Transport Airlines

Low-Cost Carrier Battle in Europe Grows as Ryanair Rivals Gain Strength

Apr 25, 2014 1:09 pm

Skift Take

Will legacy carriers like Air France and Lufthansa really be able to change their ways in such a manner that they can make this challenge work?

— Jason Clampet

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 / Air France

Air France's new low-cost carrier Hop! / Air France


Norwegian Air Shuttle ASA and the low-cost arms of Air France-KLM Group and Deutsche Lufthansa AG gained in Europe’s discount-airline market as they added routes faster than regional industry leader Ryanair Holdings Plc.

Ryanair’s share of takeoffs among European low-cost carriers declined to 22.5 percent during a sample week in January from 23.5 percent a year earlier, Germany’s national aeronautics and space research center DLR said in a study. The Dublin-based carrier retained its lead, while Norwegian Air climbed one spot to third place, and Lufthansa’s Germanwings unit increased its ranking to sixth from ninth. Air France’s newly formed Hop! entered the list in seventh place.

European mainline carriers are trying to stem losses from short-haul operations by challenging Ryanair and EasyJet Plc, the region’s second-biggest discount airline, with low-cost divisions separate from their namesake brands. Fornebu-based Norwegian is testing the discount concept for long-haul routes. The market is consolidating as some carriers retreat and others are acquired, according to the DLR study published yesterday.

Takeoffs by low-cost airlines in Europe rose 10 percent in the sample period, with the U.K. remaining the top country at 7,057 flights a week, followed by Italy, Germany and Spain, the Cologne-based aviation research association said. The number of routes flown by Ryanair increased 4.6 percent from the year- earlier period to 1,587, while Norwegian Air increased service 29 percent to 475 routes and Germanwings expanded its network 62 percent to 231.

Discount Units

Lufthansa, which ranks second in group traffic to Air France among the region’s flag carriers, is shifting all intra-Europe routes that don’t serve its main hubs of Frankfurt and Munich to Germanwings. Paris-based Air France has combined most of its regional operations into Hop! as part of a strategy to restore earnings after three unprofitable years.

Carriers are saying competition is increasing, with Ryanair predicting in November that profit in fiscal 2014 would fall, the first decline in five years, and fares sliding at Norwegian Air. Still, 91 percent of the 4,900 European routes served by low-cost airlines are served by one carrier only, limiting direct rivalry to 9 percent of city pairs, according to the DLR study, which is published twice a year.

London Gatwick overtook Barcelona El Prat as the busiest low-cost airport in Europe, with Dublin remaining third, ahead of London Stansted and Berlin Tegel, the DLR said.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net. To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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