Europe's airline industry should follow the example of the USA and consolidate into "five or six large airline groups" in order to gain the "scale effects that are needed" to compete, argues Thomas Cook's long-haul network group director Jens Boyd.
"Be it state aid, be it problems with our pilots, be it other items – partnerships we are trying to manage to become groups but are really not – are currently hindering us to be as efficient as maybe Ryanair and EasyJet are," said Boyd during a strategy summit panel debate at Routes Europe in Aberdeen.
Peter Morris – chief economist at Flightglobal consultancy Ascend, and another participant in the debate – offered a pithy take: "I have the feeling about consolidation that if you wanted to breed a racehorse, you probably wouldn't take two dinosaurs and start your breeding programme."
Morris adds: "Whatever has happened in the United States I think is interesting from a number of points of view. On the one hand, you can clearly see that it's returned to profitability. [However] I don't know how many of you travel regularly in the United States, but as soon as I mention US carriers, I see faces fall round the room – in terms of the customer product."
In the view of Simon McNamara, director general of the European Regions Airline Association, investment in Europe is being hampered by current rules that limit foreign ownership to 49%.
"It is a source of problems I think, in the future, for attracting that investment into European carriers because there's not a big bunch of people out there wanting to give money to the industry," says McNamara. "The industry needs capital."
But there are ominous signs. Jeremy Robinson, legal director with Hill Dickinson, told delegates that the European Commission has in fact "flirted with the idea of regulating minority investments that don't give rise to decisive control over carriers", including the "loophole" that allowed Ryanair to acquire an almost 30% stake in Aer Lingus.
While this idea has been put on the "back burner", Robinson is "not hopeful it's gone forever".
Source: Cirium Dashboard
