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VSMUT
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European aviation in a over supply situation?

Fri Oct 19, 2018 9:27 am

Over the past weeks and months we have seen a spate of airlines heading into bankruptcy, or in economic problems of varying degrees:

Primera Air
Cobalt Air
Cello Aviation
Azur Air Germany
Small Planet Poland
Small Planet Germany
Wow Air*
Icelandair*
Norwegian*
VLM
SkyWork
NextJet
FlyBe*

*Still around, but problems of varying degrees of severity have been reported

The economy is on the way up (probably about to peak), competition in central Europe is smaller than ever with the demise of Air Berlin, and European airlines are falling like flies. So what is going on? Pilot shortage? Unrealistic pricing and aggressive expansion plans in an attempt to gain market share?

This is even happening during an economic upturn! How well will the European industry fare when the inevitable downturn comes, possibly reinforced by a hard Brexit?
Last edited by SQ22 on Sat Oct 20, 2018 6:45 am, edited 1 time in total.
Reason: Title was dramatizing situtation
 
PanHAM
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Re: European aviation crisis

Fri Oct 19, 2018 10:00 am

I would leave out the * marked carriers, they are still around .

Competition is always tough in this Business but this year we even had a shortage of aircraft due to the AB demise. The regulatory bodies did not release aircraft soon enough and the LBA for instance could handle only the registratio of one Jet per day.

Airlines like Small Planet and Azur are under financed and had ops Problems. But not only the two aforementioned were fly-by-nites. Primera for instance, the authorities should investigate that this Airline announced a challenging plan to operate narrowbody flights on the TATL, each route flown 7 days per week with a single aircraft. 8(7 would be realistic and even then.

How much Money did they rake in between These announcements and decalring bancruptcy?
Was Erlauben Erdogan!!!
 
mutu
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Re: European aviation crisis

Fri Oct 19, 2018 10:04 am

So many factors
Oil spike
Strong dollar (oil traded in US$ so in € or £ its getfing expensive)
Weather extremes this year with sustained winter disruptions at the start of 2018 and a very hot summer 2018with a lot of stay at home holidays
Building economic uncertainty starting to bite in some markets
Cost of debt up modestly but if you have a lot of debt it soon mounts
Flawed business models in some cases

No one single factor but an almost perfect storm of many of the above
 
greg85
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Re: European aviation crisis

Fri Oct 19, 2018 10:08 am

I think “crisis” is a bit sensationalist. I disagree that competition is smaller than ever. All of the airlines you mentioned have to deal with easyJet and Ryanair being bigger than ever. Disruption (eu261 payments) has been greater than ever before in Europe. Now the fuel price is creeping up. These are tough conditions for the smaller players, and the less established. “Consolidation” is a word that has been used by plenty of airline CEOs, and this is what they mean by it. Airlines like air Berlin being swallowed up by bigger airlines, and smaller ones quietly disappearing.

There will be plenty of speculation of what’s to come next. I personally think that WOW will disappear. And I’ve been told that it’s almost a certainty that Flybe will be gone in the next few years. I am less certain about the future of Norwegian.

The one thing I’m sure of is that all of this is good for the big airlines, and passenger numbers across Europe will continue to be high.
 
oldannyboy
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Re: European aviation crisis

Fri Oct 19, 2018 10:26 am

Honestly I see a lot flawed -seriously flawed- business models there.....
And a lot of small under-funded peripheral carriers that were fighting for the breadcrumbs falling off the table of bigger carriers.

To be fair Icelandair, WOW and Norwegian don't really belong in the conversation I think.....
 
