Europe"™s major airlines may need to consider merging their low-cost arms in order to fend off the challenge of discount specialists led by Ryanair Holdings Plc, International Air Transport Association Chief Executive Officer Alexandre de Juniac said.
Fleets of barely more than 100 aircraft at any of the no-frills offshoots of Europe"™s three big network airlines fall far short of the 400 planes operated by Ryanair and the 250 at EasyJet Plc, according to De Juniac, who previously led Air France-KLM Group.
Air France-KLM, Deutsche Lufthansa AG and British Airways parent IAG SA established the discount brands to compete for traffic on less lucrative routes that don"™t feed passengers onto long-haul flights. IAG"™s Vueling is currently limited mainly to bases in Spain and Italy, while attempts to expand Air France"™s Transavia unit and Lufthansa"™s Eurowings have been stymied by union opposition, including clashes that led to De Juniac"™s own exit.
A more collaborative approach may be necessary because the European market is ultimately too small to support the 10 or so discount carriers currently operating in the region, De Juniac said in an interview in London. The glut in short-haul capacity has weighed on fares and was a factor in bankruptcy filings at Alitalia SpA and Air Berlin Plc.
Full-service airlines probably need to retain short-haul operations of some form even away from their hubs, as a complete exit would put them at risk in their domestic markets, according to the IATA chief…
