTAs

Fake hotels are fast becoming a massive issue for OTAs, leaving them out of pocket. And they’re becoming ever more sophisticated and believable too. What can OTAs do to protect themselves from this growing threat?

Read more

22 February 2018

Costing US$21B a year - it pays to know about fraud in travel payments

In 2017 the impact of fraud is estimated to have cost travel intermediaries US$21B. By 2020 the impact of fraud is expected to cost US$25B, driven by both a migration from offline to online, and an expected uptick in the rate of fraud. Understanding fraud and its true impact and cost to travel businesses is the first step to combating it.

Read more

07 February 2018

Future-proofing your business for 2018

Anthony Hynes gives his top four considerations travel companies should be thinking about to get ahead in 2018.

Read more

12 December 2017

A Year in Review for Travel

2017 is shaping up to be a record-breaking year for the travel industry. eNett MD and CEO, Anthony Hynes, recaps of some of the highs and lows over the past year, and ways travel companies can continue the growth trajectory in 2018

Read more

16 November 2017

Tackling Fraud in the Travel Industry

As part of International Fraud Awareness Week, eNett MD and CEO, Anthony Hynes gives his view on how travel agencies can tackle increasing levels of fraud in the travel industry.

Read more

30 October 2017

Key to tapping Asian travel market is payments

As part of International Fraud Awareness Week, eNett MD and CEO, Anthony Hynes gives his view on how travel agencies can tackle increasing levels of fraud in the travel industry.

Read more

27 September 2017

We’re backing World Tourism Day’s drive for sustainable tourism

Travel and tourism grow every year. Many underprivileged communities across the globe are being displaced - especially those in high-growth travel destinations. 'Repay the eNett Way' is our hands-on approach to make a difference in these communities.

Read more

29 August 2017

Great employee experience = great customer experience

A unique value proposition is one thing, the second step you take when launching a business is just as important.

Read more

01 August 2017

How Virtual Account Numbers Simplify B2B Travel Payments

Travel agencies are wasting time and money - it doesn't need to be this way. There is a solution today, it's faster, easier and safer than many other traditional methods too!

Read more

22 June 2017

Eight Entrepreneurial Essentials

From a tiny no-frills office near Heathrow airport, to offices in Asia, Australia, Europe and America just eight years later - what a journey!

Read more