Palma de Mallorca Airport: new Eurowings base in price-sensitive market; capacity is accelerating

The announcement by Eurowings that it plans to establish a base with two aircraft at Palma de Mallorca Airport next spring focuses attention on Spain's number three airport by passenger numbers. One of Europe's most important airports for LCC capacity, Palma is also very dependent on the summer schedule. The low point of the winter schedule has 78% fewer seats than the peak summer week.

Traffic at the airport held up relatively well during the second phase of Spain's 'double-dip' recession in 2011 to 2013, but its passenger growth has lagged that of the country as a whole since then. The mix of airlines has been in some flux, with Palma's leading airline airberlin gradually losing share to LCCs and the seat-only sales of charter airlines. Ryanair, number two at the airport, has returned to capacity growth there in 2016 after two years of cuts.

Eurowings' new base at Palma in May-2017 will follow the establishment of bases at the airport by easyJet and Norwegian in 2016. It is certainly a market that seems to attract the interest of Europe's leisure-focused airlines, but strong capacity growth at Palma (and elsewhere in Spain) increases the downward pressure on yields in a price-sensitive market.