Transatlantic competition heats up

The next front in the airfare battleground
The skies above the Atlantic could be the next front in the airfare battleground. United, Delta and American have been long-time leading airlines when it comes to transatlantic air travel, but competition on these routes is likely to rise.
The three US carriers will mount a fierce defence of the traditional airfare but they are facing a significant challenge.
Airbus and Boeing are competing to manufacture new, fuel-efficient, narrowbody aircraft types, which are making it easier for European low-cost carriers as well as Gulf airlines to offer long-haul flights. Boeing is now planning a new midsize plane that can travel up to 5,000 nautical miles.
Inevitably, competition will rise, the number of available flights will remain high and fares will sink.
“It’s still a very profitable entity for US airlines, and I think it’ll continue to be,” aviation analyst Joseph DeNardi says about the transatlantic market. “It’ll probably just become less profitable.”
The three US airlines control about a third of transatlantic flights, generating 10-15% of their revenues from this lucrative market.
Ryanair recently floated the possibility of flying across the Atlantic. Norwegian and WOW Air already do. And legacy airlines like Air France-KLM, British Airways and Lufthansa are planning to launch their own discount flights to the US. From the US side, JetBlue is considering flights to Europe as it starts to take delivery of Airbus A321s.
To compete with low-cost rivals, the big three US airlines are using cabin ‘segmentation’, with more classes on offer such as a no-frills ‘basic economy’.
Investor’s Business Daily


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