easyJet CEO Carolyn McCall stated the airline is considering co-branding links with mobile phone service providers in a bid to step up marketing as part of a new sales growth strategy (Dow Jones Newswires, 28-Mar-2011). The airline has announced a marketing partnership with VisitBritain, which will see both parties invest a total of GBP18 million to market the UK as a tourist destination. Half the investment will be provided by the government with the balance to come from easyJet in the form of cash and promotional services. Ms McCall stated easyJet wouldn't add extra capacity for the 2012 Olympics, but said it would benefit from improved yields as demand pushes up fares. easyJet's contribution to the campaign will focus mainly on France, Germany, Italy, Spain and Switzerland. easyJet is "open to talk to anyone" regarding similar partnerships, according to the CEO, but she added it would limit the number of similar ventures as it doesn't want to dilute its own brand.
easyJet steps up marketing strategy
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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.
European airlines: 1H2016 results show a widening gap between the haves and have-nots
The last of Europe's leading listed airline groups reported 1H2016 results on 19-Sep-2016. This now allows analysis of the aggregate trends for the 15 largest European airline groups listed on the stock market that publicly report financial results for the first six months of the calendar year. These groups account for 53% of ASKs flown to/from/within Europe by all airlines and 71% of ASKs flown by European airlines (week of 19-Sep-2016, source: OAG).
Collectively, these 15 groups enjoyed an improvement in operating margin in 1H2016 versus 1H2015. This was achieved in spite of heavy downward pressure on unit revenue – thanks largely to lower fuel prices, which allowed them to cut unit costs more rapidly. However, there was a wider range of levels of profitability in the individual results compared with last year.
Moreover, in margin terms, there was a trend towards the strong getting stronger and the weak getting weaker. Further, there has been a number of profit warnings in the sector – particularly since the UK's Brexit referendum. This may mean that further improvements in the aggregate results of Europe's listed airline sector will be harder to achieve in 2017.