Air Transport World

Changing times in Europe. (airline industry)

From consolidations to hubs to frequent-flier programs, Europe's airlines are becoming more like their U.S. counterparts. For many years, Europeans have recited the mantra that the U.S airline system, while perhaps suited to its own marketplace, has no place in their part of the world. There will be no competitive free-for-all, they said, no spectacle of wholesale bankruptcies and abandoned passengers, no below-cost fare wars or silly giveaways, no employment chaos. Europeans, they implied, preferred more benevolent arrangements that protect airlines and consumers alike from competitive excess.

Well, guess what? Slowly but very steadily, the underpinnings of some of these arguments are crumbling. True, there is no competitive free-for-all. Most doubt there will be. But the EC still is designing rules of competition applicable to other business sectors. And it only began debating its Commission's third-stage airline reform proposal in November.

Outside the regulations sphere, however, the European airline system is changing character. Carriers have gone bankrupt. The flags are inching toward private ownership ATW, 12/91). They are merging or otherwise allying-within and across borders-and setting up hubs. They have pared excess workers. They have set up traveler-loyalty programs. They are taking on trappings of the U.S. system.

So far most but not all of the bankrupts are charter airlines whose business suffered from the Gulf War impact and the recession. But the cessations are not limited to charterers. Among the fallen are Paramount, British Island Airways, Hispania, Air Sur, TEA and Odyssey. The biggest to fold was Air Europe, which had developed a considerable scheduled network and a following that had the potential to threaten more established lines. …

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