Is China’s Airline Industry Bankrupt?

Tuesday, December 9, 2008 20:25

In the true fashion of industrial clusters swirling the economic toilet bowl, the last few days have brought to light a lot of bad news for China’s airlines.

Hammered by the last 18 months of record gas prices, which were coupled with cut throat competition, and matched by a lot of price freezes that only exacerbated the losses,  it appears that the shakeout is beginning and many airlines are teetering on the brink of bankruptcy.

Founded more in the costs of hyperdevelopment and scarcity of resources, and not tied directly to the global financial crisis, where I see this is as:

(1) a short term issue that will be resolved by more infusions of funds from government sector
(2) opportunities for foreign investment may present themselves not only in terms of equity plays, but also on the service side as well
(3) logistics service providers who have contracts with these firms should review their contracts and speak with potential backups to ensure continuity of service as a just in case.

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2 Responses to “Is China’s Airline Industry Bankrupt?”

  1. Dan says:

    December 10th, 2008 at 12:15 am

    How will this impact safety?

  2. Rich says:

    December 10th, 2008 at 2:01 am

    Interesting question Dan.

    1) I have a brother who is a pilot and majored in airline safety
    2) I have watched the Discovery airline investigation series too much.

    In essence, when money is short, inspection schedules are often one of the first thing to be stretched.

    However, with many manufacturers having tech reps in country, I am guessing that they will make sure and keep their eye on the ball.

    anyone from the airline services industry care to comment?
    R

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