European aviation needs bigger mergers than easyJet-Wizz Air

Premium Analysis

The news of Wizz Air's rejected bid for easyJet has refocused attention on European airline consolidation and the structure of the European market.

Ryanair has taken over from Lufthansa Group as the intra-Europe leader by seats and made the biggest gain in seat share during the pandemic. Aeroflot, Turkish Airlines, Wizz Air and Pegasus have also gained seat share. Lufthansa Group and easyJet have lost share, while Air France-KLM's share is flat.

Comparison with the structure of the North American market is informative. The intra-Europe market is similar in size to intra-North America's in terms of seat capacity, but far more fragmented. The 87% share of North America's top seven equals Europe's top 25.

This report suggests a hypothetical series of combinations among Europe's top 25 that would roughly replicate the seat shares held by North America's top seven. A combined easyJet/Wizz Air, were it ever to happen, would be number two intra-Europe, but its seat share would not be top four in North America.

Europe needs much bigger deals if its market structure is to match that of North America, where consolidation has improved airline profitability.

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