Why Europe's Biggest Rival Airlines Are Working Together

by Josh Lew
Last updated: 1:00 PM ET, Thu January 21, 2016

Some of the world's most heated competition takes place between Europe's biggest airlines. Ryanair and easyJet have a fierce rivalry, as do carriers like Lufthansa, British Airways and Air France/KLM. All five of these brands vie for passengers on the continent's most popular routes, and they are constantly trying to get the upper hand when it comes to image and public opinion.

Unlikely allies

Because of this day-in-day-out competition, it always seemed very unlikely that the "Big Five" would ever work together. But that is exactly what they have agreed to do. Ryanair, easyJet, Lufthansa, Air France/KLM and IAG (parent company of British Airways and Iberia) have joined forces to form an association called Airlines for Europe, which uses the acronym A4E.

The association will work toward a few common goals. Willie Walsh, IAG's CEO, addressed the media at Amsterdam Schipol recently about A4E: "Six months ago we got together to agree that Europe needs a loud and unified and clear voice to represent the airline industry in order to bring changes to the EU aviation framework… and create jobs and support the interest of aviation in Europe."

Better regulations needed

The airlines all have complaints about airport taxes and fees, which make travel more expensive for fliers on the continent and also raise operations costs for airlines. The association pointed to a study that showed that fees at airports had nearly doubled over the past decade, even though fares had fallen by approximately 20 percent. Ryanair and its peers have said that the EU needs to step in to regulate airports so that the hubs that have a monopoly in a country or region are not able to set their own exorbitant fees without fear of repercussions.

Regulations would also help protect airport employees and create jobs. Airlines have had to deal with strikes by ground crews and air traffic controllers at some major European airports. These work stoppages disrupted airline schedules and caused a loss of revenue. With better regulations, such labor disputes could be forced into arbitration and settled before there was a work stoppage.

If some of the changes pursued by the Big Five come to pass, passengers will certainly benefit. The cost of flying in Europe would get cheaper, and, ideally, the industry would be stronger and better able to deal with labor problems before they disrupted service.

Joining forces against outside competition

The Airlines for Europe movement could eventually help Euro carriers better compete with the surging Gulf airlines. Emirates, Etihad and Qatar are all making headway in Europe. Their direct flights and code sharing deals have often meant that Europe-based carriers are competing directly with these Middle Eastern stalwarts. One of the problems is that these three Gulf airlines get a great deal of support from their governments when it comes to both financing and regulation. Competing airlines have sometimes contended that this support amounts to unfair, or even illegal, advantages.

The EU, meanwhile, does not offer the same kind of support to its major carriers. However, some airlines on the continent have benefited from code-sharing agreements with Emirates and Etihad, so there is a bit of a disagreement among European airlines about trying to compete with the Gulf and attempting to level the playing field.

Regardless of how it ends up approaching competition from the Middle East, if A4E gets its way, there will be some major changes to the European commercial aviation landscape in 2016.

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