Europe’s aviation business models on the test bench

Tourism, low cost, regional flights – everyone wants to grow. Panel discussion in Frankfurt (from left: moderator Timo Kotowski / FAZ, Roland Keppler, Oliver Wagner and Jochen-Schadt) / Photo: Messe Frankfurt

Germany and Europe’s aviation business models are on the ,test bench´ after the bankruptcies of Air Berlin, Monarch Air and Alitalia. According to experts, further bankruptcies will follow, as consolidation in Europe is in full swing. In Frankfurt at the end of November this item was heatedly debated on this year’s Aviation Symposium und business models were presented.

For Eurowings sales chief and Chief Commercial Officer Oliver Wagner Lowcost is still one of the main trends, especially in the continental point to point traffic. For Wagner, it was only logical that Lufthansa in 2012 began transfering the decentralized traffic on Germanwings and expanding the airline accordingly – from 32 to now 110 aircraft. When setting up Eurowings in 2014, it was clear from the beginning that the company had to be designed so that more airlines could be integrated. Therefore, they have set up as ‘Eurowings Aviation GmbH’ based in Cologne, which controls several flight operations centrally from Cologne. Currently, these are Germanwings, Eurowings Germany, Eurowings Europe and SunExpress with long-haul (wet lease) and – subject to the approval of the antitrust authorities – NIKI and LGW. In addition, one wants to integrate further airlines in the future.

We believe in consolidation

Wagner: “We believe in consolidation, want to be drivers and are prepared for anything that happens.” There will be further consolidation, the bankruptcies of Monarch Air, Air Berlin and Alitalia showed this quite clearly. Wagner is convinced that the ‘Eurowings business model’ works, all of course is subject to the antitrust authorities’ decision. All prerequisites have been created, on the operational, technical and financial side. Turnover has risen by a third this year. Now he is waiting, what Brussels will decide. On the current excitement about the ticket price increase, the Eurowings sales boss says: “I assume stable prices in the coming months and not prices which are rising .”The competition will continue to increase, in tourism there will be growth and EasyJet will come to Germany.

Interesting gap

Jochen Schadt, CCO bmiRegional, sees good opportunities for the niche ‘regional flight’, because network carriers are increasingly concentrating on their hubs and the low-cost airlines have aligned themselves with the network carriers, which means larger aircraft and basic fares with additional purchase possibilities. This is exactly where an interesting gap for the regional aircraft model arises. Customers preferred simplify booking, Schadt said. Also to be observed is the ‘2nCity syndrome’. Outside the metropolises, there is more and more networking between the regions. Here, bmiRegional is increasingly working together with universities and chambers of commerce and seeks synergy effects with Air Dolomiti or Lufthansa. The regional aviation business model addresses the need for regionalization in the globalized world. It will, according to Schadt, continue to grow.

Desire for holidays unbroken

Tuifly boss Roland Keppler sees people’s desire for holidays unbroken and his business model ‘hotel plus flight’  growing. Customers wanted to be guided individually through the entire travel experience, from the booking until to the hotel. That is precisely the future of Tuifly. The turnover of Tui Europe and tuiFly increased by 15 percent in the last financial year. It is crucial to remain capable of action and flexible. He knows that many now scent their chances, but he has with TUI the largest tourism group in Germany and Europe on board. Of course one can reach some tourist destinations with scheduled flights, Mallorca for example, but the Cape Verde, for example, not. Tuifly´s target: capacities, which were flown by Air Berlin, flying again under own risk . Keppler: “We are well on the way and we are not afraid of what is coming.”

Johanna Wenninger-Muhr

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