The Strategist

IATA: Europe's top airlines need consolidation

09/11/2017 - 12:12

The largest European airlines, probably, will have to consolidate their units engaged in low-cost air transportation in the future. This is necessary to win the struggle for leadership with aggressive low-cost airlines, led by Ryanair Holdings.

Eduard Marmet
Eduard Marmet
This view was expressed by the Director General of the International Air Transport Association (IATA) Alexandre de Juniac. Air France-KLM, German Lufthansa AG and International Airlines Group, which, in particular, belongs to British Airways, have established their budget airlines to compete for traffic on European routes for short distances.

Alexandre de Juniac believes that the largest airlines in Europe need to develop a joint approach to solving the problem of conquering this market. In his opinion, the European region is too small to make 10 self-employed discount air carriers feel great on its territory. The oversupply of the short-haul air travel market in Europe has become one of the main reasons for the bankruptcy of airlines such as Alitalia and Air Berlin.

According to the Director General of the International Air Transport Association, which provides a full range of services to European airlines, it is of course necessary to maintain its share in the short-haul air transportation market, even if they are located far from their hubs. The total refusal of this kind of transportation will jeopardize the business of these airlines in the home markets, says Alexandre de Juniac.

On August 15, one of the largest air carriers of Germany - Air Berlin - launched the bankruptcy procedure. The German government, Lufthansa and other partners of the airline felt that such a solution is ideal for restructuring the business. In late August, the largest German air carrier Lufthansa made an official offer to acquire part of the business of bankrupt Air Berlin. Irish low-cost air carrier Ryanair is also interested in taking part in the tender for the purchase of Air Berlin business.

In addition to buying a stake in Air Berlin, Ryanair's management is also interested in ruined Italian air carrier Alitalia. The largest Italian airline’s management decided to begin the bankruptcy procedure in early May, after Alitalia employees refused to approve the restructuring plan.