Business year in review: From the collapse of Monarch to the rise of Bitcoin and the hanging-in-there of Uber

All-electric cars are on the ascent while Air Berlin’s been grounded and the gender pay gap is ever gaping – 2017’s a year of lows and highs

Josie Co
Business Editor
@JosieCox_London
Tuesday 19 December 2017 10:25
comments
Uber chief Dara Khosrowshahi walked into a ride-hailing firm fighting court battles and regulators
Uber chief Dara Khosrowshahi walked into a ride-hailing firm fighting court battles and regulators

For the world of business 2017 was a year of revolution. The ballooning sharing economy whetted our appetite for on-demand services at the click of a mouse, in real-time.

Artificial intelligence redefined the world of technology, and achingly innovative startups made more headway than ever before in their quest to derail more established counterparts.

Here’s a look back at some of the most defining stories and trends of the past 12 months, as we brace for the year to come.

Uber’s battles in London and beyond

Uber covered up a huge security breach that occurred last year 

The ride-sharing behemoth’s meteoric rise was marred by a series of scandals in 2017, the full of extent of the damage of which is still hard to gauge.

Sexual assault allegations, concerns around the treatment of drivers and worries about passenger safety, added to criticisms that chief executive and founder Travis Kalanick had been fostering a culture of misogyny internally.

Tensions between Kalanick and key shareholders escalated in the first half of the year, eventually leading to the founder taking an indefinite period of leave. He resigned as chief executive of the San Francisco-based company a week later.

But his successor, former Expedia chief executive Dara Khosrowshahi, inherited more than just a global tech firm with tens of millions of loyal customers.

In September, Transport for London shocked the capital by announcing that it would not extend its licence for the company to continue to operate there in its current form.

That dealt a major blow to the group, which has an estimated 40,000 drivers in London and millions of customers. Khosrowshahi came to London to engage in talks with representatives of TfL and Uber unsurprisingly appealed the decision.

It’s hard to tell how long the appeal process will last. For now, Uber is able to keep operating. It’s promised to clean up its act, especially around health and safety standards, yet TfL shows no let-up in its tough approach to the company.

Separately, in early November, Uber lost an appeal against what employment lawyers and trade unions called a landmark ruling in London, ordering it to treat its drivers as fully-fledged employees of the company, and not self-employed.

Again, Uber is appealing judgment, but if it’s not successful the decision could spell higher costs for a company that many value for its cut-price rates.

There are plenty of battles still brewing for Uber - well beyond the UK too.

In November it also admitted to having covered up a massive data breach – 2018 could indeed prove to be a make-or-break year for what once looked like the ultimate startup success story.

Airlines face crisis point

Monarch ceased trading suddenly in October (Getty)

The lingering threat of terrorism, coupled with fierce competition for cheap flights and market share, proved too much for some airlines to handle in 2017.

Perhaps the most high-profile victim in the UK was Monarch Airlines. After a slew of poor annual earnings, profit-warnings and rescue packages, rumours surfaced on the last weekend of September that the Luton-headquartered airline, founded in 1967, was finally heading for administration.

The company vehemently denied the reports, but just days later, in the early hours of 2 October, the Civil Aviation Authority put out a statement confirming that Monarch had ceased operations with immediate effect and that it had entered administration.

To get more than 100,000 holidaymakers who were abroad at the time back home, the biggest mass repatriation in peacetime history was called into action.

The demise of Monarch, which over decades had for many sunseekers become a symbol of carefree holidays in the Mediterranean and elsewhere, was blamed on several factors, but perhaps most notably a decline in travel demand to places like Egypt, Turkey and Tunisia, the falling value of the pound in the wake of the Brexit vote, and the dominance of rivals like easyJet and Ryanair.

But Ryanair didn’t quite escape 2017 unscathed either. A major staffing crisis propelled Europe’s biggest discount carrier into the headlines in late summer. A mess-up in scheduling in response to a change in labour laws, and the poaching of some staff by competitors caused more than 20,000 flights to be cancelled.

In the longer run however, analysts forecast that the debacle would have no impact on Ryanair’s finances or reputation.

Less of a lucky escape was had by Air Berlin. Once one of Germany’s largest airlines by passenger numbers, it was forced to file for insolvency in August after its largest shareholder, Etihad, withdrew support. Its final flight landed in Berlin on 27 October. Rival easyJet subsequently announced that it would absorb many of Air Berlin’s staff and lease some of its aircraft.

