Passengers Suffer as Crowded Field Puts Pressure on Europe’s Airlines

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With flights sometimes as cheap as $15, an array of low-cost airlines has transformed travel in Europe. Monarch and Ryanair, along with rivals like easyJet, Eurowings, Jet2 and Wizz Air, brought service to well-trodden destinations like Paris or the beaches of Portugal, as well as far-flung corners of the Continent like Lappeenranta, Finland, or Varna, Bulgaria.

Travelers’ expectations of low prices have pushed the more traditional carriers to offer budget options, under which passengers pay for extras like food and checked luggage that previously would have been included.

“Passengers have had a really good run for a long time with incredibly cheap tickets,” said Andrew Charlton, managing director of Aviation Advocacy, a consultancy. But, he added, “Europe’s got too many airlines.”

The shakeout, along with other issues, has made for some tough travel in Europe.

More than 100,000 passengers were stranded when Monarch collapsed into bankruptcy this month, forcing the British government to charter planes to get its citizens home. It was Britain’s largest repatriation in peace time.

Air Berlin, another low-cost airline, filed for insolvency in August. Alitalia, the Italian flag carrier, filed for bankruptcy in May. Ryanair had to cancel thousands of flights in recent weeks because of staffing problems, including strikes in France that forced Ryanair and other airlines to cancel flights this week. About 75,000 passengers on British Airways were affected by cancellations caused by a technical failure in May.

Damian Karykowski, who had to rebook flights to New York for him and his fiancée after Air Berlin collapsed, said they had been among the fortunate ones.

“For some people it’s a dream to come from Europe to the U.S.,” he said. “We had the possibility to buy new tickets on our own, but I can’t imagine what would happen if someone had their flight canceled when he’s at the airport already or the day before.”

The falling away of poorly performing airlines can be a positive: weeding out weaker, inefficient carriers, and portending much-needed consolidation.

Photo

Employees of Air Berlin in September expressed their concern about job losses after the low-cost carrier filed for insolvency.

Credit
John Macdougall/Agence France-Presse — Getty Images

The United States has already been through a similar shake-up through mergers and takeovers. American Airlines purchased T.W.A. in 2001; Delta Air Lines linked with Northwest Airlines in 2008; United Airlines joined with Continental Airlines in 2010; and American and US Airways merged in 2013.

The six largest airline groups in the United States now make up about 80 percent of flights in and out of the country, according to Jonathan Wober, chief financial analyst at CAPA Centre for Aviation, a research company. By contrast, the six largest in Europe have less than 50 percent of seats, he said.

“The stronger, better-run airlines whose business models are better adapted are growing and getting stronger,” said Mr. Wober. “The smaller, weaker ones are disappearing.”

Other long-term challenges stalk the industry, not least Britain’s withdrawal from the European Union. An aviation agreement currently in place allows European airlines to fly between airports in the region. But “Brexit” has put that agreement in doubt, creating an additional layer of uncertainty for carriers.

“Low-cost carriers and network carriers enjoy huge flexibility because of E.U. membership and liberal aviation agreements,” said Andrew Lobbenberg, an analyst at HSBC. “Once the U.K. drops out, the U.K. has no access — that needs to be negotiated. Will that be liberal, illiberal, friendly, unfriendly? We don’t know.”

Although some airlines are dropping out in Europe, consumers are expected to benefit from the competitive market for some time. Rivals could buy up the assets of failed carriers and still run the routes on budget prices.

“The low-cost airlines have got such a big presence in Europe and they stimulated markets that didn’t exist,” Mr. Wober said. “You can’t turn the clock back on that.”

As the consolidation game plays out, a global focus will be important for European players. Carriers could focus on linking up with long-haul routes as they try to tap into faster growing travel markets outside the Continent.

Norwegian Air Shuttle has already started to edge into this market with budget long-haul flights to the United States and to Singapore. Some tickets from New York to Dublin in December, for example, were available at $139. The low-cost Spanish airline Vueling is partnered with other major European airlines like British Airways, Aer Lingus, Iberia through the International Airlines Group.

“Intra-European travel will not be the growth target,” Daniel Röska, an analyst at the research firm Sanford C. Bernstein, said. “Global scale is important.”

Ticket prices, too, will remain crucial.

Ryanair has seen its stock price fall since the cancellations, but kept its profit guidance unchanged and even began offering sale prices, saying that it was confident there would be no further disruptions.

“When they’ve worked this through, next summer they’re going to be offering the cheapest flights around Europe and passengers are going to take those flights,” Mr. Charlton of Aviation Advocacy said. “Passengers will come back to Ryanair if they’ve got cheap flights.”

That will be of little comfort to Ms. Vyhnakova who, thanks to Monarch’s struggles, landed in Birmingham faced with chaos — not the ideal start to the relaxing vacation she had imagined.

“There was no info at the airport, there was no one to ask,” she said. She finally arrived in Gran Canaria with a simple wish: “I hope nothing else gets canceled for me.”

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