Budget Airlines Hit Ceiling

In Europe, airlines are in fierce competition waiting for some to fail so others may succeed.


EUROPE'S budget airlines market has grown to its maximum size, with no more growth possible, claims CNBC European Business.

The business magazine says that with too many operators and too many seats available, no-frills airlines can only expect to gain more market share at the expense of others' failure.

It adds that could have dire consequences for some of the operators using Liverpool John Lennon Airport.

The airport handles both chartered and scheduled flights and is served by airlines including Easyjet - with flights to many European destinations - MyTravel Airways, Ryanair, VLM Airlines and Wizz Air.

CNBC European Business, in its latest issue, says the overheated, ruthlessly competitive air travel industry is littered with collapses. It says Luton-based Now went bankrupt in 2004 without having flown its first route, while Germany's VBird announced a new route in July 2005 and was broke by October.

"A host of new airlines including Poland's Wizz Air, Spain's Vueling and Germanwings have sprung up to compete for European passengers with the budget giants Ryanair and Easyjet," said the magazine.

"Budget carriers have stripped their service to the bone to attract tourist trade and are now focusing on business travellers for their bread and butter. Yet with insufficient passengers for the seats available, such slight margins may prove disastrous to the smaller operators."

Last month Wizz Air, the first airline to connect Liverpool with Eastern Europe, celebrated its first year of operations from Liverpool John Lennon Airport. It said it had been a successful year and 73,000 passengers had taken advantage of the low cost fares to and from Liverpool.

European aircraft manufacturer Airbus, which has a wings factory on Deeside, has racked up hundreds of orders for new jets on the back of the surge in the low cost carrier sector.

Easyjet placed an order for 120 aircraft and has an option on another 120.

Deregulation of the air industry in countries like India has also seen a huge demand for new planes. The most recent Airbus order from the sub-continent came from Bangalore-based low cost carrier Air Deccan which placed a firm order for 30 more A320 jets.

Liverpool operators could feel the pinch

business@dailypost.co.uk

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