Airline consolidation creates pressures for Europe's airports

BERLIN (Reuters) - A wave of consolidation among European airlines is creating pressure on the region’s airports because it gives carriers more negotiating power over their hubs, the head of airports association ACI Europe told Reuters.

Air Berlin sign is seen at the check-in for the AB6210, the last flight, operated by insolvent carrier Air Berlin before departing Munich's international airport, southern Germany, October 27, 2017. REUTERS/Michael Dalder

European airlines have had a turbulent year. Monarch, Air Berlin and Alitalia have entered administration after struggling to compete as air fares fell.

Lufthansa and easyJet are scooping up Air Berlin’s assets and have also both made bids for some Alitalia operations. Meanwhile British Airways has acquired collapsed Monarch’s valuable Gatwick slots.

“Consolidation means less airlines in the market to chase, to serve your airport and open destinations. It also gives airlines more purchasing power, more power to dictate the conditions under which they serve an airport,” ACI Europe head Olivier Jankovec told Reuters.

While budget airlines such as Ryanair were already more flexible in shifting business to and from airports, the creation of big airline groups with multi-hub operations - IAG, Air France-KLM and Lufthansa Group - means traditional airlines can now also go elsewhere, he said.

For example, Lufthansa this year upped pressure on Fraport, the operator of its main base in Frankfurt, by moving some of its A380 superjumbos to Munich.

CEO Carsten Spohr said at third-quarter results that he expected Lufthansa’s negotiating position to improve at Duesseldorf, Stuttgart and Berlin airports, as a result of its planned takeover of parts of Air Berlin.

“An airport cannot move, an airline can move to another location. With those three groups emerging in Europe, they all have multi-hub operations so they can play that game,” Jankovec said.

Airlines association A4E said in response that re-allocation of flights occurs as a response to passenger demand.

“Airlines serve passenger demands. Switching airport hubs is expensive and should not be confused with a partial re-allocation of capacity,” Thomas Reynaert, managing director of A4E, said.


The Air Berlin collapse has left Berlin’s Tegel airport lacking in more lucrative long-haul flights. Jankovec also predicted that Rome Fiumicino could suffer if Alitalia ceased operations or was bought by a rival.

It took Brussels airport traffic 14 years to recover after the collapse of Sabena, he said, while Budapest lost its status as a hub following the demise of home carrier Malev.

Airports can try to woo airlines, however, by making their operations more efficient so that planes spend less time on the ground, thus earning the airlines more money, he said.

Aviation analyst John Strickland said airports had to be looking ahead all the time.

“It’s about airports being dynamic in what they do, not overspending on capital programmes or coming up with ambitious plans to win architectural awards, but looking at operational efficiency, with which they can be flexible given the shifting sands of the industry,” he said.

Jankovec said the airport sector remained attractive for investors overall, thanks to expected growing passenger numbers.

Shares in European airport operators Fraport, Flughafen Zurich, Vienna Airport, Aena and Groupe ADP have risen by between 19 and 60 percent this year.

Credit rating agency Moody’s last month gave a positive outlook for European airports in 2018 thanks to strong passenger growth, though it highlighted airline consolidation as a risk in the medium term as surviving carriers could cut capacity and raise ticket prices.

Reporting by Victoria Bryan, editing by David Evans and Adrian Croft