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Competition heats up between airports

European airport companies are fighting an increasingly heated battle to attract airlines.

“Route exhibitions – mass gatherings of aeronautics industry stakeholders – are looking more and more like speed-dating sessions where airports try to seduce airlines.” In one sentence, Nicolas Paulissen, delegate general of the French airport union UAF, sums up the situation: over the past 15 years, competition has been ramping up between European airport groups, including some public companies like Aéroports de Paris (ADP), Flughafen Zürich and Fraport.

The cause of this battle for influence can be found in the growing success of the low-cost model. While traditional airlines are often former national companies and are structurally closely linked to their respective countries, low - cost airlines are flexible pan-European companies that can leave an airport if the expected profitability isn’t up to par. In October 2018, for example, Ryanair decided to close its bases in Eindhoven (the Netherlands) and Bremen (Germany) and reduce capacity in Niederrhein (Germany). These announcements are nothing out of the ordinary: of the 18,000 routes that link European airports, an average of 3,000 are opened and 2,500 are closed, each year. “It shows the extreme volatility of this market, where an airline can move overnight,” says Olivier Jankovec, director general of Airports Council International Europe. “For hubs, it’s not necessarily a problem, but for smaller airports, an airline closing could have serious consequences.”

To understand the full scope of the phenomenon, it is helpful to look to the past. “Thirty years ago, no one took a weekend trip to Barcelona, because the train took too long and flights were too expensive,” says Jean-Baptiste Nau, an aeronautics expert at Wavestone. “Low-cost airlines caused an explosion in mass tourism.” That’s one way of saying that for travellers, price has become the main factor when choosing a destination: “If Rome is more expensive, you choose Lisbon,” says Paulissen of French airport union, UAF. This type of decision means that a city like Cluj-Napoca in Romania could compete with Cork in Ireland to attract new airlines and keep existing ones.



Olivier Jankovec, director general of Airports Council International Europe


Airports must financially encourage companies to choose their airport, and make sure that ticket prices are as inexpensive as possible. “This could mean reductions in airport fees,” says Paulissen. “Some airports are even offering airlines communications and marketing campaigns.” Regional authorities, which benefit from hordes of tourists, are often stakeholders in these types of negotiations.

“Low-cost airlines now hold considerable power,” says Jankovec. The numbers confirm this: low-cost airlines contributed up to 76% of air traffic growth between 2010 and 2016, according to a study by Airports Council International published last year. And the arrival of low-cost long-haul carriers will further increase traffic growth. “Mid-size and even small regional airports will break into the longhaul market. Cork, for example, now has regular services to Boston and Manchester and flights to Puerto Vallarta, Mexico,” says Paulissen. “But there can’t be an infinite number of these kinds of routes: there won’t be both Toulouse-New York and Bordeaux-New York. It will be either one or the other.”

While major European hubs are largely spared this phenomenon, they need to be wary of competitors from the Gulf states and Turkey. Indeed, airports in Dubai, Abu Dhabi, Doha and Istanbul are becoming more and more competitive in terms of transfer passengers. This type of passenger makes up 30% of passenger traffic at London Heathrow and 32% at Paris-CDG, with the figure rising to 61% at Frankfurt.


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