Arbeitsgemeinschaft Deutscher Verkehrsflughäfen Low Cost Monitor 2/2007 – A Joint Analysis of DLR and ADV – # LCCLCC -StreckenRoutes 568 Aer Lingus # Routes Air Baltic # # # # # # Air Berlin (Euro Shuttle) # # Air Italy # Blue Air # # # Blue1 # # # # # # # # # # # Brussels Airlines # # # # # Clickair # # # # # # # ## # # Condor-City fliegen # # # # # # # # # # # # # ## # # # # # Easyjet # # # # # # # # # # # Easyjet Switzerland # ## # # # # # fly niki # # # # # # # # # # # # flybe # # # # # # # # # # ## Germanwings # # # # # # Iceland Express # # # # # # # # # # # # # Intersky # # # # # ## # # # # # Jet2 # # # # # # # # # # Norwegian # # # # # # # # Ryanair # # # # # # # # Sterling # Transavia # TUIFly (Lowcost) Wizz The Current Low Cost Carrier Market in Germany September 2007 The Current Low Cost Carrier Market in Germany (First Half Year of 2007) Since several years the low cost carrier (LCC) market is an essential part of the German air transport market. The Low Cost Monitor, jointly issued by ADV and DLR, twice a year informs on LCC’s essential features and current developments in this market segment, particularly as to the number and relative importance of low cost carriers, their offers including the air fare, and the passenger demand. The offers reflected by the current Monitor are based on one reference week of the summer flight schedule 2007. The passenger traffic indicated relates to the half-year total of 2007. Airlines 4 The airlines involved in the low cost business mostly design their offers quite differently. Due to this inhomogeneity, only a few clear distinctive criteria can be defined, for example low fares and direct sale via the Internet. Thus, in some cases a certain scope of discretion arises when allocating an airline to an LCC-segment. The authors of this Monitor currently classify 23 airlines operating on German airports as low cost carriers. These are in detail (see also table 1): Aer Lingus (EI) (www.aerlingus.com), Fleet: 30 Airplanes (A320: 24/A321: 6) Air Baltic (BT) (www.airbaltic.com), Fleet: 20 Airplanes (B737: 12, F50: 8) Air Berlin (AB) (www.airberlin.com), Fleet: 86 Airplanes (F100: 3, A319: 6, A320: 20, B737: 57) Air Italy (I9) (www.airitaly.it), Fleet: 6 Airplanes (B737: 2, B757: 3, B767:1) Blue 1 (KF) (Blue1.com), Fleet: 12 Airplanes (Avro RJ: 9, MD90: 3) Blue Air (0B) (www.blueair-web.com), Fleet: 4 Airplanes (B737-300/500: 4) Brussels Airlines (SN) (www.brusselsairlines.de) Fleet: 45 Airplanes (A319: 3, Avro: 32, B737: 10) Clickair (XG) (www.clickair.com) Fleet: 19 Airplanes (A320: 19) Condor-City fliegen (DE) (www.Condor.de), Fleet: in total 35 Airplanes, (A320: 13) Easyjet (U2) (www.easyjet.com), Fleet: 124 Airplanes (A319: 94, B737: 30) Easyjet Switzerland (BH) (www.easyjet.com), Fleet: 12 Airplanes (A319: 12) Flybe (BE) (www.flybe.com), Fleet: 82 Airplanes (ATR42: 1, BAE146: 12, D8: 36, E: 32, F100:1) Germanwings (4U) (www.germanwings.com), Fleet: 31 Airplanes (A319: 25, A320: 3, MD80: 3) Intersky (3L) (www.intersky.biz), Fleet: 3 Airplanes (D8: 3) Iceland Express (FHE)(www.icelandexpress.com), Fleet: 4 Airplanes (MD90: 4) Jet 2 (LS) (www.jet2.com), Fleet: 32 Airplanes (B737-300: 23, B757-200: 8, MD80: 1) Niki (HG) (www.flyniki.com), Fleet: 7 Airplanes (A319: 1, A320: 5, A321: 1) Norwegian (DY) (www.norwegian.no), Fleet: 48 Airplanes (B737: 44, MD80: 4) Ryanair (FR) (www.ryanair.com), Fleet: 137 Airplanes (B737: 137) Sterling (NB) (www.sterling.dk), Fleet: 26 Airplanes (B737-500/700/800: 26) Transavia (HV) (www.transavia.com), Fleet: 32 Airplanes (B737: 31, B757: 1) TUIfly (X3) (www.hlx.com), Fleet: 56 Airplanes (B737: 55, A320: 1) Wizz (W6) (www.wizzair.com), Fleet: 13 Airplanes (A320: 12, B737: 1) (A: Airbus, B: Boeing, C: Canadair, D: Dash, E: Embraer, F: Fokker, MD: Boeing-McDonnell) In general the number of low cost carriers in the German market has been increasing steadily compared to last year’s summer. New are the services of Clickair, Easyjet Switzerland (a Swiss subsidiary of Easyjet), Blue 1, Brussels Airlines (merged in Virgin Express) and Air Italy. However, the Polish airline Centralwings and the Scandinavian airline Fly Nordic stopped their services in the German market since beginning of this year. Also Blue Express and Sky Europe do not operate currently in Germany. DBA has been taken over by Air Berlin last year. Meanwhile, their entire network of routes has been integrated in the low cost segment of Air Berlin. Actually, there is no longer a Euro Shuttle flight schedule, it was abandoned for economical reasons. However, all those flight routes are allocated to the low cost range, which do not have typical tourist destinations and where mainly single seat bookings take place. Noteworthy is further the merge of the brands Hapag Lloyd Express and Hapag Lloyd Flug to become TUIfly in spring this year. This complicates the clear identification of the low cost range by means of the flight number. However, identification can be made by considering the different quality of service. Thus,low cost flights do not offer free meals onboard. Therefore, in the following only these flights of the total TUIfly segment are considered. On the European level Virgin Express and SN Brussels have merged in Brussels Airlines, the existing routes to Germany remain. 