European airlines: Struggling to stay in the air?

Strikes, cancellations and delays; it seems you can't open a newspaper or turn on the news without hearing about a European air carrier suffering one of the above.

A mere glance at BBC News aerospace page is filled with stories relating to Lufthansa's four-day strike, BA's £50 million loss in three months and the need for European airlines struggling to 'polish up their image' - so where did it all go wrong? Was it the downturn during the recession? Increasing fuel prices? Or is there something else that is damaging the European aviation industry?

It did begin during the recession; with people thinking to cut costs where they could, many travellers opted for economy carriers such as EasyJet or Ryanair over British Airways and Lufthansa. As such, these companies have been forced to completely restructure their earnings.

As first-class and business-class passengers have not been forthcoming, the carriers have lost money maintaining an old business model that post-recession may never be needed again especially if people opt for cheaper companies.

However change does not come easy.

Changing a legacy

For companies that are well established, making changes is a massive challenge especially when it is resisted by its workforce.

Air France, BA and Lufthansa have all faced massive staff strikes and in turn, crippled by the stoppages. In customers' eyes, these continuing industrial actions (BA's has been going on for months) has led them to book with rival airlines, hitting the earnings of established carriers hard but massively increasing the likes of RyanAir.

Speaking to the BBC, Saj Ahmad, airline analyst at FBE Aerospace said, "Air France, Lufthansa, British Airways and Alitalia are just a few players that have been crippled by stoppages."

"Customers are taking their money to low-cost and Middle Eastern airlines that provide much better and much more reliable services."

As such, Asian and Middle Eastern airlines, such as Singapore Airlines, Emirates, Qatar Airways and Etihad Airways have seen a boost in custom taking massive numbers of customers away from European carriers.

The fact that 'budget' airlines such as Ryanair and EasyJet have long since outgrown BA when measured by passenger numbers shows the shift in power and established carriers have had to join forces to survive.

In 2004, Air France and the Dutch airline KLM merged to counter the growing dominance of budget airliners while the likes of Lufthansa and BA have been buying up smaller rivals or working towards mergers with Iberia of Spain and American Airlines.

While this may cut costs, it has not been popular with staff. What is clear though is that legacy carriers are attempting to change, but the question is whether they can change fast enough to still be players in the industry.

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Forget planes, take trains | British Airways drops routes to cut costs | 12 days of Christmas strikes

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