easyJet

Milan Malpensa is trying to gel low-cost and full service to rebuild its lost glory

Milan Malpensa Airport is betting on low-cost carriers as well as full service carriers to restore its lost glory but it will not be able to rebuild a hub owing to its lack of a local network carrier. LCCs now represent about 50% of total seat capacity at the airport while Alitalia accounts for only 4% of capacity as it has shrunk its Milan network to only seven routes, according to data from Innovata. Including its LCC subsidiary Air One Smart Carrier, Alitalia offers less than 13% of Malpensa’s total seat capacity, which is not sufficient to fulfil a possible hub operator role. Most noteworthy is the decline of Malpensa as a transatlantic gateway.

Malpensa used to be a thriving Alitalia hub with the airline serving over 80 routes from the North Italian airport, including 10 transatlantic routes. But the Italian flag carrier’s bankruptcy at the end 2008 and its restructuring under new private ownership from 2009 changed its fortunes. Alitalia now only operates two transatlantic routes from Malpensa while US carriers have also dropped several routes to Milan in recent years.

easyJet's reduced loss in 1H2012 reflects brighter skies and higher seat revenue

easyJet blew a kind wind through the cloudy European sky as it reported a better than expected net loss of GBP90 million for the six months ended 31-Mar-2012, despite increased fuel costs and the increased UK Air Passenger Duty (APD). Net loss for 1H2012 reduced 21.5% on the year-ago period on a 5.4% rise in passengers carried and a 15.7% growth in total revenues.

The good performance of Europe’s second largest LCC in terms of passengers carried contrasts with the worsening operating results of its full service peers like Lufthansa Group and Air France-KLM Group, which were not able to absorb spiralling fuel expenses, notwithstanding increased passenger traffic and higher passenger unit revenue in their most recent 1Q2012.

The financial year of easyJet differs from Lufthansa and Air France-KLM’s which both have the calendar year as their financial year.

Luxembourg opening to LCC competition with the entry of easyJet

The tiny Luxembourg market has been thrust into the spotlight by easyJet’s announcement that it plans to launch the first low-cost carrier service into the small European nation. With no domestic market in Luxembourg, national carrier Luxair relies on a short/medium-haul international network serving Europe and Africa. The arrival of LCC competition will place pressure on the flag carrier, which may find it difficult to compete with budget rivals.

Luxair, which is the only Luxembourg-based passenger carrier, currently offers 36,285 seats per week, according to data from Innovata. Western Europe accounts for about 90% of the carrier’s total capacity (seats) and all 10 of the carrier’s largest routes.

Iberia Express launches as Europe’s latest salvo to bring short-haul model to profitability

New carrier Iberia Express has launched services despite its website not launching until later this week, and even then bookings will be accepted for travel only as early as 10-Apr-2012. The unusual arrangement is indicative of what Iberia Express is: a wholly-owned subsidiary of Iberia that will replace some of mainline Iberia’s short- and medium-haul routes. In its initial weeks it is taking over flights sold as Iberia, but passenger perceptions will be few; service is almost identical to Iberia – but with staff employed at market rates, drastically cutting costs.

Iberia for some years now has been in dispute with its over-paid staff – some of its short-haul pilots earn more than British Airways’ long-haul pilots – a problem that has compounded Iberia’s short-haul network which faces intense competition from low-cost carriers amidst rising fuel prices. The struggle of a European legacy carrier’s traditional short-haul network is not unique to Iberia and across the continent many alternative models are being explored, with none yet to emerge as successful and resistant to challenges.

Changes ahead for Cyprus Airways as it implements turnaround plan and seeks new owner

Cyprus Airways is facing intensifying competition in its local market while it contends with falling revenue and rising expenses. A turnaround plan is underway to streamline the airline’s operations in attempt to strengthen the carrier prior to raising new capital and a potential sale to a strategic investor. All the while low-cost carriers are growing in influence in the key Cyprus-Europe market.

In 2011 Cyprus Airways’ revenues were down 10.1% to EUR212.4 million while operating costs grew 1.9% to EUR264.7 million, primarily from rising fuel prices. The negative result was attributed to the ongoing economic downturn along with “intensifying competition in the main markets” where the airline operates. The flag carrier expects to be impacted further by Greece’s financial crisis while unrest in the Middle East is expected to continue to create uncertainty.