Strength in numbers
Five big airlines may make up 51% of the European market, but 136 smaller carriers account for the remaining 46% and they also have a voice.
On Oct. 13-15, Europe’s regional airlines gathered for the European Regions Airline Association (ERA) general assembly in Berlin. ERA represents 54 airlines and 45 million passengers (as well as 22 airports and 110 aviation companies). Suffice to say, the ERA general assembly is a big event.
Over the last few months, there has been disruption in the European airline association landscape, with the five largest carriers breaking away to form their own lobby group, casting doubts on the future of network airline body The Association of European Airlines (AEA).
However, as ERA represents the smaller carriers, it has been largely unaffected by this shake-up and – conversely – has picked up some new member airlines along the way. Could ERA emerge as the voice of the Davids, while the tentatively named Airlines for Europe (A4E) represents the Goliaths?
This would certainly make life easier for Europe’s regulators, who are concerned with the needs of the wider traveling public (A4E) and connectivity between regions (ERA). Rather than hearing petitions from multiple associations and individual airlines, they would undoubtedly prefer to have these needs consolidated into as few voices as possible.
In Berlin, ERA director general Simon McNamara used a slide to demonstrate the European market, showing the big five airlines as large fish and the remaining 136 airlines as minnows. “When you put them together, I think the smaller airlines look like piranhas – and a piranha’s bite is 30 times its body weight. I like to see ERA as the voice of the piranhas, biting above its weight,” he said.
The black piranha has the most powerful bite of any animal in history, including the T-Rex. Piranhas aren’t apex predators - they only attack if you mess with them – and they swim in packs for safety, not strength. I’m sure ERA can relate.
But for the time being, things are going well for Europe’s regionals. “Things are actually looking quite good at the moment. We are in a positive situation and I hope our members can grow and thrive. Even when things are good, they are tough. We’re on an upward stretch; hopefully we are not at the top of cycle yet, but there are some economists who forecast that we might be,” McNamara said.
JLS Consulting director John Strickland replied: “Put 50 economists in a room and you will get 50 different results. It all comes back to strength of management.”
A quarter of the world’s top regional airlines are based in Europe. All of them are trying not only adapt to market conditions and survive, but to take control. This has seen 70% of ERA’s members branch out into wet-lease work, either as a core part of their business, or as a service that they offer.
CityJet executive chairman Pat Byrne told me he expects own-branded flying to make up just 30-40% of his operations, with the other 60% being performed for other carriers.
“The North American model is being replicated in Europe 15 years later,” he said. “Larger airlines are divesting their smaller subsidiaries and using lease-providers in Europe. That’s going to be the bulk of our business development,” Byrne said.
Hopefully seeking out this kind of diversified work will give Europe’s regionals the mass they need to survive stormier waters.