Air Transport World

If you can't beat em.... Europe's airlines have more than held their own against the 'Big Three' but multinational alliances are reshaping the transatlantic field.(includes related sidebar)

Europe's airlines have more than held their own against the 'Big Three' but multinational alliances are reshaping the transatlantic battlefield

When American Airlines, Delta Air Lines and United Airlines acquired prime European route authority from Pan Am and TWA in the early part of this decade, many in the industry expected to see a significant shift in transatlantic traffic away from the traditional European flag carriers and toward the "Big Three" U.S. airlines.

After all, the Big Three possessed what were perceived as enormous advantages compared with the carriers they were replacing. In terms of revenues, traffic and size of fleets, they were--and still are--the three largest airlines in the world. Unlike Pan Am and TWA, each had a fully developed transcontinental traffic network capable of flowing passengers to U.S. gateway cities, sophisticated yield-management systems to eke the most out of a seat, and strong frequent-flier programs to capture and hold onto passengers.

Also in contrast to their predecessors, both of which had lost money through much of the deregulated period and lacked access to capital, they were well-capitalized and positioned to invest in their new routes. In the cases of Delta and American, they already had extensive experience on the Atlantic.

And as European airlines pointed out at the time--and still do--they had a captive domestic market that accounts for roughly 35% of world airline traffic. Thus, the stage seemed set for an era of U.S. dominance reminiscent of the immediate post-World War II years.

Things did not turn out that way, however. Europe's leading airlines have more than held their own across the pond and increased their share of traffic in a number of markets (see tables, charts, this page and page 41).

"They [Big Three] certainly didn't walk in and blow anybody out," agrees Jon Ash, managing director of Washington-based Global Aviation Assoc. Far from it. According to U.S. government data, the U.S. flag share of total transatlantic passengers has fallen five points since 1988. U.S. airlines carried 46% of passengers in 1994, down from 47% in 1993 and 49% in 1989. Preliminary data for 1995 show U.S. market share falling two more percentage points.

Direct airline traffic reports support this analysis. AEA members' transatlantic RPKs and ASKs have grown at a much faster rate than those of U.S. carriers since the end of 1992, and the U.S. share of transatlantic RPMs fell to 46.9% last year from 48.9% in 1994.

A review of specific city markets is even more revealing. The U.S. airline share of enplanements in the top 25 U.S-Europe airport pairs fell from 54% in 1989 to 43% in 1994. …

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