Need I say Moores

Is Europe at a turning point?

Irish LCC Ryanair has observed a “wave of EU airline failures” over recent months. Is this further evidence of the tide turning for ‘middle-seat’ airlines?

“Higher oil prices and lower fares have over the past four months seen a wave of EU airline failures including Primera (UK & Spain), Small Planet and Azur (Germany), Sky Works (Switzerland), VLM (Belgium), Cobalt (Cyprus) and Cello (UK). In addition, other bigger airlines like Wow (Iceland), Flybe (UK), and Germania (Germany) are urgently seeking buyers or, like Norwegian, refinancing just to survive,” Ryanair said, at the release of its financial results on Feb. 4.

Since then, Germania has filed for bankruptcy and grounded all flights, joining the four-month casualty list.

For a long time, Ryanair CEO Michael O’Leary has predicted a real shake-out of the European market, leaving just a few players remaining. However, that shake-out has been slow to materialize. Could this be it?

“We expect more closures and airline failures in 2019 due to over-capacity in the European market, which is causing continued fare weakness,” Ryanair said.

Perhaps the best evidence of market tightening is Ryanair’s own results. For the first time in many years, Ryanair just posted a quarterly loss.

Average fares were down 6% because over capacity. This is expected to deepen to a 7% decline for the winter season and Ryanair is not optimistic of things getting better in summer 2019.

“We expect excess short-haul capacity to continue through 2019, which will we believe lead to a weaker—not stronger—fare environment,” Ryanair said.

If a market-leader like Ryanair posts a loss, the future for weaker and smaller players doesn’t look bright.

Victoria Moores victoria.moores@informa.com

Please or Register to post comments.

What's Need I say Moores?

Need I say Moores

Blog Archive

We use cookies to improve your website experience. To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy. By continuing to use the website, you consent to our use of cookies.