Expert asks: "Are they an endangered species?"
Industry experts are warning that Europe's regional airlines face possible extinction unless they quickly restructure to counter the onslaught of low-cost carriers.
Addressing senior executives from regional airlines at last week's European Regions Airline Association (ERA) conference in Barcelona, highly regarded industry consultant Professor Rigas Doganis said that low-cost carriers have undermined conventional short-haul markets, and questioned whether they were in fact the new regional airlines. "Should Ryanair be a member of ERA? It's a 'new regional', effectively doing what you are doing," he said.
Doganis added that despite efforts by the full-service carriers to reduce fares to compete with low-cost carriers "they haven't cut costs so losses are going to continue on European routes". He questions why full-service carriers have not adopted more of the low-cost carrier strategies such as higher density seating, shorter turnarounds and higher aircraft utilisation.
Doganis believes it may already be too late to stop the low-cost carriers, and predicts that, in future, most of the intra-Europe short-haul market will be dominated by "two or three major, low-cost, no-frills operators who will squeeze out new, smaller entrants".
"Perhaps the regionals will be the losers," says Doganis, asking: "Are they an endangered species?"
Doganis does see a niche role in the future for traditional regional airlines providing feed for "three-to-five network dominators" focusing on longer-haul operations.
KLM Cityhopper managing director Elfrieke van Galen is confident that there will be a place for regional airlines in the future, but not without pain. "Regionals will continue to operate as hub-feeders, but have to lower costs both in flight and on the ground," she says.
Lufthansa's regional operations have had to bear the brunt of the recent onslaught of low-fare carriers in the German market. Although the majority of Lufthansa Regional's business is hub-feeding, around 35% of operations are point-to-point. "The regional concept cannot compete with no-frills carriers in this market," says Lufthansa Regional senior vice-president Werner Knorr.
Airline consultant and former Scandinavian Airlines chief operating officer Kjell Fredheim thinks Europe's established carriers already have the armoury to tackle the low-cost carriers, but need to deploy it. "They have an advantage with slots when they get their act together and start to compete," he says.
MAX KINGSLEY-JONES / BARCELONA
Source: Flight International
