euro|topics - The end of an era

02/12/2008

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Main focus of Tuesday, July 29, 2008

The end of an era

The high price of oil is wreaking havoc with Europe's cheap airlines: The Irish carrier Ryanair yesterday announced an 85 percent drop in its first-quarter profit while its British rival Easyjet has revised its profits outlook downwards. Is the era of cheap air travel coming to an end?

Corriere della Sera - Italy

Corriere della Sera sees the problems Irish budget airline Ryanair is facing as the end of the "dream of flying for a euro.".The European Commission's decision to include domestic European flights in the emissions trading programme will deal cheap airlines the final blow: "The low-cost era has come to an end; rising prices will bring budget airlines to their knees. Since the beginning of the year 24 budget airlines have gone bankrupt and the remaining airlines have drastically cut down their routes. ... In sum: fares will no longer be as 'low', expansion projects will collapse, airlines will close down or be bought up by more stable companies. ... The death blow will come from the EU: from 2012 on civilian air services will be added to the list of traffic sectors that must pay for their carbon dioxide emissions. This will cost airlines around three billion euros and means certain death for budget airlines." (29/07/2008)

The Times - United Kingdom

The Times takes a nostalgic look at the achievements of cheap air travel: "The advent of budget carriers, which ferried 45 million Britons around Europe last year, has done more to build friendship and understanding between nations than any grandiose EU project. No-frills carriers have opened up Europe, by enabling more people to fly more often, and by putting entire regions on the tourist map for the first time. ... By filling almost every seat, and using more modern aircraft, budget airlines are arguably less polluting per passenger mile than legacy carriers. ... Sadly, there is no way around the fact that higher fares are needed to make air travel better reflect its environmental cost." (29/07/2008)

Financial Times Deutschland - Germany

The business newspaper Financial Times Deutschland is predicting tough competition among budget airlines amid falling profits: "Given the gloomy economic prospects in Britain, Ireland and other European countries Ryanair .. can no longer rely on low-earners regularly booking weekend breaks. Both Ryanair director O'Leary and Ryanair's competitors like Easyjet will thus have to find an answer to the question of how to increase passenger numbers in the face of escalating costs and higher ticket prices in a pretty much saturated market if they are to keep investors sweet. ... But unlike Air Berlin it is not a make or break situation for Ryanair despite the sobering prospects. ... If the high price of kerosine propels a consolidation of the market Ryanair will be a potential buyer, while Air Berlin already looks like a candidate for a take-over. The days when you could fly to half Europe's destinations for 19.99 euros are over. Anyone who constructed his business model on that assumption now needs more than a good showman at the top." (29/07/2008)

» To the complete press review of Tuesday, July 29, 2008

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