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terrificturk
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Re: European aviation crisis

Fri Oct 19, 2018 10:27 am

mutu wrote:
So many factors
Oil spike
Strong dollar (oil traded in US$ so in € or £ its getfing expensive)
Weather extremes this year with sustained winter disruptions at the start of 2018 and a very hot summer 2018with a lot of stay at home holidays
Building economic uncertainty starting to bite in some markets
Cost of debt up modestly but if you have a lot of debt it soon mounts
Flawed business models in some cases

No one single factor but an almost perfect storm of many of the above


Oil Spike ? It is between 70 and 80 USD, more than a year or two ago but no signs of going over 80 USD.
Strong Dollar ? The USd has weakened against the Euro and other currencies since mid 2017... it is hovering around 1,15 (interbank) but no signs of strength at all.
Winter in Europe was not really bad for most places, with maye one or two really heavy days. Nothing special. Hot summer yes, but still a lot of record days at airports ad full planes.
Economic Uncertainty ? No sign in major European countries / markets, not even in UK.
Cost of debt ? No, interests are still very low. And yes, if you keep adding debt, it will mount but that is not really teh case for some of the listed failures.

Flawed business models ? That is probably the only valid point on your list.
 
ewt340
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Re: European aviation crisis

Fri Oct 19, 2018 10:28 am

The answer is on your own long list. Too many airlines competing with each other. Compared to the US, the number of airlines in Europe is too much.

We could see this all around the world. From Indonesia or India. Too many airlines in the market competing with each other. This impacted their profits to survive.
 
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SRQKEF
Posts: 1952
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Re: European aviation crisis

Fri Oct 19, 2018 10:30 am

VSMUT wrote:
Over the past weeks and months we have seen a spate of airlines heading into bankruptcy, or in economic problems of varying degrees:

Primera Air
Cobalt Air
Cello Aviation
Azur Air Germany
Small Planet Poland
Small Planet Germany
Wow Air*
Icelandair*
Norwegian*
VLM
SkyWork
NextJet
FlyBe*

*Still around, but problems of varying degrees of severity have been reported

The economy is on the way up (probably about to peak), competition in central Europe is smaller than ever with the demise of Air Berlin, and European airlines are falling like flies. So what is going on? Pilot shortage? Unrealistic pricing and aggressive expansion plans in an attempt to gain market share?

This is even happening during an economic upturn! How well will the European industry fare when the inevitable downturn comes, possibly reinforced by a hard Brexit?


How in the world can you include FI in that list?!
Are they less profitable han they thought they'd be at the start of the year? Sure. But they're still profitable, as they have been for almost every year since 2009, so lumping them in with airlines that are hanging by a thread is like comparing a man with a broken hand to one with stage 4 cancer. It's simply a bizarre comparision.

For the others, I agree with comments posters before me in the thread have made.
Nothing compares to taking off in an empty 757 with full thrust!
 
Someone83
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Re: European aviation crisis

Fri Oct 19, 2018 10:35 am

There are no crisis, but an over supply situation, which results in some of the weak carriers will fold.

Bankruptcies are a part of business world.....
 
LupineChemist
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Re: European aviation crisis

Fri Oct 19, 2018 10:37 am

Growing economies, low interest rates and low oil prices have everyone at least staying afloat. Start to remove some of those advantages with slowly rising interest rates and more expensive oil and marginal players will start to fall off. If we have a recession, all bets are off.

Though that said, funny enough I'm pretty convinced Norwegian's days are numbered, I don't think a recession would hit them nearly as hard as it's business travel that disproportionately falls in those cases. People still want vacations and still go see family. In the event that a recession lowers oil demand/price, I could actually see it working in Norwegian's favor.

I'm really just waiting until next Thursday's Q3 release for Norwegian to see what I think. My bet is that they make a couple percentage operating margin in Q3 before heading into the long winter. I don't see how they have the cash to make it through to next summer.
Last edited by LupineChemist on Fri Oct 19, 2018 10:40 am, edited 1 time in total.
 
leghorn
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Re: European aviation crisis

Fri Oct 19, 2018 10:39 am

Bankruptcies are a part of business world in an open market and the European Skies are wide open unlike other parts of the world.
Much less protectionism in Europe than elsewhere and the exceptions to the rule are notable e.g. Alitalia
 
VSMUT
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Re: European aviation crisis

Fri Oct 19, 2018 11:00 am

ewt340 wrote:
The answer is on your own long list. Too many airlines competing with each other. Compared to the US, the number of airlines in Europe is too much.


