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Rivals cash in on Europe's airlines domino fall

Tuesday, October 03, 2017 - 01:56

Europe's struggling carriers are falling like dominoes and the region's biggest airlines are set to chalk up bigger profits. As Silvia Antonioli reports, the collapse of airlines like Monarch, Alitalia and Air Berlin gives rivals the chance to snap up planes, prized airport slots and much-needed pilots.

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Heading home on a rescue plane after the collapse of Monarch Airlines It's little consolation for these passengers that the domino fall of European carriers - such as Alitalia and Air Berlin - could be good for the sector. Richer rivals are already snapping up their planes, airport slots and - good news maybe for Ryanair- their pilots. Brussels kick-started competition by liberalizing the sector 25 years ago But Europe hasn't yet gone the way of the US - with fewer more profitable companies. SOUNDBITE (English) Justin Urquhart-Stewart saying : "What you are going to be seeing (though) is a smaller number of discounters probably because they need that economies of scale to be able to have those low prices and they'll be able to manage those margins. You really can't do that if you're just handling one or two routes." Margins of North American carriers at more than 7% are almost twice those of their European peers. Their higher profitability likely a consequence of consolidation that saw 9 major airlines become five, in the decade to 2015. Shares in large European groups like Lufthansa, Air France-KLM and British Airways parent IAG got a boost from the collapse of Monarch. Some experts predict they will be the survivors longer term, along with easyJet and Ryanair. SOUNDBITE (English) Justin Urquhart-Stewart saying: "Ryanair built its business on not behaving badly but not necessary behaving nicely. They sold to their customers one thing and that was we're cheap. We are cheap and we'll send you to an airport somewhere close to where you are intending to go. Even though it may have the same name it may not be precisely there. Did people moan about it. Yes. Will they fly again. Reluctantly Yes." Fewer airlines means less competition. And possibly higher costs for passengers - but that could be a price worth paying. SOUNDBITE (English) Justin Urquhart-Stewart saying: "If you don't have some consolidation and your weaker ones are just allowed to carry on till they finally go bust then you will end up with a rather poor industry overall." Monarch passengers know all about that - some 90 thousands more still need to be rescued.

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Rivals cash in on Europe's airlines domino fall

Tuesday, October 03, 2017 - 01:56