That insolvency was attributed to rising competition, failed negotiations around how it might profit from lower oil prices, and major delays to the construction of a new Berlin airport.

Crypt-revolution and the rise of bitcoin

The cryptocurrency is now a mainstream player (Reuters)

Bitcoin has in recent years migrated from being a little-known cryptocurrency and the exclusive domain of geeks and techies, to being a global currency, better known than many that have been around for centuries. In 2017 it went mainstream.

Though still widely considered to be dangerously volatile and present a bubble-risk, representatives of several major financial institutions have over the past 12 months spoken out on the merits of bitcoin. And that has caused a surge in value.

Despite intermittent dramatic sell-offs, the value of bitcoin, first created in 2009, absolutely soared throughout 2017, and other cryptocurrencies – like litecoin and ethereum – appear to have piggybacked off its success.

Back in 2014, travel booking service Expedia started taking bitcoin payments. Microsoft users can now use the currency to buy content in the Windows and Xbox stores.

In September lingerie entrepreneur Michelle Mone began selling property worth a total of $250m (£192m) in Dubai to be paid for in bitcoin while Bjork announced recently that her latest album would can be bought via bitcoin.

Beginning of the end of the diesel car

Elon Musk and Tesla are set on driving the all-electric revolution for cars – pictured is the 2020 Roadster 

Hobbled by a massive diesel scandal caused by Volkswagen in 2015, the global auto industry found itself at a turning point in 2017.

Perhaps encouraged by the growing popularity of alternatively fuelled vehicles, as well as reams of research showing just how much damage emissions are causing to the planet and our health, the Government announced in July that it would be banning the sale of all diesel and petrol cars and vans from 2040. The announcement followed a similar move by France, and manufacturers appeared to have been anticipating it.

Earlier in July, Volvo had said it would become the first major car company to go all-electric. It said that every new car that rolls off its production line from 2019 would have an electric power train available.

Others followed suit, announcing the launch of new models, and similar targets.

And several companies also introduced diesel scrappage schemes, incentivising customers to bring in their old vehicles for a discount on a new, cleaner alternative.

One of the companies that has become perhaps most emblematic of the movement towards green in the automotive industry, is Tesla. Elon Musk’s company in 2017 launched its new Model 3, which promised to be a cheaper alternative to the existing iterations. But in the second half of the year the company hit more than a few bumps in the road.

In early November, it pushed back its target for volume production on the Model 3 citing bottlenecks. It also posted the biggest quarterly loss in its short but eventful history.

With more established manufacturers adopting the green way, 2018 promises to be yet another challenging year for Tesla. It’s proved to be highly innovative and forward-looking, but in a market where consumers decide who’s king, that's not always enough to guarantee success.

Gender equality goes mainstream

Some big companies remain reluctant to reveal how much female employees earn compared to men 

For years charities, action groups and the Government have been pushing for greater gender diversity across businesses, but 2017 brought what may prove to be one of the most effective steps towards enforcing equal pay between the sexes in Britain.

Under Government legislation, from early April this year, companies employing at least 250 people had 12 months to meet a deadline to publish their gender pay gap figures for each pay band.

It’s the first time such rules have come into force, and many praised it as a historical move to combat a stubborn divide, but others immediately expressed concerns that the reporting requirements would not be granular enough to facilitate real change.

“The reporting will tell us what we already know, whilst neglecting to consider the myriad of factors that legitimately differentiate pay such as levels of responsibility, nature of work, experience and geographical location to name but a few,” Suzanne Horne, an employment partner at law firm Paul Hastings said at the time.

What it has achieved already, however, is a greater level of conversation around the issue.

Business leaders have become aware that they need to make gender pay gap reporting an integral part of their strategy and that fair pay is not just a woman’s issue.

Further inflaming the debate, the BBC over the summer published the salaries of all of its presenters and actors who earn more than £150,000.

Two thirds of those on the list were men, triggering outrage and accusations that many of the broadcaster's best-known women are being compensated less than their male counterparts for jobs that are of equivalent value.

So far only a minority of companies and institutions have reported their gender pay gaps – including the Bank of England and FTSE100-listed easyJet. They still have until early April to do so. The picture then is likely to be bleak, but at least it will provide us with a starting point for progress. And perhaps achieving gender equality in the workplace, will pave the way for greater ethnic diversity too.

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