The iPhone era

Instant scrutiny, life-long repercussions

Airline profitability’ seems like juxtaposition these days. More and more capital is poured into these gargantuan entities as margins and yields fall. Market competition is tougher than ever and ‘lowcost’ carriers have altered the expectations of air travellers forever.

World-renowned investor Warren Buffett once famously said, “. . . if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favour by shooting Orville down. ” For investors, airlines are not only huge consumers of capital, they are considered to be performing well if they return three to four per cent. This figure is more in line with the security of a fixed-term bank account than the wild ride offered by the aviation industry. So often the industry falls victim to world events beyond its control. Epidemics, oil prices, terrorism, changing contracts and economic collapses are just some of the independent influences that can hobble airlines overnight.