Europe has twice the population of the US, and is on average richer and has more free-time to spend on traveling. It's only natural that there are more airlines in Europe than in the US.

terrificturk wrote:
Winter in Europe was not really bad for most places, with maye one or two really heavy days. Nothing special. Hot summer yes, but still a lot of record days at airports ad full planes.
Economic Uncertainty ? No sign in major European countries / markets, not even in UK.


Indeed, many airports have broken passenger number records this year. The summer of 2017 was pretty bad, so many people took no chances when it came to booking holidays this year.
 
mutu
Posts: 501
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Re: European aviation crisis

Fri Oct 19, 2018 11:33 am

terrificturk wrote:
mutu wrote:
So many factors
Oil spike
Strong dollar (oil traded in US$ so in € or £ its getfing expensive)
Weather extremes this year with sustained winter disruptions at the start of 2018 and a very hot summer 2018with a lot of stay at home holidays
Building economic uncertainty starting to bite in some markets
Cost of debt up modestly but if you have a lot of debt it soon mounts
Flawed business models in some cases

No one single factor but an almost perfect storm of many of the above


Oil Spike ? It is between 70 and 80 USD, more than a year or two ago but no signs of going over 80 USD.
Strong Dollar ? The USd has weakened against the Euro and other currencies since mid 2017... it is hovering around 1,15 (interbank) but no signs of strength at all.
Winter in Europe was not really bad for most places, with maye one or two really heavy days. Nothing special. Hot summer yes, but still a lot of record days at airports ad full planes.
Economic Uncertainty ? No sign in major European countries / markets, not even in UK.
Cost of debt ? No, interests are still very low. And yes, if you keep adding debt, it will mount but that is not really teh case for some of the listed failures.

Flawed business models ? That is probably the only valid point on your list.


Hmm. Ok. Oil has risen 40% in past year. For well run airline like Delta making an operating margin of 13% this is manageable. For A small airline not making a profit or making say 2% operating margin this is a major issue especially as forward pricing increases in volatility and typically they have run down their hedges or candy afford them in the first instance

Flybe profit warning sets out a face number if the headwinds they are increasingly facing
 
SRQLOT
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Re: European aviation crisis

Fri Oct 19, 2018 1:13 pm

Small Planet Poland is going to 2 aircraft hoping to survive, but with Ryanair Sun now on the market I’m not sure of their chances. Unfortunately for some airports in Poland they are more vacation charter heavy, next year numbers will be interesting to see. I just hope aviation in Europe won’t get as boring as here in the USA!!
LO LH CL BA AZ WN UA DL AA B6 NK G4 F9
717 733/7/8/9/M8 744 752/3 763 788 319/20/21 332/3 M90 RJ85 CR9 Q400 E7/95 (PA28,152)
 
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aemoreira1981
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Re: European aviation crisis

Fri Oct 19, 2018 1:25 pm

I'd take Small Planet off the list partially. The Group as a whole was profitable last year...although their German and Polish operations are not. Azur Air of course is still around, but the planes are being moved to other units.

The next domino I could see falling is FlyBe, especially if its aircraft lease terms are as horrible as noted. The major problem there is going to be who fills the UK domestic void...this is where Virgin Atlantic could let FlyBe implode and then invest in a domestic network in the UK. This is where a quicker death for FlyBe is good. (The SAS contract could then be re-bid.) I would also put WOW air on that list, given that they have so many seats to fill and have to do it on price.

By contrast, Icelandair is on pretty good footing in terms of its assets (only its 737 MAXs are leased - sale/leaseback, the cargo 757s, and one 767). Everything else is owned, and two of the 737 MAXs leased are on JOLCO terms which count as financing.
 
mjoelnir
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Re: European aviation crisis

Fri Oct 19, 2018 3:34 pm

aemoreira1981 wrote:
I'd take Small Planet off the list partially. The Group as a whole was profitable last year...although their German and Polish operations are not. Azur Air of course is still around, but the planes are being moved to other units.

