Originally Posted by
orbitmic
To be honest, U2 has significantly encroached the predominance of some of the large legacy carriers at leading European airports. Look at their European network from AMS or GVA, for instance, it is impressive. Or for mainstream airports of secondary magnitude, look at their network at LYS. My guess is that they will kick A5 out sooner rather than later. They continue to eat market shares from their local main competitor there as they do from ORY and CDG, and notably a larger share or the business market.
What did they actually take away from Swiss at Geneva or AF at Lyon or LH at DUS?
A lot of thin routes that did not turn a profit anyway and that were only operated, because of slot related issues or the inability to lay off staff.
On the other hand however, it woke up the BA’s and LH’s of this world, so they managed to cut costs fast (speed is certainly always a relative term at a legacy carrier with 110+k employees)
Of course, LH under Weber and Mayrhuber and AF and KL since deregulation missed their major chance, a massive employee entitlement cut, after Sep.11 and SARS, probably the only time employees would have accepted that.
But then again, they are still growing, so actual passenger migration, let alone the migration of profitable customers to low cost carriers is difficult to prove, probably because it never really happened. We saw migration from expensive low cost carriers to less expensive ones, however migration of profitable accounts from LH to Ryanair is a myth, at least I am not aware of any study.
So we saw encroachment, however that disruption woke up the legacy carriers, AF needed a few more rings by the alarm clock, so arguably they are better prepared than ever before, again AF being the exception.
As pointed out before, my sources within KL are not as good as they used to be, the ones within AF are even worse, but I can definitely tell you that they talked to two major law firms (one from the US) about ‘strategic bankruptcy’ , the infamous strategy used for the first 30 years ago in the US for an airline. They met, I am not saying that they elaborated on a plan already, but at least AF appeared to be prepared….before oil became so inexpensive.
If you consider that deregulation in Europe started 15 years after the US and if you take a look at the first bankruptcy of a major US carrier, United in 2002, so 24 years later, AF would be on course for bankruptcy in 2017.
A streamlined post bankruptcy AF would be fearsome and would put a lot of pressure on the competition (legacy costs will become a factor at the European LCC eventually…)
If you take an educated look at the financial situation at LH or BA, if you take a look at the profits for 2015, I really wonder how relevant the encroachment really was.
Again, the Euro 400 backpacker passengers from Europe to Goa never used the EU3 anyway and the Euro 99 passengers from DUS to CDG on LH are not really that relevant, so losing a few of them to an LCC is not the end of the world.