Low Cost Carrier Impact
February 2003
English and French only
THE IMPACT OF LOW COST CARRIERS IN EUROPE
(Presented by Albania, Armenia, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Moldova, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Serbia and Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, The former Yugoslav Republic of Macedonia, Turkey, Ukraine, United Kingdom)1
1.
BACKGROUND
1.1 In the current difficult climate for European aviation, one sector is performing extremely well, the so-called low cost/no-frills carriers. While the flag-carriers are experiencing severe difficulties, withdrawing from routes and cutting staff, the low cost sector continues to expand at a tremendous pace. There is evidence that the low cost carriers are even becoming dominant players on a significant number of intra-European shorthaul point-to-point routes. The extent to which this expansion of the low cost carriers will affect the traditional airline hub-and-spoke networks poses interesting questions for the European industry and policy makers. 1.2 Europe’s experience of low cost scheduled operators began in 1991 when Irish carrier Ryanair transformed itself from a conventional regional airline into a carbon copy of the US low cost pioneer Southwest Airlines. By focusing initially on serving the large leisure market between Ireland and the UK, the airline had a dramatic effect on services across the Irish Sea. The second phase of Ryanair’s rapid growth has involved the carrier in building up a network of intra-EU routes linking London’s third airport, Stansted, with over 50 under-utilized, secondary airports in a number of countries, making the second largest low-cost carrier in Europe. 1.3 After the acquisition of it’s rival and British Airways offshoot Go, EasyJet, established in 1995, is
English and French only
THE IMPACT OF LOW COST CARRIERS IN EUROPE
(Presented by Albania, Armenia, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Moldova, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Serbia and Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, The former Yugoslav Republic of Macedonia, Turkey, Ukraine, United Kingdom)1
1.
BACKGROUND
1.1 In the current difficult climate for European aviation, one sector is performing extremely well, the so-called low cost/no-frills carriers. While the flag-carriers are experiencing severe difficulties, withdrawing from routes and cutting staff, the low cost sector continues to expand at a tremendous pace. There is evidence that the low cost carriers are even becoming dominant players on a significant number of intra-European shorthaul point-to-point routes. The extent to which this expansion of the low cost carriers will affect the traditional airline hub-and-spoke networks poses interesting questions for the European industry and policy makers. 1.2 Europe’s experience of low cost scheduled operators began in 1991 when Irish carrier Ryanair transformed itself from a conventional regional airline into a carbon copy of the US low cost pioneer Southwest Airlines. By focusing initially on serving the large leisure market between Ireland and the UK, the airline had a dramatic effect on services across the Irish Sea. The second phase of Ryanair’s rapid growth has involved the carrier in building up a network of intra-EU routes linking London’s third airport, Stansted, with over 50 under-utilized, secondary airports in a number of countries, making the second largest low-cost carrier in Europe. 1.3 After the acquisition of it’s rival and British Airways offshoot Go, EasyJet, established in 1995, is