Air Berlin's brave move

Air Berlin's announcement that it plans to set up a low-cost transfer hub at London Stansted is a potentially ground breaking development in the European low-cost sector.

It is an extremely aggressive move - and a brave one too, given that Stansted is home to both Ryanair and easyJet. Low-cost carriers in Europe have tended to avoid each other like the plague, but with all three carriers taking deliveries of massive aircraft orders, more direct competition is likely to become increasingly common.

Of the two connecting destinations announced so far, Glasgow International will see the German carrier going head-to-head with easyJet and Globespan, while Ryanair flies to nearby Glasgow Prestwick.

No carrier flies from Stansted to Manchester other than regional cairline Eastern Airways, but bmiBaby and Monarch have bases at Manchester, while the big charter carriers have a strong presence - and are also after the seat-only market.

The move is also interesting because Air Berlin is replicating the successful business model developed at its low-cost transfer operation at Palma de Mallorca. This offers 12 German cities connections with airports in the Mediterranean, mainly the Spanish mainland. Air Berlin was flying around 200 flights per week to its Palma hub this summer.

There is clearly plenty of scope for yield-destruction, but Air Berlin has built itself up into Europe's third low-cost force, and, so far at least, has made strategic innovation work.