Business Irish

Monday 26 June 2017

Low-cost carriers soar as flying's old order is toppled

Norwegian Air Shuttle said it carried 29.3 million passengers
Norwegian Air Shuttle said it carried 29.3 million passengers

Christopher Jasper

Aggressive growth strategies at Europe's low-cost carriers are poised to overthrow the region's established airline order.

Ryanair boosted its passenger tally 15pc to 117 million in 2016, a figure that's set to give it the biggest annual tally of any carrier in the region, ahead of Lufthansa, which reports numbers next week.

Norwegian Air Shuttle attracted 29.3 million passengers last year, it said yesterday, a 14pc increase that's likely to put it ahead of SAS for the first time.

Scandinavian rival SAS also posts figures next week.

Wizz Air Holdings, the number one budget carrier in Eastern Europe, grew numbers 19pc to 23 million as it added more destinations in the west of the continent.

Discount specialists are piling on passengers using bargain-basement pricing even as a sluggish European economy and the threat of terror attacks acts as a brake on consumer demand.

With fares sliding, airline giants Lufthansa, Air France-KLM Group and Aer Lingus owner IAG have responded by establishing low-cost units of their own.

However, they've generally struggled to compete with the likes of Ryanair and EasyJet amid opposition to cost cuts from their own staff.

Lufthansa, which attracted 108 million passengers in 2015, is under particular pressure as Ryanair sharpens its focus on Germany.

The group, also including Austrian Airlines and Swiss, probably finished 2016 with about 110 million customers, based on reported figures through November and projections for December, which is about seven million behind its Irish rival.

From January, Lufthansa figures will be boosted by the inclusion of customers of Brussels Airlines, of which it is taking full control after previously holding a minority stake. The Belgian carrier attracted 7.5 million passengers in 2015.

The race between SAS and Norwegian, whose maverick strategy includes low-cost long-haul services, was probably closer.

Air France-KLM, IAG and Lufthansa remain Europe's top three carriers by traffic, a measure of passengers multiplied by the distance flown that's the industry's standard gauge for airline rankings.

Traffic at discount operators is generally much lower since they tend to specialise in short-haul routes and quick turnarounds.

(Bloomberg)

Irish Independent

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