Rejuvenated
Sep 16, 05, 3:10 am
Source: Airwise (http://news.airwise.com/story/view/1126816639.html)
September 15, 2005
Low-cost airlines were defiant in the face of record fuel costs on Thursday, tipping more passenger growth as new markets open up but warning only a handful of the industry's most aggressive players may survive.
Europe's largest budget airline Ryanair said it expected another tough winter but oil price surges were being offset by less pressure to reduce fares because full-service rivals were adding on fuel surcharges.
Chief Executive Michael O'Leary, who warned a year ago the industry faced a "bloodbath", said he still expected weaker players to collapse, particularly with oil around USD$70 a barrel.
"Some of the low-fares airlines in Europe were losing money at USD$25 a barrel and they are going to lose more money at USD$70 a barrel. Over the longer term I think there are going to be four main big survivors in Europe," O'Leary said on the sidelines of the World Low-Cost Airline summit in Amsterdam.
Despite mixed warnings about the industry's future, ambitious expansion plans were still a highlight of the annual meeting of budget airline executives.
Stock market listings, multi-billion dollar aircraft orders and predictions of skyrocketing passenger growth in eastern Europe, Asia and the Middle East were common themes.
"Asia was made for low-cost carriers. Asia is filled with sea and a very poor rail and road," said AirAsia's Chief Executive Tony Fernandes, who expects his passenger numbers to double in 5 years.
The bloodiest battlegrounds were expected to be Germany, central and eastern Europe, and India, the conference was told.
"We think the fuel issue is good for us because this is just going to accelerate the consolidation process," Jozsef Varadi, the chief executive of Hungarian airline Wizz Air, said, saying he expected the number of European low-cost carriers to fall to 4 from 6.
Free travel partly subsidized by income from airports, on-board gambling and budget long-haul were also possibilities in the future, the conference was told.
"I have a vision in the future that we will be flying everyone for free, but damned if I'm going to pay for them to fly," O'Leary said.
Untapped markets in the Middle East, Russia, Asia and Africa would also ensure there was no shortage of new start-up airlines.
"Africa is a massive continent that has been significantly underserviced by air travel for a long time. We see a lot of opportunity there but we are realistic about the regulatory hurdles there," Gidon Novick, Chief Executive of South African low-cost carrier Kulula told the conference.
(Reuters)
September 15, 2005
Low-cost airlines were defiant in the face of record fuel costs on Thursday, tipping more passenger growth as new markets open up but warning only a handful of the industry's most aggressive players may survive.
Europe's largest budget airline Ryanair said it expected another tough winter but oil price surges were being offset by less pressure to reduce fares because full-service rivals were adding on fuel surcharges.
Chief Executive Michael O'Leary, who warned a year ago the industry faced a "bloodbath", said he still expected weaker players to collapse, particularly with oil around USD$70 a barrel.
"Some of the low-fares airlines in Europe were losing money at USD$25 a barrel and they are going to lose more money at USD$70 a barrel. Over the longer term I think there are going to be four main big survivors in Europe," O'Leary said on the sidelines of the World Low-Cost Airline summit in Amsterdam.
Despite mixed warnings about the industry's future, ambitious expansion plans were still a highlight of the annual meeting of budget airline executives.
Stock market listings, multi-billion dollar aircraft orders and predictions of skyrocketing passenger growth in eastern Europe, Asia and the Middle East were common themes.
"Asia was made for low-cost carriers. Asia is filled with sea and a very poor rail and road," said AirAsia's Chief Executive Tony Fernandes, who expects his passenger numbers to double in 5 years.
The bloodiest battlegrounds were expected to be Germany, central and eastern Europe, and India, the conference was told.
"We think the fuel issue is good for us because this is just going to accelerate the consolidation process," Jozsef Varadi, the chief executive of Hungarian airline Wizz Air, said, saying he expected the number of European low-cost carriers to fall to 4 from 6.
Free travel partly subsidized by income from airports, on-board gambling and budget long-haul were also possibilities in the future, the conference was told.
"I have a vision in the future that we will be flying everyone for free, but damned if I'm going to pay for them to fly," O'Leary said.
Untapped markets in the Middle East, Russia, Asia and Africa would also ensure there was no shortage of new start-up airlines.
"Africa is a massive continent that has been significantly underserviced by air travel for a long time. We see a lot of opportunity there but we are realistic about the regulatory hurdles there," Gidon Novick, Chief Executive of South African low-cost carrier Kulula told the conference.
(Reuters)