EUROPEAN AVIATION LANDSCAPE

In the European aviation sector, there is no middle ground anymore. On scheduled flights, travellers have to choose between service and price. There is no longer room for holiday carriers and regional airlines, after tremendous consolidation that occurred in the last two years. Holiday carriers like Air Berlin, Monarch Airlines, Primera Air and Germania disappeared. In addition, several regional airlines ceased to exist and Flybe, the largest regional airline in Europe, was forcefully sold to a consortium of buyers led by Virgin Atlantic.

There is no longer room for small players in the European airline industry.

Market share of the ‘big five’

1. Lufthansa Group 12.3%
2. Ryanair 12%
3. IAG 9.8%
4. Air France-KLM 8.8%
5. easyJet) 7.7%

Nowadays, over 40% of the flights within Europe are carried out by low-cost airlines.

Biggest low-cost carriers in Europe 

1. Ryanair
2. easyJet
3. Norwegian
4. Wizz Air
5. Vueling
6. Eurowings
7. Pegasus Airlines.

Largest full-service carriers in Europe 

1. Lufthansa
2. Air France
3. KLM
4. British Airways
5. Turkish Airlines
6. Aeroflot
7. Scandinavian Airlines.

More consolidation is likely in the coming years; airlines will either topple over or be taken over.

For many years the bigger European airlines were able to grow due to the lack of any meaningful competition. This changed with the appearance of budget airlines (within Europe), Gulf carriers (Europe – Asia) and long-haul low-cost flights (Europe – North America). All of a sudden, airlines like Air France, Lufthansa, British Airways and Iberia had to start cutting costs in order to be able to compete with the lower prices of the new challengers. These airlines could grab significant market shares in a short period of time. Now, years later, they seem to have succeeded for the most part and are able to offer airline tickets at much more competitive prices. With the gaps significantly reduced, the low-cost airlines and Gulf carriers are no longer able to offer obviously more attractive products.

European low-cost carriers seem to be well aware of this and they are trying to adapt their business to be more customer oriented. Within Europe, full-service carriers must consider the growing market share of the low-cost carriers, but outside of Europe, many opportunities await.

A couple of years ago there was suddenly a lot of attention for a new market. Long-haul low-cost was expected to bring significant changes, in particular to the intercontinental market between Europe and North America. Norwegian took the lead, followed by Icelandic WOW air, Primera Air, Joon (Air France-KLM) and LEVEL (IAG Group). The competition was expected to be fierce for European full-service carriers. Now, it looks like the experiment has failed once again. Norwegian was forced to close many routes, and WOW air avoided bankruptcy due to a money injection from Indigo Partners who acquired a 49% share in the company. Primera Air did go bankrupt, Joon airlines will cease operations in June 2019 and insiders wonder how much longer LEVEL will survive.

In recent years, the business market has been increasingly popular with low-cost airlines. Ryanair, for instance, moved many flights from secondary airports to primary airports. The question is where the focus will be in the coming years with a holiday market offering many opportunities after the demise of well-known names like Air Berlin, Monarch Airlines, Small Planet Airlines, Primera Air and Germania. Ryanair already showed an interest in Germania and the airlines division of Thomas Cook Group which was recently put up for sale. In addition, TUI still intends to get rid of French airliner Corsair International. Currently, over 40% of all the flights within Europe are operated by low-cost carriers. Insiders expect this share to continue growing. The takeover of the holiday market could result in an even bigger growth.

Bankruptcies

Belgium

1. VLM Airlines (Declared bankrupt in August 2018)

Cyprus

1. Cobalt Air (Declared bankrupt in October 2018)

Denmark

1. Primera Air (Declared bankrupt in October 2018)

France

1. Joon (Airline remerged into Air France in June 2019)

Germany

1. Germania (Declared bankrupt in February 2019)
2. Azur Air Germany (Declared bankrupt in September 2018)
3. Air Berlin (Declared bankrupt in October 2017)

Italy

1. Alitalia (Announced bankruptcy in May 2017. A credit of the Italian government keeps the Italian flag carrier alive)

Latvia

1. Primera Air Nordic (Declared bankrupt in October 2018)

Lithuania

1. Small Planet Airlines (Declared bankrupt in November 2018)

Sweden

1. Nextjet (Declared bankrupt in May 2018)

Switzerland

1. SkyWork Airlines (Declared bankruptcy in August 2018)
2. Darwin Airline (Declared bankruptcy in December 2017)

United Kingdom

1. Flybmi (Declared bankrupt in February 2019)
2. City Jet (Stopped scheduled flights in August 2018) still active as wet lease specialist
3. Monarch Airlines (Declared bankrupt in October 2017)