THE NEW AIRLINE MARKET OF EUROPE – PART 2

The current European airline industry is made of 3 basic groups of airlines: one, the prosperous “mega-airline” – British Airways, Lufthansa and Air France. These are giant airlines, and they do very good in terms of business and revenues. Within this group lie two more airlines – KLM and Swiss – which are independent only as brands.

Second, the legacy “national airline”: Iberia, Alitalia, Lot, Finair and so on. Those airlines are rooted in the days that commercial aviation was purely a national business, and each airline carried the national flag of its country. Today, some of those carriers are successful, like Iberia, and some are not, like Alitalia and Olympic. Both types enjoy today from the national character of this business, giving the “home airline” in each country some advantages over other airlines in that country airspace.

Third, the booming group of small, quick, market-oriented airlines, some of them charter and some of them not, among them: Air Europa, Air Berlin, Monarch, BMI, Click Air, Vueling and many more. Those airlines were founded in order to cater a specific slice of the market, be it vacationers traveling to the shores of south Europe or business persons hopping between central European cities. Soaring demand enlarged their appetite, and today some of those airlines are looking much further, as in the case of Air Berlin, which recently ordered 25(!) new Boeing 787s.

Demand for air travel is expected to continue to soar, so what else does the future holds for each group of airlines? And by future I mean especially the eradication of the nationality factor from the market, making all carriers “European”, instead of Italian, Spanish or German.

For the “mega-airlines” group, the future is bright. With their huge economic clout, they can continue to lead the market, aquire other small airlines and purchase more and more planes. The third group of airlines, those small, quick ones, is also predicted to benefit from the new shape of the market, at least those of them which will know how to manage themselves in the commercial aviation jungle.

The one group that could be in trouble is the “national airline” group. Those airlines that would not adapt to the new market, and continue to think in terms of national aviation, could very fast find themselves in dire situation. The future of such airlines like Olympic, Lot, Austrian etc. lies in understanding their field, and maybe cooperating with other airlines. The key term is “competition”: only airlines that will know how to compete will survive.

THE NEW AIRLINE MARKET OF EUROPE - PART 1

A non-stop British Airways flight from Warsaw to New York.

A non-stop Air France flight from Vienna to Denver.

A non-stop Lufthansa flight from Budapest to Los Angeles.

Is this the future face of commercial flying in Europe? possibly. Less than a year from now, a new aviation agreement is due to take effect between the U.S. and the E.U. In the conservative world of civil aviation, this is one of the most revolutionary steps ever taken.
For the first time ever, all of the E.U. countries will be considered as one country vis a vis commercial aviation flights from and to the U.S. In practical terms it means that British Airways will not be considered as a British airline; Alitalia will not be considered as an Italian airline; Iberia will not be considered as a Spanish airline; and so on. All of those airlines will now be European airlines. Of course, this change will take place at first only on the U.S. routes, but you don’t need to be a genius to figure out that it is going to spread into the E.U.’s other aviation agreements very quickly.

If BA is no longer a British airline, but a European one, it can take off directly to the U.S. from any European city. Today you can fly from Athens to Boston with BA, but you have to do it in two legs: one flight from Athens to London, and another flight from London to Boston. The reason is that only a Greek airline is allowed to fly directly from Greece to the U.S., just as only a British airline can fly directly from the U.K. to the U.S.

The probability of BA establishing a non-stop route from Athens to the U.S. will now become a matter of economic feasibility: does it pay or doesn’t it? But there is no question that there is a huge opening here: more than half of the E.U. countries are relatively new to the union, being former eastern states. Such countries, such as Hungary, Poland and Romania, are predicted to experience extended rates of economic growth in the years to come, and that means great opportunities for major airlines.