BIRD’S EYE VIEW
Air Scoop - July 2006
Open Skies Agreement: New Markets for LCCs?
Bosnia and Herzegovina, Bulgaria, Croatia, Iceland, Mace-donia, Norway and Romania have signed the 9th of Junethe agreement on the
European Common Aviation Area (ECAA)
at a ceremony in Luxembourg. Thus they join theSingle European Sky of the EU member states under speci-ﬁc conditions for each country. This agreement still needsto be ratiﬁed by national parliaments.“The creation of the
will put impetus on the po-litical and economic integration of Europe, for which airtransport plays a key role. The agreement will open upmarket opportunities for the aviation industry and givepeople better travel options” said
, EUTransport Commissioner.Egypt also agreed to consider an ‘open skies’ policy to allowforeign airlines greater access to the Arab world’s largesttourism market. The main issue in these open-skies ne-gotiations will concern Cairo. Indeed, Cairo is the hub of national carrier
and is not freely accessible forforeign carriers.
Do you believe that consolidation of the market will lead to 2-3 main LCCs in Europe, or do you think there will always be many LCCs on niche markets?
I do not think that consolidation willresult in only 2 or 3 large low-cost air-lines. There are more variations among the low-cost carriers than among thetraditional airlines. This variation hasdeveloped out of a need for differentconcepts in different markets. Therewill always be a need for various ni-ches. A niche carrier can however ne-ver expect to grow large because thenit no longer serves a niche.
Are you worried about the shortage of pilots and crew hitting LCC mar- ket?
I am not worried but one must all thetime keep an eye on the situation. Themarket for pilots is very much a localmatter. Pilots are people with homesand family and not members of a hi-ghly mobile workforce. A well-run air-line should be an attractive employer.If you stick to one aircraft type andoffer a good and rewarding working environment you should have a betterchance to recruit and maintain a goodpilot workforce.
What are the options for FlyNordic to transform its business model in or- der to make more costs savings?
We are pretty close to have exploredmost of the cost saving areas. Thereare naturally some savings to be gainedregarding service providers. Our ownorganization is as small and effective asit can ever be. If we can maintain ourcost structure but increase our earning potential through customer orientedand innovative product features, weshould be doing OK.
Low Cost Market Share – Monthly Frequencies (June 2006)To/From Germany (in percentage)
Source : OAG MAX
Munich or Nuremberg as 5thGermanwings base?
is currently looking forits 5th base in Germany, and another oneoutside the country. Catchment area isimportant to set a base, smaller airportsare then commercially not viable to sus-tain a base of ﬁve aircraft as targeted by
.Few rumors are, as usual, ongoing aboutpotentially airports:
Munich Internatio- nal Airport
arethe most recurrent options.Munich appears most expensive, but Nu-remberg has already a strong presence of
, even if it is not a base. Setting a base in Nuremberg could be the oppor-tunity to attack its core market, but tillnow
, CEO Nuremberg Airport, has always rejected proposals from
. Fur-thermore, a recent statistics indicated that only 10 % of ﬂights out of Nuremberg were true LCCs while other Germanairports, including Munich, have between 17 and 25 %.Even if a
base is scheduled in Munich (
might try to avoid competition between its two LCCs), Mu-nich Airport should be favorite to become the 5th