Tuesday, February 21, 2017

European regional carriers facing tough times

Europe’s regional airlines face a narrow—and shrinking—window of opportunity in which to make a profit, an industry consultant said in London Feb. 20.

The continent’s regional airlines already face a delicate balancing act in finding and operating viable routes, Seabury Aviation & Aerospace managing director Jonathan Sullivan said.

“There’s a really narrow window of opportunity for these businesses to exist,” Sullivan said at the European Region's Airline Association’s (ERA) annual media briefing.

Too few passengers on a route made it unviable, but if a regional carrier nurtured it to the point where traffic is growing strongly, it risks attracting the attention of low-cost carriers (LCC) swooping in and pricing the regional out of the market.

The low fuel prices of the past two years led to that small gap in the market shrinking further, Sullivan said, as lower costs had made LCCs more willing to deploy new capacity on thinner, riskier routes.

Sullivan added that Europe’s regional airlines were growing at a slower rate than any other category of carrier and the fleet of regional jets worldwide was ageing, while the fleets of full-service carriers and LCCs were generally getting younger.

The increase in numbers of regional turboprops was only partly offsetting this trend and many passengers still had a prejudice against aircraft with propellers rather than turbofans, no matter the age of the turboprop.

The situation may be helped by an initiative that is planned in which the European Investment Bank (EIB) will provide funding of up to €1 billion (1.1 billion) for new regional airliner financing.

“Several of our members are in quite advanced negotiations with the EIB and we hope to see some orders with this financing in the first six months of this year,” ERA director general Simon McNamara said.

While this would potentially bring new, fuel-efficient aircraft into regional airlines’ fleets, McNamara said that ERA’s 53 member airlines remained frustrated at the European Union’s Emissions Trading System (ETS), which continued to apply to flights wholly within the EU’s 28 nations, a category into which the vast majority of ERA members’ services fell.

This imposed a considerable administrative burden on small airlines and contributed only to a small extent in the reduction of aviation emissions.

ERA and its members fully supported the adoption of a global ETS, but there was concern that disagreements between legislators and the industry could lead to two separate emissions schemes being imposed.

European regional airlines’ frustration on this score was intensified, he said, by the continuing lack of progress on the Single European Sky project, which is supposed to sweep away multiple air traffic control boundaries on the continent, replacing them with larger blocks of airspace.

“This has huge potential to reduce emissions,” McNamara said. A study by Eurocontrol, the European air traffic control organization, had shown that inefficient routings forced on airlines by the current system led to around 10% of the continent’s total fuel burn being unnecessary.

(Alan Dron - ATWOnline News)

No comments: