Monarch collapse highlights EU airline consolidation – The recent move by Monarch Airlines into liquidation is likely the first in a round of news that will have major impacts on the European aviation and travel sector.
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In recent years, we have seen the US airlines suffer at the hands of low-cost players, resulting in major upheavals and a collapse in the number of airlines to just a handful of major fleets. Europe is likely to follow that trend.
For noteworthy investments in the coming years, look to the key players in the airline market. They are likely to up their spending on new, more economical fleets from Airbus and Boeing to ensure they remain at maximum efficiency. Also, look for the way that the airlines operate to ensure that flights remain full. Will they partner more with reservation brokers and ticket websites to ensure tickets are sold?
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Factors Impacting Airlines
Airlines that will suffer in this market are those like Monarch, who lie between the rampant budget airlines, like Ryanair, and the major fleets, like British Airways and Lufthansa. Only those with new investment or who enter into alliances or partnerships are likely to survive.
Oil Prices
Much of the fortune of the airlines depend on oil prices, a key signal to monitor. Continuing instability in oil-producing countries will drive prices up. Meanwhile the slow rise of electric vehicles will start to have an impact on petrol consumption. Add to this, the growing political turmoil, rise in terrorism and other threats across the continent which will are all have an impact on airline profits.
Business Travel
Business travel is also down, as growth in video conferencing and teleworking reduces the need for flying. In this environment, spotting the winners and losers in the aviation sector will remain a challenge. The concept of flying will also change as plane makers roll out new cabin types. These range from ultimate luxury to cramming more passengers into economy class.
Just ten extra passengers on each flight in a plane that is 4% more fuel efficient can make a big difference to airline profits. All of these factors will impact the profit and success of airlines in the coming years, making this an exciting market to monitor.