The Future of Long-haul Air Services From Europe
N Dennis, University of Westminster, UK
In recent years, the short-haul scheduled air network within Europe has generated much activity and interest through the growth of low-cost airlines. This paper however aims to turn the spotlight onto long-haul services from Europe. This has been a less dynamic sector of the market but is crucial to the viability of many of the traditional European ?flag carriers?. The changing commercial, technological and policy framework is evaluated in order to identify the future development of airline operations.
An initial analysis is made of the current distribution of demand and provision of long-haul flights from Europe. The recent round of airline failures is shown to have led to greater concentration on the major hubs. Sabena?s long-haul network has virtually disappeared while Swiss is a shadow of its former self and BA has run-down Gatwick and shifted routes to Heathrow. The major beneficiaries of this re-alignment have been Paris CDG and Frankfurt.
Alliances are playing a key part in airline strategy on intercontinental routes. Links between alliance hubs are being strengthened?for example, Detroit-Amsterdam now enjoys four widebodied flights per day, while misfit routes such as Copenhagen-Hong Kong, linking hubs in rival alliances have been dropped. The proposed merger between KLM and Air France is studied to assess the complementary strengths as well as potential duplication. The role of smaller partners is quantified. Some of these are adopting more of a feeder function, while others such as bmi British Midland have long-haul ambitions of their own.
Niche strategies are also examined. Virgin Atlantic has been successful outside any alliance by offering an ?added value? point-to-point product at conventional tariffs. It is shown that this may be difficult to repeat outside the London market however. Several US airlines have introduced Boeing 757s on thin North Atlantic routes, such as Continental?s new service from Edinburgh to Newark. Lufthansa have gone a step further and contracted in executive 737s from Privatair to provide a business class only product on selected routes between Germany and the US that have strong business demand but insufficient total traffic to support a daily widebody flight. Charter airlines have some presence ? but generally at low frequency ? to traditional leisure destinations such as Orlando in Florida or the Caribbean.
New aircraft developments such as the 7E7 and A380 are discussed. Emirates large order for A380s suggests that the Dubai hub is determined to become a major force in Europe-S Asia markets. At the same time, a gap has emerged in the mid-range with the Boeing 767 becoming viewed as old and uncompetitive, leaving the A330 as the smallest new generation long-haul aircraft. This leaves a void in the 180-250 seater market. A greater move towards dedicated cargo aircraft may see a move away from the Boeing 747 as the natural aircraft choice on markets such as Europe to Asia.
Low-cost airlines have not so far entered the long-haul arena. The paper examines the cost structure of long-haul services and shows that traditional operations are in a relatively stronger position. Demand is much more dispersed which makes hubbing a necessity. Utilisation can not be much increased on aircraft that are already flying 16 hours per day. Product features do matter on long distance flights and while there are some passengers willing to pay many thousands of pounds for sleeper seats at the front of the aircraft, the economy cabin can be provided at low marginal cost. The scope for services linking low-cost bases such as London Stansted and Baltimore/Washington is considered. The potential of regional airports with long-haul aspirations such as Finningley near Doncaster or Lille in France is assessed including potential catchment areas and surface transportation.
Bilateral air service agreements still dictate the pattern of long-haul services from Europe. EU plans to negotiate these en-bloc for Europe are discussed. It is not expected that this will lead to a dramatic change in operations but peripheral airlines may well attempt to tap bigger markets en-route and some reshuffling between alliance partners is likely to take place. Gatwick is liable to see almost all its remaining long-haul services switched to Heathrow once the Bermuda 2 agreement is superceded.
Future growth opportunities are expected to concentrate on more non-stop destinations and higher frequencies from the major European hubs to other parts of the world, coupled with increased non-European carrier service to second-tier cities in Europe such as Manchester, Brussels and Dusseldorf. Scheduled leisure services are likely to evolve from existing charter operations in seasonal markets with a low business content. These may form the nucleus of a long-haul, low-cost operation.
Association for European Transport