The next domino I could see falling is FlyBe, especially if its aircraft lease terms are as horrible as noted. The major problem there is going to be who fills the UK domestic void...this is where Virgin Atlantic could let FlyBe implode and then invest in a domestic network in the UK. This is where a quicker death for FlyBe is good. (The SAS contract could then be re-bid.) I would also put WOW air on that list, given that they have so many seats to fill and have to do it on price.

By contrast, Icelandair is on pretty good footing in terms of its assets (only its 737 MAXs are leased - sale/leaseback, the cargo 757s, and one 767). Everything else is owned, and two of the 737 MAXs leased are on JOLCO terms which count as financing.


You could add that Icelandair has a sizable equity. Equity is your insurance for bad times, the reserves a company can use before they get in real trouble.
 
dmstorm22
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Re: European aviation crisis

Fri Oct 19, 2018 3:42 pm

VSMUT wrote:
ewt340 wrote:
The answer is on your own long list. Too many airlines competing with each other. Compared to the US, the number of airlines in Europe is too much.


Europe has twice the population of the US, and is on average richer and has more free-time to spend on traveling. It's only natural that there are more airlines in Europe than in the US.



This might be, but passenger traffic is fairly even between US and Europe.

The Europe aviation market has significant competition with rail which is just not there in the US, apart from the NE Corridor and a few small sub-sets where rail is still prevalent.
 
VSMUT
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Re: European aviation crisis

Fri Oct 19, 2018 4:06 pm

dmstorm22 wrote:
VSMUT wrote:
ewt340 wrote:
The answer is on your own long list. Too many airlines competing with each other. Compared to the US, the number of airlines in Europe is too much.


Europe has twice the population of the US, and is on average richer and has more free-time to spend on traveling. It's only natural that there are more airlines in Europe than in the US.



This might be, but passenger traffic is fairly even between US and Europe.

The Europe aviation market has significant competition with rail which is just not there in the US, apart from the NE Corridor and a few small sub-sets where rail is still prevalent.


Europe-US traffic doesn't apply to Primera, Cobalt, Cello Aviation, Azur Air Germany, Small Planet Poland, Small Planet Germany and Norwegian. They all had or have significant business intra-Europe. They barely even compete with HSR. They were predominantly found on holiday routes, some of the markets that saw records this year.

Of the 4 remaining intra-European airline, VLM, SkyWork, NextJet and FlyBe, you can only blame HSR competition on the demise of VLM and SkyWork.
 
n797mx
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Re: European aviation crisis

Fri Oct 19, 2018 4:10 pm

Norwegian and Iceland Air aren't going anywhere imo.

FlyBe, on the other hand. Considering they've spent a majority of the last few years in the red with their earnings, and their years with earnings have been small, I don't know how they've stayed afloat this long.
Clear skies and strong tail winds.
 
zakuivcustom
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Re: European aviation crisis

Fri Oct 19, 2018 5:23 pm

No Air Belgium on this list? :scratchchin: :scratchchin: (Ok, they haven't file bankruptcy yet, but their days are definitely more numbered than Norwegian or Icelandair or even WOW).

I agree with a few other posters - Norwegian and Icelandair are not going away anytime soon, despite what many people on here for some reason insisting that they're soon gone.

We're basically seeing two groups of airlines:
- Small regional players, flying turboprops. This is the VLM, Skyworks, and Nextjet. They simply doesn't have the economy of scale and are heavily affected by fuel price IMO. Most of them are too small (I mean, they have what? 20 aircrafts total between all of them?) to really be a factor in the big picture anyway.
- Vacation charters, i.e. Small Planets, Azur Germany, etc., that simply can't compete with larger players like TUI or Thomas Cook
- "Long-haul" LCC, so Primera and maybe soon WOW. Overexpansion, high fuel price, and perhaps, unsustainable profit model.

