Monarch Airlines: What Happened to One of the UK’s Best-Known Airlines?

Monarch Airlines was a pioneering airline in the United Kingdom, bringing overseas vacations to a price point accessible to a larger part of the British population than ever before.

The London Luton Airport-based airline brought millions of British travelers to their destinations and back over the course of five decades. Then, in 2017, Monarch Airlines collapsed in a spectacular manner, leaving some 100,000 customers stranded across Europe.

It marked the biggest airline collapse in UK aviation history and an end of an era.

While there were numerous reasons for the airline’s collapse, the result of the 2016 Brexit referendum was arguably one of the more important ones.

Monarch Airlines: What Happened to One of the UK's Best-Known Airlines?
A Monarch Airlines A321 resting overnight at its base, London Luton airport.

The Early Days of Monarch Airlines

Monarch Airlines was founded by two former British Eagle directors in 1967 and began operating as a subsidiary of Globus, a travel holdings group that, among other things, owned the UK-based tour operator Cosmos Tours.

With significant financial backing from Globus’ owner, Monarch was well-positioned to take on the burgeoning civilian aviation market in the United Kingdom.

The company’s focus on middle-class families proved a winning strategy as customers flocked to the airline for relatively affordable overseas trips. As the airline started expanding its fleet with jet-powered aircraft, it quickly grew to become a force to be reckoned with in UK aviation.

By 1972, just half a decade after its founding and a year after introducing its jet service, it was carrying 500,000 passengers per year. By 2013, Monarch Airlines was carrying some 7 million passengers annually after enjoying decades of growth.

Monarch Airlines BAC-111
The BAC 1-11 was the second jet aircraft type to enter Monarch’s fleet after the Boeing 720. (Credit: Pedro Aragão, CC BY-SA 3.0)

Monarch Airlines’ Evolving Business Model

Monarch Airlines started as a charter airline with an emphasis on package tours, an arrangement that offered immense synergies with Cosmos Tours (later Monarch Holidays and Cosmos Holidays).

However, as the airline noticed shifting consumer preferences toward independent travel in the 1980s, it decided to expand into scheduled flights in 1986.

The next decade also prompted further evolution of Monarch’s airline business as low-cost carriers (LCCs) started putting pricing pressure on more traditional airlines such as Monarch. At Monarch Airlines’ Luton home base, easyJet was rapidly expanding its base operations, giving Monarch staff a clear sign of where the market was heading.

By the mid-2000s, Monarch Airlines decided to follow suit, adopting an LCC-inspired approach to pricing, for example, by charging extra for food and drinks.

While it kept running its traditional charter business alongside its more LCC-like airline, by 2008, it changed its slogan to “The Low Cost Airline That Cares,” firmly positioning itself as a low-cost airline. As part of its market reorientation, it aimed to make its scheduled services 80 percent of its business, with its charter services making up the remaining 20 percent.

A Number of Problems at Home and Abroad

Even though Monarch Airlines was keen on reorienting itself to meet a changing market head-on, it proved to be a challenging and costly venture.

The razor-thin margins of the LCC market severely impaired Monarch Airlines’ profitability, and by November 2011, it needed a £75 million rescue package to stay afloat amid steep fuel prices and lower demand for many of its Middle East destinations.

As the cash injection allowed Monarch to stay afloat and expand, the company reached a record of 7 million passengers in 2013. The target was to raise this figure to over 10 million by 2016.

However, the competitive and costly reality of the UK aviation market quickly caught up with Monarch Airlines again, prompting cost reduction initiatives only a year after the company broke its all-time passenger record.

In October 2014, the company that had owned Monarch Airlines since its foundation, Globus, decided that it was time to get out of the airline business. It sold the airline to Greybull Capital, a private investment company specialized in turning struggling companies around, which immediately intensified cost-cutting efforts.

As a result, Monarch’s fleet shrank from 42 to 34 aircraft, some 700 jobs were cut, and long-haul flights and the long-running charter business were wound down.

Monarch Airlines 757
A Monarch Airlines 757 arriving at Manchester airport back in 2011.

Consequently, Monarch Airlines carried only 5.7 million passengers in 2015—a significant decline from the year prior and a far cry from the 10 million passengers it had aimed to serve in 2016.

Then, external factors made Monarch’s already ill fortunes turn for the worse.

Terrorist attacks in Egypt, Turkey, and Tunisia combined with the highly publicized migrant crisis in Southern Europe seriously dampened UK traveler demand for trips to many of Monarch’s most important destinations.

In September 2016, the writing seemed on the wall for Monarch’s imminent collapse as it scrambled to renew its customer protection license, or so-called ATOL license. Rumors suggesting that the airline was about to file for bankruptcy were abundant.

The crises was briefly averted when a sudden cash infusion that eventually turned out to come from Boeing saved the airline from collapse and allowed it to continue operations as usual with its ATOL license intact. Consumer confidence in Monarch Airlines, however, had taken a serious dent.

To add insult to injury, the pro-Brexit outcome of the June 2016 Brexit referendum saw the pound sterling plummeting.

This resulted in lower customer demand for overseas travel as the exchange rate against other currencies had worsened considerably, and for Monarch Airlines, it meant increased operating costs across the board.

Monarch Airlines’ Bankruptcy and the Aftermath

Exactly one year after the first bankruptcy scare, Monarch Airlines would face the same situation, but this time, there was no sudden cash infusion to save the company from collapse. On 2 October 2017, it had landed its last aircraft and entered into administration with immediate effect.

The collapse meant that some 100,000 Monarch Airlines customers were stranded around Europe, prompting British authorities to embark on an enormous repatriation effort to bring British travelers home.

In total, the UK Civil Aviation Authority estimated that the repatriation cost the UK government around £60 million.

Summary

The scale of Monarch Airlines’ collapse was unprecedented, and it turned out to be the United Kingdom’s greatest peacetime repatriation effort in history.

However, it would only take two years for this historic, but unfortunate, record to be broken as Thomas Cook collapsed and left 150,000 passengers stranded in 2019.

Exactly to what degree the Brexit referendum results played a role in Monarch Airlines’ collapse remains a subject of debate as the airlines’ finances were quite precarious years before the referendum.

Even so, it’s clear the Brexit fallout exacerbated Monarch’s already dire financial situation—a fate that, in many ways, was mirrored by Thomas Cook’s collapse two years later.

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