The future of European aviation belongs to low-cost carriers. Or so it seems. Recently, IATA CEO Alexandre de Juniac told Bloomberg that Europe’s biggest airlines need to consolidate their LCC wings in order to compete with the well-established low-cost carriers. The idea echoes the processes across the Atlantic, where the “no frills” approach is shaping ticket prices and competition.

Juniac, the former CEO of Air France-KLM, has expressed the view that there is not enough space on the European market for a dozen of small low-cost carriers. Most of them, established by the long-haul-focused parent airlines, operate fleets several times smaller than Europe’s LCC giants Ryanair and EasyJet.

Take, for instance, Eurowings (Lufthansa), Vueling (IAG), Iberia Express (Iberia), Transavia (Air France-KLM), the newest player in the game – Joon (also Air France-KLM) and, in some cases, even the third biggest European LCC - Norwegian Air Shuttle. Despite the latter operating a fleet of almost 150 aircraft, it still falls short almost by half to EasyJet with 250 and, of course, Ryanair with 400 aircraft.

Juniac believes that full-service carriers need to merge their LCCs in order to compete with Ryanair and Easyjet and, consequently, avoid the fate of Alitalia and Air Berlin’s.

Meanwhile, across the Atlantic

The dynamic of low-cost airlines shaping the aviation market, mainly through lowering the ticket prices, is far from new. 

As Micah Maidenberg from New York Times News Service argues, research conducted in 1993 by the Department of Transportation described a “Southwest trend”, giving an example of a US airline whose growth was attributed to the basic and low-cost service. Later research by University of Virginia revealed that its presence resulted in approximately $45 cheaper airline tickets in the area, served by its non-stop routes.

This tactic provides results. The increasing pressure by low-cost Spirit and Frontier is not only pushing the big carriers to lower ticket prices, but also to alter their business model. As Maidenberg notes, United – the world’s third biggest airline by revenue and one of the biggest carriers in US - has been shifting its behavior closer to LCCs in order to offer competitive ticket prices.