Then there's Cobalt Air, which is another one of those "national" airlines for a small country that simply can't expand much, especially if that country (Cyprus) is mostly vacation traffic (i.e. competition with the like of Ryanair and Easyjet).

As for Flybe, they were a mess for awhile anyway, with them trying to be everything without even doing their original "niche" (i.e. UK P2P flying with Q400s) all that great to begin with, along with the bad lease term that spell the end of Air Berlin.
 
MIflyer12
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Re: European aviation crisis

Fri Oct 19, 2018 5:57 pm

Not every business succeeds long-term. That's one of the features of capitalism - the weak are killed and eaten, so to speak. Can the OP point to EU-based start-up carriers that have succeeded, within the last ten years?
 
Prost
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Re: European aviation crisis

Fri Oct 19, 2018 6:12 pm

Europe deregulated later than the US, so we’ll see the weaker players fold or merge into other carriers much like happened in the US. Europe also has stricter bankruptcy laws than the US, so there isn’t the opportunity to continue to operate as long. It’s interesting watching the industry and change, but I feel for the employees who lose their jobs.
 
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OzarkD9S
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Re: European aviation crisis

Fri Oct 19, 2018 6:43 pm

I wouldn't call thinning the herd a crisis.
Next up: STL DEN PSP DEN STL
 
LupineChemist
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Re: European aviation crisis

Fri Oct 19, 2018 8:32 pm

VSMUT wrote:
Europe has twice the population of the US, and is on average richer and has more free-time to spend on traveling. It's only natural that there are more airlines in Europe than in the US.


I don't get how people can think Europe is on average richer. It's not even close to true, people generally have way less discretionary income than the US.
 
a350lover
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 8:56 am

VSMUT wrote:
Primera Air
Cobalt Air
Cello Aviation
Azur Air Germany
Small Planet Poland
Small Planet Germany
Wow Air*
Icelandair*
Norwegian*
VLM
SkyWork
NextJet
FlyBe*


The question here to me is very clear: what do they all have in common?

Low fares, no industrial partnership with any other big player, poor/nule level of financial integration within a bigger group, serve highly competitive/difficult markets, revolutionary proposals? Out of all of them, and trying not to see it from a personal perspective, but from its international presence, the ones which are probably more relevant to me are (in order):

Norwegian
Icelandair
FlyBe

All the rest, mainly because of the reasons you have pointed out in your post ("unrealistic pricing and aggressive expansion plans in an attempt to gain market share"), are not that "essential" to the aviation industry. If any of those three collapsed, important changes may come.
 
f4f3a
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 11:17 am

What I think will be more interesting will see how the biggest independent airlines fair . Ie Ryanair easyJet Norwegian and wiZz . When the over supply situation happens will these airlines be able to still make grounds or are they reaching the end of there expansion phases. Then there business model either means dipping feet in long haul or face stagnating . Not that they won’t be profitable not expanding but it seems there main feature
 
Blerg
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 12:54 pm

It would be awesome if we could stop comparing Europe to the US. Also, I fear most on here keep on confusing the EU with Europe.

Also, let's not forget that Europe has a great railway system and trains are actually a popular means of transport. I wonder how many flights would be cancelled if there was a decent, reliable and modern railway system across the US east coast. Look at the effects of TGV and Eurostar on aviation in that area of Europe.

As for the airlines mentioned above, most of them had a flawed business strategy from the start. Unlike the US, Europe does get new airlines that seem to make it in the end, from the top of my head there is Blueair (2004) and Volotea (2012), Enter Air (2009), Evelop Airlines (2013)...
 
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SRQKEF
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 1:00 pm

a350lover wrote:
VSMUT wrote:
Primera Air
Cobalt Air
Cello Aviation
Azur Air Germany
Small Planet Poland
Small Planet Germany
Wow Air*
Icelandair*
Norwegian*
VLM
SkyWork
NextJet
FlyBe*


The question here to me is very clear: what do they all have in common?

