Smaller European regional carriers that have government participation or serve niche markets are the airlines most likely to emerge from the current COVID-19 pandemic, believes the head of the European Regions Airline Association (ERA).
“The ones that have government participation have a better chance of surviving,” ERA director general Montserrat Barriga told ATW. The other grouping with better prospects were those that had niche markets such as Loganair in the Scottish Highlands and Islands or Air Nostrum, which serves a cluster of smaller Spanish cities.
All ERA’s members have asked their respective governments for support “either delayed payments on aviation taxes, airport charges or parking fees etc. The majority of European governments are supporting the airlines. The problem is, there’s a patchwork of things happening and that creates competitive disadvantages.”
Another concern is whether governments that approve airline aid will do so to all carriers in their national territory, she said.
Prior to the slump in traffic occasioned by the pandemic, the picture for ERA’s 50-plus members had been mixed, as might be expected from airlines serving scheduled routes, charter flights, ACMI specialists and those who serve public service obligation routes (essential air services in US parlance).
“As you know, 20 European airlines have failed in the past two years. That means something. That means there’s room for improvement, for consolidation, in the European market.
“There’s healthy consolidation, when several airlines work together and come up with an efficiency plan and are much more profitable together, for example Air Nostrum and CityJet creating one big capacity provider.” The two carriers announced almost two years ago they intended to combine their forces in a joint venture, although progress has been paused by the announcement earlier this month that CityJet has entered “examinership,” the Irish equivalent of Chapter 11 proceedings.
“But the fact that many airlines go bankrupt perhaps shows that it’s very difficult to operate as a regional airline in Europe, because of a lack of economies of scale,” Barriga said.
The collapse earlier this year of Flybe, ERA’s largest member, was a blow, said Barriga: “That hurt.”
However, the organization has seen a sudden upsurge in membership in recent weeks, with nine new carriers joining the existing 50-plus members. “We made an offer to a few of the airlines we normally work with—potential members that we’ve approached previously.
“We went out to them and said, ‘Look, just join. We can talk about the fee and membership whenever is the right time for you and you will be able to contribute by joining forces to mitigate these disastrous effects, because we have a better chance of surviving together if we work together.’”
The new members are: Aircompany Armenia; Greek carriers Air Mediterranean, Ellinair, and Orange2Fly; Cyprus Airways; Georgian Airways; Sevenair (Portugal); Stobart Air (Ireland) and West Atlantic (UK/Sweden).
Barriga added that it remained important that reasonable numbers of airlines remained in operation, in order to provide competition and benefits for consumers. She felt that the sector would be “absolutely key to the reconstruction of Europe” once the pandemic passed. “I think there will be fewer airlines, but the connectivity needs to be there if we want to be ahead of the game.”
She added that she felt the recovery for the continent’s airlines would be slow, partly because of nervousness by people over travelling in groups together, not only in aircraft but in trains and metros, “but I think the sector will survive because there’s a social need to stay connected.”
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