More airlines might go bankrupt in Europe in the next twelve months
Monarch and Air Berlin have disappeared from the European airspace. German charter operator Small Planet and Danish leisure carrier Primera just filed for bankruptcy. More airlines in Europe might become bankrupt this winter, analysts say.
Most analysts expect the fuel prices to go upwards. At the same time, there is an increasingly upsetting pilot shortage in Europe. The latter resulted in a number of flights to be canceled and the vast amounts of compensation claims. An expense item that has hardly been included in the cost estimations.
The spreading strike wind is another challenge that some airlines must face among others.
In Europe, competition between low-cost and full-service airlines is harder than in many other markets. More than 40 percent of all seats in Europe are low-cost chairs offered by budget companies such as Ryanair, Easyjet, Vueling, and Wizz Air. In the United States, for instance, this proportion is only 32 percent.
More challenges are now standing in front of the companies. So far, Monarch, Air Berlin, and Primera have gone bankrupt. In the next twelve months, it is likely that at least four medium-sized European airlines will go bankrupt, analysts claim.
The airline market in Europe can soon begin to resemble the US market. Over a decade between 2004 and 2015, eleven seperate airlines were transformed into four giants, American, Delta, Southwest, and United, mainly through merger and acquisition.
As a result of these mergers and acquisitions, the US airline market is now relatively profitable. Some merger measures are already taking place at Lufthansa and IAG. But there are slight differences between the two markets.
In the US, the system of large hubs is still alive. The European airport structure is different, while point-to-point travel is significantly more widespread.
European operators need to find their niches, and from there prepare to stay on the market. Those who fail to do that will disappear into oblivion, says Gediminas Ziemelis Chairman of the Board at Avia Solutions Group AB.