European Airlines: New Competitors Exacerbate Marketplace Challenges

Summary

The European airline industry is on the road to recovery. While the numbers look optimistic – traffic trends are positive throughout 2011 and total traffic increased. Numbers alone don’t provide the full picture of what’s happening in the airline segment. The dynamics and structure of the industry have undergone massive changes in the past several years.

The European Union’s successful liberalization of the air transport industry, on the heels of U.S. air deregulation, has ushered in unprecedented growth in air transport and introduced many new entrants and business models. From 1987 through 2007, deregulation across the European Union (EU) introduced the market to many new players. Deregulation first came into effect between Ireland and the U.K., and soon after, airlines throughout Europe were free to service the EU market.