Rocketing costs mean a future of uncertainty

May 10 2008 by Toby Chapman, Liverpool Daily Post

TODAY’S news that Isle of Man airline EuroManx has closed is the latest depressing sign of a tightening economy. EuroManx stopped flying yesterday, blaming increasing fuel prices and low passenger numbers.

The airline, which started operating in August 2002, flew to Liverpool John Lennon Airport five times a day. It also flew to Manchester, London City and Belfast from its Ronaldsway hub.

Fortunately, airline Flybe started flying four times a day out of JLA to the island six weeks ago, otherwise the loss of EuroManx would have caused some very serious problems for travellers – especially as the summer tourism season prepares to get under way.

The collapse of EuroManx comes in the same week that Easyjet reported its half-year losses had more than doubled.

Easyjet claimed it would recover from the blow as its low-cost business model would allow it to ride the fuel price rises.

But it warned that the rocketing cost of crude oil – jet fuel has risen 35% in three months and 80% in a year – would put many players out of business. That dire prediction soon came true.

This is a competitive market where consumers are frequently able to make choices based on financial competitiveness.

This is good for the traveller, but for budget airlines, the rising cost of crude oil will spell a period of uncertainty, financial difficulties and, perhaps, some hard decisions.

In the case of EuroManx, some 70 employees have lost their jobs due to the company’s “insurmountable obstacles”. The firm had appeared to be thriving but its hard work was undone by the high cost of fuel, coupled with reduced passenger numbers.

Many will see the Credit Crunch as playing a role in this airline’s demise and JLA is fortunate that Flybe is there to pick up the Liverpool trade and ensure the airport continues to attract Isle of Man-bound travellers.

Otherwise it would have been a blow to the economy of Merseyside as well.