Airlines now have more power thanks to Covid-19

Source: Schengen Visa Info

The Airports Council International (ACI) Europe has released a comprehensive analysis of airport competition in Europe, highlighting the shifting dynamics as airlines tighten their grip. According to ACI Europe, market changes resulting from the COVID-19 pandemic have increased airlines' power over airports, including the expansion of Ultra-Low-Cost Carriers, airline consolidation, and capacity management. Additionally, changes include the opening and closure of routes and changes in capacity on existing ones.

ACI Europe's Director General, Olivier Jankovec, stated that national regulators across Europe largely ignore the reality of airport competition, resulting in over-regulated airports with limited commercial freedom. He added that while airlines enjoy unrestrained pricing power, consumers receive little protection, suggesting the need for further engagement with regulators.

The publication highlights the COVID-19 pandemic's impact on the air transport sector, increasing air competition across Europe. Low-cost carriers have gained an increasing share of flights, representing 37% of all flights to, from, or within Europe and 45% of all intra-European flights as of June 2022. The publication also revealed that the top five European airlines have an increasing share of seats each year.

The publication further explained that airlines are working on shorter planning horizons, making them more flexible in shifting capacity and negotiating harder for discounts. Additionally, leisure passengers represent an increasing share of passengers, increasing competitive pressure on airlines. As airfares go up, leisure travelers shift to cheaper destinations, drive instead of flying, or stay at home.

Finally, the publication noted that major European airports are facing the most competitive pressures.