The established European airlines have all come under pressure in the last few years, with a collapse in profitability and doubt cast over their traditional business model. Meanwhile, there has been huge growth by the low-cost airlines and other new entrants. Although much has been written of the low-cost carriers' performance, relatively little research has taken place on the reactions of the traditional airlines. This paper aims to assess the extent to which the different airlines are threatened by the low-cost carriers, looking at the major and secondary 'flag' carriers, regional operators with small aircraft and the charter airlines. The various responses are then evaluated. Distinctions are made by European market and detailed analyses will aim to quantify some of these developments. It is concluded that the major airlines cannot abandon their short-haul networks because of the importance of providing feed to their long-haul services. In volume terms they still dominate short-haul traffic in Europe, although this position is being eroded. Cost cutting is being aggressively pursued but it is considered important not to undermine the key differentiators in passenger perception. For the covering abstract please see ITRD E135207.
Abstract