After the love bug that has infected some US carriers with the slightly surprising Alaska land grab at Virgin America in April, similar emotions may start afflicting their European cousins.
But just as the recent US west coast meeting of minds surprised at least one analyst, it is not entirely obvious who in Europe wants to jump into bed with whom.
Even one of the region’s merger gurus – Willie Walsh – isn’t entirely sure what developments are on the horizon. But he’s sure there will be some.
“There are lots of airlines that look interesting at the moment,” the IAG chief tells Airline Business in the June edition's cover interview. And Walsh is firmly of the belief that there is more consolidation to play out in Europe, which could offer opportunities to IAG, although he quickly adds the group isn’t actively pursuing any at the moment.
While there’s a raft of second-tier European national carriers that could be in the consolidation mix (Finnair, SAS, Air Malta and Brussels Airlines, to name a few), the region’s leisure and low-cost sector looks like it could also yield some movement. UK leisure carrier Monarch, whose origins date back to the bucket-and-spade holiday era of the late 1960s, has become increasingly squeezed out by low-cost carriers. Its owner and saviour, Greybull Capital, looks likely to use a takeover to furnish its exit strategy, with EasyJet touted as the most likely suitor.
Consolidation in the Euro-budget sector seems an obvious development, but it appears to have ground to a halt in recent times. As our special report this month highlights, the region boasts almost half of the world’s top 10 LCCs (or “next-generation carriers” as Walsh’s IAG prefers to call them), so it feels like there is room for some alignment here.
While the likes of Hungary’s Wizz Air and Turkey’s Pegasus (which are just outside the world top 10) are potential participants in Europe’s long-term consolidation game, the really interesting brand in the sector is Norwegian.
Led by the charismatic lawyer and former Royal Norwegian Air Force Starfighter pilot Bjørn Kjos, the airline has carved out a niche and challenged convention with its unique strategy of dispersed short- and long-haul operating bases and plans for a mixed fleet of Airbus and Boeings supplemented by a leasing company, Arctic Aviation Assets. Norwegian carried 26 million passengers on its fleet of over 100 aircraft last year, and continues to push for unconditional approval of a US foreign carrier license to support its transatlantic operations.
Walsh confesses to being a great admirer of Kjos’s strategy and style, and notably did not line up with his European legacy airline peers to object to Norwegian’s bid for US approval. “We’ve been very supportive of their view that they should get approvals in the US. I don’t think he’s done anything wrong,” Walsh says.
“Bjørn’s a very smart guy, the company is ambitious and growing fast,” he adds.
But despite the plaudits, Walsh admits he’s unclear of the former fast-jet jock’s true intentions, and wonders whether Norwegian is working on its acquisition appeal. Although he admits that his pal Kjos “shows no evidence of slowing down or wanting to move out”.
There has been talk about some form of co-operation with Ryanair, which itself is departing from the usual “keep it simple” policy with a flight-connections trial. Boss Michael O’Leary has long been a proponent of the long-haul low-cost idea, so perhaps Norwegian could provide him with the turnkey opportunity to finally make the leap to that sector. When asked recently by Flightglobal if there was any deeper agenda, Kjos responded that Norwegian was “not up for sale”.
So there you have it, straight from the horse’s mouth. Or perhaps as Winston Churchill once said, they’re just haggling over the price?
Source: Airline Business