Tuesday, January 6, 2015
Challenges facing European carriers.
Overall, European airlines made some progress towards profitability in 2014, but in many cases the process of restructuring remains problematic. The International Air Transport Association (IATA) outlook sees European airlines achieving a collective profit of around 2.7 billion dollars for 2014, rising to 4.0 billion dollars this year. This contrasts badly with the US experience, where a largely restructured industry -- centring on three major carriers and operating in a more buoyant economy -- is set to do much better.
- Competition from LCCs and aggressive Gulf-based companies is undermining the profitability of several major airlines.
- Unless they can significantly improve productivity, many will continue to struggle in 2015.
- While falling fuel prices may help to cut costs in the medium term, the European airline industry needs wholesale restructuring.
- A bid for Aer Lingus by the International Airline Group (IAG) is unlikely to be the start of a more generalised rationalisation.
- European LCC operators still dominate the regional short-to-medium-haul markets.