easyJet stated long-haul services are “under-taxed”, as the LCC renewed calls for the UK government to move to a per-aircraft form of APD that would charge more (Travel Weekly, 26-Jan-2011). ABTA CEO Mark Tanzer supported the statement, adding the APD has adversely affected travel to the Caribbean and other long-haul destinations. In response, Virgin Atlantic CEO Steve Ridgeway admitted that while the APD was “doing great damage to the Caribbean”, the rates on short-haul services should be increased.
UK carriers disagree on impact of APD
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Air France-KLM: long haul low cost airline could be part of new CEO's vision as French Blue enters
Air France-KLM chairman and CEO, Jean-Marc Janaillac, who took charge in Jul-2016, has talked about the possibility of launching long haul low cost operations (Bloomberg/luchtvaartnieuws.nl, 20-Sep-2016).
If Air France-KLM were to enter this segment it would be the second of Europe's big three legacy airline groups to do so, after the Lufthansa Group. Ironically, there is no long haul low cost competition to Lufthansa in Germany. By contrast, IAG faces more such competitors in the UK than either of its two major rival groups in their largest home market, but currently has no plan for such an operator.
Air France-KLM management told analysts on a conference call in May-2016 that it was sceptical about the sustainability of year-round profits for long haul low cost. However, new competition has prompted Mr Janaillac to look more closely at this market segment. Since Jul-2016 Norwegian has commenced trans-Atlantic long haul operations from Paris CDG. In addition, since Sep-2016, the new-start long haul LCC French Blue now flies on routes to the Caribbean. Mr Janaillac is expected to report on his strategic vision for Air France-KLM in early Nov-2016. Labour relations will be crucial to the group's development – not least in the area of long haul low cost.
TUIfly, easyJet, airberlin, NIKI, Eurowings eye partners in Germany's aviation market upheaval
Ryanair's expansion and Brexit are among factors which may have prompted reports about possible consolidation and other forms of co-operation involving Germany's leading airlines. These include - apparently false - speculation that easyJet has considered buying a stake in TUIFly (possibly to ensure that it has access to EU traffic rights post Brexit) and that TUIFly, a charter airline with growing seat-only sales, may be integrated with airberlin subsidiary NIKI and the TUIFly aircraft currently operating airberlin routes under wet lease.
An expanded TUIFly operation could, perhaps, better withstand fast-growing competition from Ryanair in Germany, although these stories have been denied. A more definitive development, announced by both parties, is that up to 40 of airberlin's narrow body fleet will be wet-leased to Lufthansa Group for its LCC Eurowings and Austrian Airlines. Airberlin will also put its leisure operations into a separate unit. These moves should partly alleviate airberlin's overcapacity problems, while accelerating the growth of Eurowings (further boosted by the possible integration of Brussels Airlines into the LCC).
Even if the other stories prove mere speculative, the frequency of such reports highlights the need for consolidation in Europe, whose centre is Germany. Moreover, they throw light on the rapid pace of change in business models in what has historically been a very conservative aviation market.