Bloomberg BusinessWeek has interesting article up on its website (access here) about the current short-haul restructuring that is going on in Europe among the big carriers such as British Airways, Lufthansa and Air France.
Lufthansa has already transferred all the short-haul flying that doesn’t touch its Munich and Franfurt hubs to its low cost Germanwings unit and Air France plans to transfer part of its short-haul flying to Transavia (airline owned by KLM).
Here’s an excerpt from the piece:
The shunning of European routes by the global flag carriers reflects the cutthroat nature of fare competition in the continent, where airlines such as EasyJet (EZJ:LN), Ryanair (RYAAY), and Wizz Air dominate the short-flight market. Those carriers’ labor costs are substantially lower than at Lufthansa, Air France, and British Airways, which also have routes that don’t touch their hubs.
Flying routes off their hubs offers very little revenue upside, says Seth Kaplan, managing partner of industry journal Airline Weekly, and this is one reason U.S. airlines have virtually eliminated flights that don’t involve one of their hubs. “Non-hub, short-haul flying is all a cost game, and that’s a game the true low-cost carriers like Ryanair and EasyJet will always win,” Kaplan says.
These flight-shifting and cost-cutting tactics have infuriated airline employees in Europe, with three pilot strikes against Lufthansa in the past two weeks. Air France, meanwhile, is now bracing for a weeklong pilot strike tentatively set to start on Sept. 15; the airline has urged customers to reschedule their trips. Air France-KLM pilots contend that Transavia cockpit crews should be paid the same as their peers across the company.
The Bloomberg forgets to mention Norwegian that has grown significant for the past few years and taken lot of European traffic from Nordic airlines such as SAS and Finnair.
Seems that the race to bottom on the European short-haul flight still continues. Seems that the big players only want to serve the traffic to the European capitals that feeds the long-haul networks as well. All the other flying is left for these independent or airline owned LCC’s.