Economic downturn 'could trigger airline consolidation'

Economic downturn 'could trigger airline consolidation'

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The next economic downturn will trigger a new round of consolidation in the European airline sector, according to the chief executive of the continent’s biggest carrier.

Lufthansa’s Carsten Spohr said there are currently too many airlines operating in Western Europe.

Spohr forecast that only five airlines in the European marketplace would prevail in the long-term, echoing a prediction made by Willie Walsh, chief executive of the International Airlines Group (IAG), some years ago.

“You just have to look at the numbers,” he told delegates at the GBTA Europe conference in Frankfurt. “In the US, the top five airlines carry 92% of passengers.

In Europe the top five only represents 45%. Be it for lobbying purposes, or finding synergies, we are too small. I do not know of any other industry where this is the case.”

Spohr said Lufthansa would have to be an “active participant” when the market next contracts, and that his airline would focus on growing non-hub traffic.

“Two of the main low-cost carriers are set [in place], and there may be room for two or three others. I know who will and who won’t [survive],” he said.  

Spohr said the Star Alliance, of which Lufthansa is a founding member, would continue to play a crucial role in the development of the airline, especially as economic power continues to move from West to East.

“Lufthansa has more codeshares and joint ventures [than any other airline]. We all have need for partners,” he said.

In a week when cabin crew strikes forced Lufthansa to cancel hundreds of flights, it also announced a new joint venture with Singapore Airlines.

The tie-up has been interpreted by some as an attempt to fend off the cash-rich Gulf Carriers on key routes.

When asked about the growing influence of the Arab airlines, Spohr said: “In countries with no democracy and no unions it is no surprise there are no strikes.”

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