Low fares, no industrial partnership with any other big player, poor/nule level of financial integration within a bigger group, serve highly competitive/difficult markets, revolutionary proposals? Out of all of them, and trying not to see it from a personal perspective, but from its international presence, the ones which are probably more relevant to me are (in order):

Norwegian
Icelandair
FlyBe

All the rest, mainly because of the reasons you have pointed out in your post ("unrealistic pricing and aggressive expansion plans in an attempt to gain market share"), are not that "essential" to the aviation industry. If any of those three collapsed, important changes may come.


Agreed on DY However, the point is moot for FI as they're actually profitable and have been for many years, and I don't remember seeing many profitable airlines going under...

BE going under would have a major impact on smaller British airports but not a huge blip in the bigger picture I'd think.
Nothing compares to taking off in an empty 757 with full thrust!
 
zakuivcustom
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 2:22 pm

Blerg wrote:
It would be awesome if we could stop comparing Europe to the US. Also, I fear most on here keep on confusing the EU with Europe.

Also, let's not forget that Europe has a great railway system and trains are actually a popular means of transport. I wonder how many flights would be cancelled if there was a decent, reliable and modern railway system across the US east coast. Look at the effects of TGV and Eurostar on aviation in that area of Europe.

As for the airlines mentioned above, most of them had a flawed business strategy from the start. Unlike the US, Europe does get new airlines that seem to make it in the end, from the top of my head there is Blueair (2004) and Volotea (2012), Enter Air (2009), Evelop Airlines (2013)...


The problem is, I don't really see any of the airline that recently went out of business, or are not doing great, are even "going out of business b/c they can't compete with the train".

Ok, VLM does, and maybe Skywork (VERY arguable, more like their home market i.e. Bern is just not big), and maybe Flybe (But again, has Flybe ever really make money anyway?). Good luck riding train across the pond (Primera), going to Iceland (WOW), to Mediterranean leisure destinations (Small Planet Polska/Deutschland, no rail is going to bring you to those Greek Island or Hurghada or Sardinia). Cobalt Air competing with rail? What rail?

If anything, there's not even an airlines like Spanair or Air Berlin or Malev or even Monarch on that list. So a bunch of airlines (or subsidiaries) with maybe 5 planes go out of business, and all of a sudden, Europe aviation is "over supply" or "in crisis" or whatever people want to call it.
 
[email protected]
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 3:48 pm

You also have to remember how small those airlines that ceased to exist are.
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SCQ83
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 4:05 pm

I think it is obvious there is oversupply. A similar situation to the previous financial crisis (2008/09) that led to a few bankruptcies and absorptions years a few years later (Spanair, MALEV, BMI...).

1. There are a lot of routes with multiple carriers that could probably be served by one the most. A lot of secondary city pairs anywhere in Europe that are served by two or more carriers. For instance (on top of my head) things like Milan-Santiago de Compostela or Porto-Warsaw now have or have had two carriers recently. There are cases like Madrid-Birmingham that was underserved during the Spanish crisis and at some point a 2-3 years ago there were 4 (!!!) carriers: Monarch, Norwegian, Iberia Express and Ryanair. Monarch disappeared and Norwegian cancelled the route. There are dozens of examples like that.

2. Major carriers (legacies, Ryanair, easyJet, Wizzair) need to find new markets and that led them to fight for very thin routes, which previously were 1) underserved 2) served by those niche carriers (Flybe, etc) or 3) back to the previous point... from being unserved to being multiple served. In this case those niche carriers don't have the back to sustain losses or lose market share and have lower yields with new competition. Oil prices go up... and they go bust.
 
a350lover
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 5:14 pm

SCQ83 wrote:
I think it is obvious there is oversupply. A similar situation to the previous financial crisis (2008/09) that led to a few bankruptcies and absorptions years a few years later (Spanair, MALEV, BMI...).


True. The main difference to me now is the fact that most legacy carriers in Europe haver transformed their models a lot, and are very well integrated in big aviation groups (AirFrance & KLM, IAG, Lufthansa Group, etc.). Compared to the 2008 recession, now I see the legacy carriers more prepared to fight for the business, especially if the oil rises above $80. They won't suffer as much as the low cost players, with the exception of Easyjet and Ryanair which have focused on short-haul and have big fleets.

