Survive or Thrive? European legacy carriers battle competition and costs
Talk of Europe’s biggest airline groups, IAG, Air-France KLM and Deutsche Lufthansa AG, has focussed in recent months on disruption, industrial action and disputes, mostly as a result of trying to cut costs to compete with LCCs. Tough times.
As we note in our latest report, the fact that these groups, and their carriers Air France, British Airways and Lufthansa, are still here means they must have got something right. However cost reduction has been only one of a number of strategies used by the airline groups to survive.
Another of those strategies has been the creation of airline groups consisting of individual carriers, 100% owned by the group, yet servicing different markets and different segments.
As they can no longer offer high fares/high value, and they can’t compete with LCCs on low fares, they are moving towards a more middle ground offering. But it is unsure how successful this approach can be.
There is also the creeping threat from Gulf carriers, who – according to OAG Schedules Analyser – have increased their share of seat capacity to and from Europe by 4% over the last five years.
We look at these issues in more detail and ask if the European legacy carriers can thrive again – or merely survive?