Air Transport World

Flying through unchartered skies: European leisure carriers remain a powerful cluster, but the industry is changing rapidly and faces some new challenges. (Competition).(airlines)

Some years ago, easyJet founder Stelios Haji-Ioannou argued that the new breed of low-fare scheduled carriers eventually would replace the charter and leisure segment of the European airline industry. His prediction notwithstanding, none of Europe's major charter airlines has ceased operations because of the no-frills phenomenon.

Nevertheless, the charter/inclusive travel landscape is mutating rapidly, at least in part owing to the changes wrought by the budget-airline phenomenon. Consolidation and integration are the buzzwords and the day of the independent may be coming to a dose. "The independent airlines have found it exceedingly difficult to survive in the tourist market," agrees Borislav Bjelicic, senior VP at Frankfurt-based DVB Bank.

Belgium provides a microcosm for the changes occurring across the entire sector. Leisure airlines that have come and gone in recent years include Air Belgium, Constellation Airlines and City Bird. Virgin Express exited the charter business in 2000. Today two major leisure carriers holding Belgian AOCs operate in Belgium: Thomas Cook Airlines Belgium with five A320s borrowed from JMC its sister airline in the UK, and former Sabena affiliate Sobelair, which was acquired by Belgian World Airlines and flies almost exclusively for TUI's Belgian tour activities.

TUI briefly considered acquiring Sobelair and also toyed with creating its own airline. "Both systems have their pros and cons," explains Elie Bruyninckx, director-air traffic and yield at Jetair/TUI Belgium. "In principle, you have more control with a vertical integrated carrier, whereas you spread your risks when you contract out to several independent carriers." Together, Thomas Cook and TUI represent an estimated 90%-95% of Belgium's travel market.

"The evolution of the Belgian charter market is very typical of the evolution of the European charter industry," comments Ludo Sauwens, who until September was GM of startup Delsey Airlines, which has links with financially struggling Dutch leisure carrier Air Holland. "Vertical integration and consolidation are now predominant." Only Germany still counts some major independent leisure airlines in Aero Lloyd and Air Berlin.

A contrarian view is presented by Rudolf Tewes, senior VP-flight operations for Thomas Cook AG, Europe's second-largest travel conglomerate. …

Log in to your account to read this article – and millions more.