As a kid, I first started plane spotting when I flew through the airports of  in Europe, Africa and the Middle East. I became expert by the age of six at picking out all of the different tails of airlines. The bright colours of Braniff, the dignified blue of Pan Am, the proud speedbird of BOAC,  the Kangaroo of Qantas and the blue and white S of Sabena all were recognisable instantly. Fast forward forty years, and most of those airlines are gone.

As an adult, I still like looking at those tails and dream both about the carrier and it service and the exotic destinations it connects.   I promise I am not obsessive about my plane spotting.  I don’t make many special trips to the airport, just to watch planes!  I am noticing that while I see more planes at most airports, I am seeing fewer and fewer airlines.

A few years ago, a friend of mine Tony (see earlier post on how he got me into Flightmemory) and I tipped that the number of carriers globally would fall to a dozen or so with a small number of regional carriers. We saw national lines would get blurred, that fewer governments would be able or willing to prop carriers up and economics would force consolidation. Tony passed away a few years ago. He would be amazed at how quickly our predictions are indeed happening. Air France-KLM (2004), Lufthansa-Austrian-Swiss (2007-8), Delta-Northwest (2008), British-Iberia (2011), and United-Continental (2012). Now American and USAir are talking.

European airlines seem to be consolidating into seven major airline groups listed here in order of number of passengers carried:

  1. Germany’s Lufthansa (who own Austrian, Germanwings, SWISS, Lauda, 45% of Brussels and 16% of Us Carrier JetBlue)- they made €820m in 2011 but lost money on British Midland who they are offloading. Their subsidiary Austrian is under major pressure
  2. Ryanair- made  €401m and are aiming to double passenger numbers in a decade
  3. Air France-KLM (who are closing in on ownership of Alitalia) lost €353 million
  4. EasyJet – increased  pre tex profits in 2011 to €303 ($362m £248m)
  5. International Airlines Group ( British Airways and  Iberia) who doubled operating profits to €485 million
  6. Turkish Airlines (winner of best European airline in 2011) was profitable and aims to be one of the 12 airlines in the world
  7. Air Berlin  ( now 29% owned by Etihad) and the newest One World member reported a net loss of €271.8m ($322m; £205m). I am curious as to how much Etihad will decide to end up owning
The remaning independent airlines in Europe seem to be increasingly limping toward bankruptcy or absorption: Poland’s LOT, Portugal’s TAP, Hungary’s Wizzair,  Ireland’s Aer Lingus, Slovenia’s Adria airlines, JAT Yugoslav and Czech Airlines all cannot last more than another couple of years.
Spain’s Vueling and Air Europa are now in a much stronger position with the collapse of Star Alliance member Spanair.  Eventually Vueling and Air Europa will have to join the consolidation dance.
Across in Scandinavia,  SAS Group has had four years of losses. Finnair is under enormous pressure after losing €87.5 million 2011 and is looking at outsourciing European flights to a new low cost joint venture.  Meanwhile low cost carrier Norwegian has ordered 222 new planes: 100 737 Neos, 22 737-800s and 100 new  A320neos.
I can’t see SAS, and Norwegian both surviving. One will have to give and the weaker one is SAS. Takeover by Lufthansa or Air France?
 I think Finnair will merge or be taken over. Possible candidates? IAG group? JAL? SAS?
Icelandair who has pegged its strategy on funnelling traffic through Iceland between the US and Europe must choose a new plane to replace its entire fleet of ageing 757s. They could remain a small regional player but more likely will be absorbed by someone else.
The British Airways/Iberia International Airlines Group is considering a possible stake in One World partner Japan Airlines when it has its IPO in September. It would seem to me that Qantas (which BA used to have a stake in) would also be a possible candidate for investment from IAG. Is it further possible that One World could move from airline alliance to airline? Eg One World Airlines combing all or most of their members?
How far will consolidation go? Will we end up with but three airline groupings in Europe all affiliated to an alliance ? And a couple of regional carriers?
Whatever it means, there will be fewer tails at airports to spot. Lets hope the mega-airlines keep the smaller brand names for a while on their planes.

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  • LufthansaFlyer said,

    Watch Turkish snap up LOT……..

  • Andrew said,

    Where does Alitalia fit in ?

  • Martin J Cowling said,

    Air France KLM (AF KLM) is aiming to buy Alitalia (AZ) in 2013 through a share swap, La Tribune reported.

    However, using shares instead of cash to finance the acquisition will require a rebound of its share price, which is trading at around €4 ($5.27), and a swift execution of its three-year “transformation plan” to bring the company back to profitability (ATW Daily News, Jan.13).

    http://atwonline.com/airline-finance-data/news/air-france-klm-eyes-full-alitalia-acquisition-2013-0307

  • Kelly Henry said,

    Agreed on Europe/North America consolidation but you’ve got to love the colorful tails on some of the newer startups/regional carriers in Africa and South America!

  • Martin J Cowling said,

    yes especially some of the South African and Indian carriers. They too are consolidating though

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