Low Cost Carriers aren’t disruptors… they’re the innovators

When it comes to Europe, particularly across the East, low cost carriers have dominated the industry. But the boom certainly isn’t over just yet. Last year, we witnessed Ryanair become the number one airline operating from Poland, after overtaking the national carrier LOT Polish Airlines and with predictions that European low-cost carriers (LCCs) will continue to outgrow their full service airline rivals, what can we now expect from the region?

When it comes to Europe, particularly across the East, low cost carriers have dominated the industry. But the boom certainly isn’t over just yet. Last year, we witnessed Ryanair become the number one airline operating from Poland, after overtaking the national carrier LOT Polish Airlines and with predictions that European low-cost carriers (LCCs) will continue to outgrow their full service airline rivals, what can we now expect from the region?

John Grant, Director of JG Aviation Consultants and previously Executive Vice President for OAG, explained how the region developed last year and how this will continue. “Was 2015 a good year for European Aviation? On the face of it, some carriers made profits that they had never made before and traffic was strong in Eastern Europe," he explained.

“Oil was based around $35 a barrel, whilst this may be good for some it has probably allowed some carriers to remain in business who should have left the market, and allowed some airlines to avoid tough organisational and network decisions that they should have been making. That price is a sign of economic confidence and demand being low; which isn’t not good," he said.

“What Europe needs is consolidation, and the sooner that happens the more sense and less disruption there will be in the market. People talk about disruption a lot and when they do they immediately think of Ryanair, Wizzair, easyJet etc. but they aren’t the disruptors at all, they are the innovators. If you look at the most recent growth it remains the only part of Europe that is showing real growth; there remains room for more and it will continue to boom, certainly compared to Western Europe,” he added.

LCCs, such as Vueling, have previously expressed the importance of innovation and technology to stay relevant and connected in such a saturated market. However, Grant suggests that there won’t be a significant moment this year for technology, instead it will take time to slowly adapt and adjust to new ways of working.

“Technology changes our world by osmosis, so there won’t be a 2016 ‘moment’. Certainly the A320NEO, A350 etc. that are coming into service will change things, but so will the distribution processes and people, such as Google. As we individually entrust more of our decision making and purchasing to metasearch companies then our lives change, and the next ten years will be full of change," he said.

"Longer routes, more direct lines, more low cost carriers, emergent demand from Asia and China will all impact those route maps.  Aircraft technology will only be a part of the changes we see, just as importantly a new generation of travellers with different demands and expectations will change the landscape of travel,” he added.

Through welcoming the open skies agreement in 2007 a lot has changed across the European market and how it is controlled. Previously, certain routes had been limited to particular airlines and were controlled by government bodies, so it’s hard to determine who holds the upper hand, explained Grant.

“When I started, most routes were awarded by the Government and in the case of the UK it was the CAA. But it’s changed a lot since then with Open Skies and free trade zones. It would, I think, be wrong to say who holds the upper hand since effective air service development occurs between airports and airlines who have shared objectives, common understanding of the market and work in partnership to meet those objectives," he said.

“It’s when that balance is distorted or when a third party, frequently a central agency, interferes and applies a previously unheard of tax or a piece of legislation gets passed, that’s when things go wrong,” he added.

This year, John Grant will be taking part in the ‘What Europe Needs Is…’ panel at Routes Europe, and expressed why he will be attending. “It’s more the exchange of ideas, thinking and networking than direct new route opportunities today. Much of the route discussions take place throughout the year, and are of course prompted by Routes!"

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