Congestion and a lack of capacity at Europe’s airports are hindering the growth of airlines across the continent, delegates heard at Routes Europe in Bilbao today.
The conference session ‘The State of the European Aviation Industry’ discussed the squeeze across Europe, especially at hub airports like Heathrow and Amsterdam Schiphol.
Europe’s market is forecast to grow by 2.3 per cent per year over the next two decades and will add an additional 550 million passengers by 2036, according to the International Air Transport Association (IATA). Yet, the lack of capacity at airports; the pace in which developments are being agreed and other challenges remain.
IATA regional vice president, Rafael Schvartzman said: “We are not seeing that the infrastructure is being addressed in an adequate way. Europe is running a very inefficient system to what is needed.”
“The industry and the government are required to work together. It cannot be done in isolation and we see a huge challenge,” he added.
The European aviation market has also been impacted by the insolvencies of Monarch Airlines and airberlin, and regional low-cost airlines are facing huge challenges, while the likes of easyJet, Ryanair and Eurowings are dominating the marketplace.
European Regions Airline Association (ERA) director general, Montserrat Barriga, agreed and said with the battle for slots so fierce due to the lack of capacity, it is even more difficult for regional airlines.
“It is more difficult for a number of regional airlines to get slots at large airports as they simply do not have the financial capability to compete for slots,” she said. “Smaller airlines need to access the airports, but because of the congestion, it is even more difficult.”
Capacity and congestion are at “breaking point”, according to fellow panelist, OAG’s EVP of product development, Mark Clarkson. He added that capacity constraints are also leading to poor airline turnaround performance across Europe’s major hubs.
Consolidation in Europe’s airline industry is set to continue and recent developments like IAG acquiring a 4.61% stake in Norwegian, and easyJet in the running for Alitalia.
The panellists believe they will see this more: Barriga said from a costs perspective it makes sense for airlines while Clarkson feels there is still some way to go in terms of consolidation.
Clarkson further said that the top five carriers in Europe account for 30 per cent of the market share, which compares to the top five in the US accounting for 80 per cent and he thinks there will be some shift towards more consolidation in future.
Clarkson could see why IAG took the stake in Norwegian and is potentially eyeing a bid for the carrier, as he said it would gain a 45 per cent increase in slots at Gatwick Airport.
“IAG would have all the necessary growth it needs in terms of slots. It would greatly reduce the competition in the London market,” he added.
Despite concerns over the lack of capacity in Europe and the congested gateways, panellists were upbeat over the future of the market. Indeed, they felt it presented an opportunity for 2nd and 3rd tier airports to grow their offering and networks.
Schvartzman said there are opportunities, especially in growing unique city pairs: “Potential for growth is there and the economy is there and we see the airlines Alitalia, are going to have a good year. In terms of growth, this will not be as good as 2017 this year, but it will still be a good year.”
Barriga stated regional airlines are better prepared to service the secondary and tertiary airports, and that there is still room for improvements and development.
Routes Europe in Bilbao, Spain started on Sunday, 22 April and finishes tomorrow (24 April).