European carriers are in for a bumpy ride

IT IS going to be a long, difficult summer for European airlines; it may well be a bumpy couple of years. Last week, IAG, the parent firm of British Airways, Iberia and Aer Lingus, became the latest carrier to tell of its woes. It reined in expectations of growth in 2016 from 40% to around 15%. To be fair, the airline had warned immediately after the EU referendum that Brexit would likely hurt its profits, as doubts about the economy hit business travel and the resulting fall in the pound affected receipts when converted into euros. In that sense, IAG has merely confirmed its own suspicions. 

IAG is not alone in the mire. Europe’s biggest airlines, including Lufthansa, Air France-KLM, easyJet and Ryanair, have already warned of the detrimental effect of not only Brexit, but also numerous terrorist attacks and the attempted coup in Turkey on the aviation market. That might be good for passengers: it is likely that carriers, in the short term at least, will decide to lower fares in order to fill their planes, rather than cutting capacity. And it is not only in Europe that prices are coming under pressure. In America, airfares are at…Continue reading

This post was originally published in the Economist.

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European carriers are in for a bumpy ride

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