Airline Weekly - October 12, 2015
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Airline Weekly - October 12, 2015

Cheap Cologne: Across Germany, Ryanair and other LCCs are growing, and Lufthansa is fighting back

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Cover Story

Cheap Cologne: Across Germany, Ryanair and other LCCs are growing, and Lufthansa is fighting back

As it prepares for next summer’s peak season, Europe’s largest low-cost carrier has opportunities—opportunities as far as the eye can see. With fuel prices down, profits surging, economies recovering, new planes coming and even corporate travelers now flocking its way, Ryanair is expanding throughout the continent, its capacity up sharply in cities as diverse as Rome, Brussels and Bucharest. But where is it growing most?

The answer: Germany.

In next year’s April-to-June quarter, corresponding with the start of the peak spring and summer season, Ryanair’s seat counts in Germany will rise by no less than a third, according to an Airline Weekly analysis of Diio Mi schedule data, highlighting an escalation of low-fare airline battles in Europe’s second largest airline market (the U.K. is No. 1). Ryanair, in fact, will add more new seats from Germany than from any other country next spring, driven by new bases at Berlin Schönefeld and Cologne/Bonn, both opening later this month.

Right behind it, meanwhile, is its fellow ultra-LCC Wizz Air, itself growing seat capacity from Germany by 24% next spring. Wizz Air is also adding routes from Cologne. But more interestingly, it has big plans at airports where Ryanair is actually shrinking, including Memmingen, Nuremberg, Karlsruhe and Hahn, which is west of Frankfurt and south of Cologne.

Ryanair and Wizz Air are not entirely representative of the wider trend among non-German LCCs. easyJet is currently shrinking a bit in Germany, while Norwegian and Vueling are downsizing to an even greater degree, albeit from a smaller base—at least according to currently published schedules for next summer, which could yet change. It’s safe to conclude though that Ryanair, already Germany’s busiest low-fare airline based outside Germany, will widen its lead. And importantly, easyJet will still be about a tenth bigger in Germany next spring than it was two years earlier, before it opened a new base in Hamburg to go along with one at Berlin Schönefeld. Vueling, for its part, barely served the German market before 2013 and today flies to 11 German airports. In other words, the long-term growth trend in Germany for all major European non-German LCCs is unmistakable.

What, though, of low-fare airlines based in Germany? Air Berlin is hardly a marginal player in Europe’s overall aviation arena, still operating more flights with more... (401 of 1,603 words)

Also Inside this Issue:

Hold tight. Here we go. Delta kicks off third quarter earnings season this week, with others lined up to follow. In the U.S., signs of a great quarter are everywhere. Unit revenues were down, to be sure. But it’s like when a person’s taxes rise after winning the lottery: a small price to pay for something overwhelmingly positive. For airlines, of course, the overwhelming positive is dramatically cheaper fuel, whose impact makes falling RASM seem far less significant, even if not trivial.

United, for one, is feeling bullish. In a Q3 earnings preview, it revealed not just falling fuel costs—everyone knew that—but falling non-fuel CASM too. Its margins, more importantly, won’t be far below American’s despite a sizeable hedge disadvantage.

In the meantime, United is adding new routes to Auckland and Tel Aviv. And it might be on the verge of a big order for small narrowbodies, reports Bloomberg News—an order designed to advance labor relations.

Labor relations couldn’t be any worse at Air France. Forget about that big pilot strike a year ago. Last week, union rabble-rousers physically attacked two executives as they presented their case for concessions. In some eyes, the airline is a modern-day Marie Antoinette trying to force the masses to eat cake. Others see a company fearful of becoming the next Alitalia if it doesn’t secure a competitive cost base.

Finnair’s cost base should improve with the arrival of new A350s, a machine well-designed for its core Helsinki-Asia flying. Meanwhile, Emirates and Jennifer Aniston, now “Friends,” mocked the products and services of U.S. carriers.

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