European Hubs Reshape To Stabilize

By Jens Flottau
Source: Aviation Week & Space Technology
July 08, 2013
Credit: Michael Urtado

The European hubs are the weakest structurally because airlines there face the most low-cost carrier competition and greater pressure in some of their long-haul markets due to the Persian Gulf carriers. Nonetheless, the big European airlines believe they have found ways to stabilize.

Structural problems at these hubs are not only the result of competition. “Short-haul-to-short-haul hubs are pretty disastrous,” says John Strickland of London-based JLS Consulting. A brief look back indicates how fast things have changed in little more than 10 years. Former Swiss carrier Crossair used to operate a “regional hub” connecting European 50-seater markets in Basel, quite an absurd thought nowadays. Air France once tried something similar in Lyon or even Clermont-Ferrand and Bordeaux. And smaller hubs such as Vienna and Warsaw are struggling to keep operating, while many others like Milan-Malpensa have disappeared.

Strickland believes it is high time for European airlines to recognize that they “can't be all things to all people.” Instead they should “focus on high-frequency thick routes,” even for hub feeder traffic, he says.

Operating a large base like London Heathrow Airport does not necessarily lead to better protection. British Airways has long pulled out of a lot of the European secondary markets. It could do so without jeopardizing its important long-haul operation because the local London market is big enough to sustain long-haul flying with much less feed than elsewhere. Lufthansa, KLM, Swiss International Air Lines, Iberia and (to a degree) Air France do not have that luxury.

“You can no longer operate long-haul without feed,” says Avinomics founder Philip Goedeking, an expert in network planning.

Airlines that have acted can expect some results. “At best, the situation stabilizes at an uncomfortable level, as hub carriers fight back,” says Markus Franke, head of Franke Aviation and Transportation Consulting. “Capacity has been taken out of loss-making markets, smaller aircraft like 50- and 70-seat regional jets are on their way out, if they have not already been retired, improving the average unit cost of the remaining fleet. On the other hand, trunk route frequencies have been increased to protect these attractive markets and airlines are often willing to accept compromises as far as yields are concerned.”

Hubs continue to evolve. Lufthansa has redesigned its main base in Frankfurt to reflect new market realities. “The system is very much geared toward short-haul-to-long-haul connections,” explains Alexis von Hoensbroech, vice president of network planning at Lufthansa. “Short-haul-to-short-haul has been superseded because of low-cost carrier competition. It has become less and less valuable to us.”

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