Could There Ever Be A European Low Cost Airline Alliance?

Could Europe’s budget airlines get together and form their own alliances with each other? This was an interesting question brought up by one of our readers recently that we thought we would like to take a look at.

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Would Ryanair ever join an alliance? Photo: Ryanair

In some respects, basic alliances are already being formed. Norwegian Air Shuttle recently signed an interline partnership agreement with JetBlue, for example. In a way, it is almost an endorsement for the low-cost Scandinavian airline as JetBlue would have never entered into an agreement if they thought Norwegian was on the verge of bankruptcy.

Will low-cost airlines join together?

For me, the entire concept of being a low-cost airline is about getting passengers from A-to-B for as little a cost as possible. The other side of that business model is to make as much money as they can from ancillary services. This is something that, love them or hate it, Ryanair does very well.

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Back in 2017, the Telegraph reported that Norwegian was keen to link up with Ryanair in some form of an alliance. CEO at the time Bjorn Kjos said that, should the Ryanair initiative work, the airline would look to form a similar partnership with easyJet. That this never happened is telling; clearly Ryanair was not as keen as Norwegian on the idea.

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Where Ryanair or other budget European airlines could form some kind of low-cost alliance would be with like-minded Middle Eastern carriers such as Flydubai and Air Arabia.

Using Ryanair as an example, the Irish budget airline could link up with Flydubai at Beirut–Rafic Hariri International Airport (BEY) or with Air Arabia from one of UAE carrier’s European destinations or hub in Morocco.

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Wizzair is doing very well and expanding. Photo: Wizz Air

In their nature, I don’t think low-cost carriers want to be in alliances and would prefer to go their own way in flying to routes that are profitable for them. We saw how royally easyJet failed with their U.K. to Russia routes, yet the current golden boy of the low-cost airline world, Wizz Air, thinks they can make it work.

In short, I do not see, for now at least, low-cost carriers getting together. That is, unless it is a matter of one of them buying another.

Could low-cost airlines join one of the three big alliances?

It seems unlikely that there would be much benefit to LCCs from joining a large alliance. For a start, most of the big full-service airlines already have a low-cost subsidy, such as Lufthansa’s Eurowings and Air France’s Transavia.

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Lufthansa already has an LLC in Eurowings. Photo: Marvin Mutz Wikimedia Commons

Saying that, 2019 has been a tough year for airlines with several of them failing. If some of them had been in an alliance with global players, they might have still been around today.

However, the high costs involved in becoming a member of one of the big three alliances means this would be a decision that would have to be thoroughly thought through.

Analyst predicts European LLCs will join one of the big three alliances

Aviation analyst at the Cowen Group Helene Becker predicts that in 2020, other than Ryanair and easyJet, hardly any independent low-cost European airlines will be able to exist outside of the three big alliances. In her report carried by CNN Becker says:

“We expect Europe to continue to consolidate through failures and [mergers and acquisitions], which should result in just five major airline groups dominating the marketplace.”

Following the turmoil that Becker is predicting, she expects to see other than Ryanair and easyJet all the other European low-cost carriers being affiliated with Sky Team, Oneworld, or Star Alliance.

According to Becker “Hardly, any independent European airlines will be able to exist outside of the alliances.” 2020 could be shaping up to be a big year in the airline industry. If what Becker predicts happens, it will certainly be interesting to see how it all unfolds.

What do you think? Will there ever be an alliance between low-cost carriers? Please let us know in the comments.

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Dr Alfred Quintano

The announcement in July 2019 by Ryanair that it had entered into a partnership with the government of Malta in the setting up of a joint venture carrier called Malta Air was a milestone. Already around 40 B737-800 have been transferred to the Malta jurisdiction 9H- register and operating under Malta Air’s AOC. Moreover, as a start, all Italy operations of Ryanair are being transferred to Malta Air with effect from 1st January and that includes all staff in Italy. It is very well likely that the initial batch of Boeing 737 Max that will (one day) fly will be… Read more »

Filippo Gallo

How to ruin the reputation of the Cowen Group.

Matt

If they do form an alliance, it likely won’t be carriers that serve the same market, but different areas. The Norwegian/Jet Blue partnership is an example. I could also see someone like AirAsia partner with a European or North American LCC.