European airlines continue to face fare-price pressure
An airplane of German carrier Germanwings takes off from Airport Tegel in Berlin, Germany 07 May 2019. EPA-EFE FILE/FILIP SINGER
By Olivia Bugault
Madrid Desk, Jul 12 (efe-epa).- Airfares for some of the busiest routes in Europe declined over the first half of the year, a trend that will likely stretch into the rest of 2019, according to travel fare aggregator Skyscanner, a report from Dow Jones Newswires supplied to Efe said.
Skyscanner cited data for European airlines flying from France, UK, Spain and Germany, all of which offered cheaper tickets than a year ago.
Flying from Germany to the country's top 5 European destinations was 5 percent cheaper during the first half of the year, while average prices were more than 4 percent lower from the UK and roughly 2 percent cheaper from France, according to data complied by Skyscanner for Dow Jones Newswires.
"Typically for the first part of the year we're seeing fares discounted within Europe compared to a similar period in 2018," said Skyscanner Senior Director Hugh Aitken.
While the trend benefits travelers, it is bad news for airlines, whose first-quarter results were mostly disappointing.
Investors will be looking for warnings across the sector when first-half results are published in the coming weeks, especially from legacy carriers that have been hit by intense price competition, Citi said.
"The earnings' downgrade cycle has just begun and thus sentiment towards the sector will likely continue to flounder," the brokerage added.
Germany's Deutsche Lufthansa AG has issued two profit warnings this year and swung to a loss in the first quarter, while Air France-KLM's loss widened.
International Consolidated Airlines, the owner of Iberia and British Airways, fared better.
Market forecasts for legacy carriers' airfares seem relatively high, especially across long-haul markets, Citi noted, while Skyscanner said that "the overall picture is one of a price-sensitive market," citing competitor pricing, fuel costs and capacity among other factors impacting airfares.
With no signs of a decrease in competition or overcapacity, the trend of declining prices will likely continue within Europe across 2019.
That would reinforce the longer-term trend, since average prices also decreased between 2016 and 2018, Skyscanner data shows.
Skyscanner is an aggregator based in Edinburgh.
According to the company, more than 80 million consumers use its website every month to search airfares worldwide.
The data provided by the company focuses on four of the busiest European countries and their top 5 to 6 destinations in terms of passengers and flights. EFE-EPA