Those players with the least "comprehensible" model (WOW & Norwegian are probably the greatest examples of this to me), will suffer. If Norwegian ever became part of IAG, it'd be interesting to see how much of the transatlantic low-cost model the big group would still develop. This model is coming and will stay I believe, but this time, the bigger groups will be the ones setting the pace of developing the model. It's just too costy for independent airlines to be supported.
 
SCQ83
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 7:05 pm

I don't think the European market has changed that much from ten years ago. Which legacy carriers have joined groups? I can think only of IAG that have acquired Aer Lingus and ate BMI. On the other hand, carriers like Lufthansa have sold their stake in things like Luxair that now are completely independent.

There have been some relatively important bankruptcies (Spanair, MALEV, Air Berlin...). But now there are also more competitors. Norwegian and Wizz Air ten years ago were quite niche (and new in the case of W6) and small carriers and now they are competing with legacies/U2/FR in dozens of intra-European routes. Or even Volotea didn't even exist 10 years ago. Or Blue Air? "Charter"/holiday airlines are competing more with low-cost carriers and vice versa. So I don't think it is that different. If anything, today the market is more competed than ever and with more airlines/groups.

There are still tons of unaligned regional carriers everywhere, from Air Nostrum to Wideroe. Eastern Europe is still a mess with tons of small legacy airlines (TAROM, Air Bulgaria, Air Moldova, Adria, Croatia, Air Serbia, Montenegro Airlines, all the Albanian VFR carriers...)

In long-haul... where to start. Norwegian, LatAm airlines becoming more competitive, ME3, Turkish, Chinese airlines opening routes left and right...

Btw in my previous comment I wanted to say MAD-Birmingham was unserved during the crisis. Then all of a sudden went to 4 carriers, and now back to 2.
 
a350lover
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Re: European aviation in a over supply situation?

Sat Oct 20, 2018 7:45 pm

First difference... ten years ago there was still kind of a notable difference between the legacy operators, and the low cost ones. Differences now are tiny. Carriers like Air Europa, Air France or Iberia would have never imagined themselves charging for check-in luggage, or choosing seats. Vueling was not part of IAG. Ryanair was not selling UX tickets. Ryanair stated time after time they would never operate in main airports. They could serve maybe something like Malaga or even... Barcelona, but never Frankfurt. Ask an AF employee what would they have thought about something called "Joon".

The main difference is that pre-crisis/during crisis 2008-2012 the pain was on the cards of the legacy carriers. They saw how Ryanair entered every single airport and market, started in many countries domestic operations, and that forced them to transform for the good. Now the business is getting more painful for the low cost rivals instead, which are the ones that have not so much margin.

SCQ83 wrote:
I don't think the European market has changed that much from ten years ago. Which legacy carriers have joined groups? I can think only of IAG that have acquired Aer Lingus and ate BMI.


In terms of offer, maybe things hasn't changed much, if that's what you meant. In 2010, in the Spanish market, Iberia merged BA and that probably supposed the biggest transformation of a legacy carrier in Europe. If they hadn't merged, Iberia would have taken the same direction Alitalia did.

Well, things have changed a bit...
 
mxaxai
Posts: 2061
Joined: Sat Jun 18, 2016 7:29 am

Re: European aviation in a over supply situation?

Mon Oct 22, 2018 7:48 am

I'm not sure if this is directly related to a possible oversupply situation, but both Easyjet and Ryanair have been facing difficulties lately. Their stocks have lost about 1/3 in value since June. Ryanairis expecting the first decrease in annual profit in 5 years, 1.2 billion € down from 1.45 billion €.
But IAG and Lufthansa stocks have lost a bit as well, though not as much. So rather than a problem of any individual airline, it might be industry-wide. Also, investors have probably been following the rising fuel price and everybody knows how much that'll affect any airline.

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