From
this article by Justin Bachman in
Bloomberg Businessweek:
The biggest airlines across Europe are finding it tricky to make money in their own backyards. Air France-KLM (AF:FP) said on Thursday it will transfer a major portion of its European flights to Transavia, a low-cost airline acquired by KLM 11 years ago, as part of a major restructuring aimed at reversing losses on short flights. The same strategy has been adopted in Germany with Lufthansa’s (LHA:GR) steady shift since 2012 of its European flying from Frankfurt and Munich to its lower-cost Germanwings unit.
The shunning of European routes by the global flag carriers reflects the cutthroat nature of fare competition in the continent, where airlines such as EasyJet (EZJ:LN), Ryanair (RYAAY), and Wizz Air dominate the short-flight market. Those carriers’ labor costs are substantially lower than at Lufthansa, Air France, and British Airways, which also have routes that don’t touch their hubs.
...and meanwhile, some airlines based in the United States are recording record profits...