A “price war” rages in the sky

Dear traders,

Despite all discussions about the ecological footprint of flying, this form of mobility is becoming more popular. More and more people are getting on the plane. A merciless competition rages over Europe’s skies. Old-established airlines fight against ever more aggressive offers of the cheap fliers. The price war is accompanied by subsidies for regional airports, which, under the guise of regional subsidies, pamper airlines in particular with cheap take-off and landing fees. In addition, there are numerous tax exemptions, such as on kerosene, which make dumping prices possible and with which not even the national railway companies can compete.

Even if subsidy policy seems absurd in view of governments’ climate targets, it is still real and tempts airlines to take high risks. The example of insolvent Air Berlin shows what happens if capacity utilization cannot be guaranteed as planned. Condor also plunged into turbulence when its parent company Thomas Cook went bankrupt. But the airline is still in the air. A consolidation in the sky is imminent. The fact is that the aviation industry in Europe is in a consolidation phase in order to reduce overcapacities. The five largest European airlines control 50% of the market. In the USA, this figure is 86%. In this respect, the European airlines still seem to have a lot to loose……

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