Travelers who have booked flights in various parts of the world will know first-hand how much prices can vary between regions. What’s more frustrating is how similar distances and levels of service can be, despite the huge difference in airfares. It’s no secret that Europe is one part of the world where flying between any two cities can be achieved for relatively little – especially when compared to domestic markets like Canada and Australia. Why is this?
How much cheaper?
Before we dive into the reasons why European airfares are cheaper, let’s take a look at the numbers and just how much cheaper it is compared to other parts of the world, flying the same distance.
Prices below have been gathered from the official websites of each airline:
A ~1,600 mile round-trip journey August 21-29
- London Luton to Athens: $173 on Wizz Air
- London Heathrow to Athens: $260 on British Airways
- Melbourne to Perth: $277 on Jetstar
- Toronto to Calgary: $360 on Air Canada
800-900 mile round-trip journey August 21-29
- Paris Orly to Warsaw: $94 on Wizz Air
- Paris CDG to Warsaw: $115 on LOT Polish
- Brisbane to Melbourne: $151 on Jetstar
- Vancouver to Regina: $303 on Air Canada
As you can see from the cities and dates we selected, flying between major Canadian cities of similar distance will cost 2-3 times more than a European budget airline, while in Australia, that same distance would cost about 60% more. Similar distances in Europe with legacy carriers also appear to be cheaper.
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The largest single reason for lower airfares in Europe is the presence of competition. The open skies agreements established in the European Union mean that European airlines can fly between EU countries freely. This has led to the rise of low-cost carriers like Ryanair, easyJet, Wizz Air, and more – resulting in more competition. More competition leads to lower fares for travelers, as airlines lower their profit margins to fight for passengers.
Furthermore, beyond air travel, there are other competitively-priced modes of transportation that can get travelers across much of the continent. For shorter journeys, the rise of low-cost coach services such as FlixBus or Megabus gives budget travelers additional options.
While often more expensive than budget carriers, high-speed rail might also be considered as it would eliminate the need to travel to and from airports, delivering passengers directly to city centers.
Somewhat connected to the first reason is the fact that population densities are much lower in countries like Canada and Australia. Therefore, fewer travelers mean fewer flights and smaller airlines, and an overall smaller market (with less competition).
A smaller market means that there may not be enough demand for additional competitors. Furthermore, start-up costs for a new airline combined with a potential price war sparked by the established incumbents, mean that it might be too difficult to even establish more competition (especially at a time like this).
We saw a real-world example of this with Canada Jetlines – which accused Swoop of “pricing below avoidable costs” in an attempt to starve out the competition. Without a sufficiently large market of potential passengers, existing airlines are able to engage in these types of price wars to ensure the competition doesn’t have a chance to grow.
Is there anything we missed in explaining why flying in Europe is so cheap? Let us know in the comments.