LONDON – Prior to the Covid-19 pandemic, the European airline market looked to be consolidating, with large airline groups dominating in the form of IAG, Lufthansa, Air France/KLM, Ryanair, and Easyjet.
Collectively these groups held just over 50% of the European market in 2019 (Chammem, 2020). And this was before the collapse of carriers such as Thomas Cook, Flybe and Germania.
Whilst significant, this pales into comparison to the US market, which through a series of mergers over the last decade, is home to four of the largest airlines (American, United, Delta and Southwest) that together hold over 66% of the US market (Goldstein, 2020).
However, Covid-19 has brought this consolidation trend to a halt, as all but Ryanair have had to take on significant debt in order to retain liquidity. Most European flag carriers – large and small – have relied on government bailouts to stay afloat.
By the end of 2020, it was estimated that industry support had amounted to €24 billion (Flight Global 2020).
With merger & acquisition activity off the table for the foreseeable future as a condition of some of the bailouts, and the industry’s big players tied up with their own challenges, some of Europe’s smaller flag carriers are re-examining their strategies to survive.
Setting up for Growth: Air Baltic
Despite shutting down for 62 days, Air Baltic has emerged from its crisis by retiring its Boeing 737 Classics and Dash-8 turboprops (CAPA 2020).