2 Some carriers have considerably increased their fleets. In particular Ryanair have extended their fleet by 30 airplanes to 137 in total since summer 2006. Easyjet have increased their fleet by 15 airplanes and by 12 additional airplanes from Easyjet Switzerland. Due to the integration of DBA, the number of Air Berlin airplanes has increased from 56 in summer 2006 to 86 in summer 2007. The merge of HLX and Hapag Lloyd Express in TUIfly does not allow any accurate statement on the number of airplanes operating in the Low cost market. Currently, the total number is 56 airplanes, prior to merging, HLX owned 18 airplanes. The services of Corendon airline have not been considered, due to lacking data. However, they have been considered in the analysis of demand. The total analysis of offers is barely falsified by this omission, since their market share is extremely small (1 per mille). 4 Carrier Ranking (s. Table 1): Measured by the number of flights (departures) offered during one week in July 2007, after the DBA take-over, Air Berlin Euro Shuttlle for the first time is the major low cost carrier in Germany with 2000 flight movements. Compared to the preceding year, when both airlines together performed almost 1700 flight movements, this means an increase by about 18%. 4 In the ranking, they are followed by Germanwings (920 flights), TUIfly (644 flights), Ryanair (518 flights), and Easyjet (379 flights). A particularly strong increase of almost 28% can be seen for Ryanair. This is due to some new additional routes from Hahn airport and the deployment of new airplanes and thus the expansion of service at the airports of Bremen and Niederrhein. Also Germanwings and TUIfly show growth rates of roundly 20%. Unlike, the Easyjet flight service stagnated on the level of the preceding year (379 departures). Besides a few small foreign low cost airlines the British airline flybe, which mainly operate on the British mainland, have been newly added to the Monitor. Whereas this company still ranked as number 11 (only 26 flights to Germany) in the LCC-Monitor 1/2007, the summer flight schedule already lists 141 flights per week. Thus, this airline, measured by the number of low cost flights, ranks as number 6, still ahead of Intersky, who increased their service by roundly 10%. 4 LCC Market Shares (s. Figure 1): The seven largest of the 23 low cost carriers make up for about 94% of the German market. Now, almost 40% of all flights can be allocated to the Air Berlin Euro Shuttle, whereas prior to the alliance, 18% were allocated to Air Berlin and 23% to DBA. In the market share ranking follows Germanwings (18%), TUIfly (13%) and Ryanair (10%). Apart from Easyjet (their market share is decreasing), all other airlines were able to keep their market shares. Transport Services 4 Flight Routes (s. Table 1 and 2 as well as Figure 2): In total, the low cost airlines considered operate on 568 different domestic and cross-border routes. These are 142 additional routes compared to summer 2006, i.e. an increase of more than 33%. The current summer flight schedule has been compared with the corresponding summer flight schedule of the preceding year, since there are many favoured warm water destinations that are served only in summer. An extensive network expansion has been performed by Ryanair in serving additional 30 routes. This means a growth of more than 60% compared to the preceding year. Mainly involved are the airports of Hahn, Bremen and Niederrhein, since primarily these airports were subject to network extensions. If the airlines DBA and Air Berlin Euro Shuttle were still considered separately, their growth would amount to 23%. In total, Air Berlin Euro Shuttle and TUIfly as well as Germanwings have added 30 routes. It should be noted in this context that for domestic flights one route is considered twice, outward MUC-DUS and return DUS-MUC. In contrast, Easyjet slightly reduced their flight route offer by 4% after having intensively expanded their network during the last years. Whereas Ryanair is building up their cross-border service and therefore in 2007 has installed two new bases, namely in Niederrhein and Bremen, Germanwings increasingly offer domestic flight services at Zweibruecken and TUIfly at Memmingen. In Europe, mainly destinations to central or East European countries have been added to the networks, but also Austria is increasingly frequented. In addition, there is an intensified service to Spain and Greece during the months of summer. However, there is a slight decrease of destinations in the North European countries, Denmark and Sweden. 4 Competition: The direct competition between low cost carriers is still relatively marginal, only on 25 routes of 568 routes in total compete two airlines, and three airlines compete on only one route.