Low cost airlines are a huge business with the increase in travelers looking for budget air fare deals. Some low cost airlines make a fortune with their inclusion to the airline industry in their country or region. However, not all airline markets are thriving as seen in the latest analysis from Germany.

DLR’s Analysis of Germany’s Low Cost Airline Market

On Wednesday, the German Aerospace Center (DLR) released its latest analysis about the country’s low cost airline market. They said that while low-cost flights increased across the region by 4% during last year’s summer season, Germany did not share this same trend. They saw that there is a 1% drop in the number of low-cost services this year or 6,683 weekly departures.

The DLR says that this decline is due to the decrease in flights to Italy, Spain and the UK, as well as domestic flights within Germany. Only Wizz Air expanded their operations in the country since Ryanair and Eurowings reduced their flights in the region.

According to Peter Berster of the DLR’s Institute of Air Transport and Airport Research, Eurowings reduced its flights by 3.5%. The result is that they only have 3,100 departures per week as compared to last year. Meanwhile, Ryanair and its Austrian counterpart Lauda dropped flights by 2% or more than 1,500 weekly departures.

When it comes to the share of German airports in the low-cost segment is around 33% as compared to last year’s 32% share. The slight increase is because of the overall decline in the number of domestic flights. Other German-based airlines – either full-service or charter – reported a reduction of 3.5%.

Meanwhile, low-cost flights from Dusseldorf Airport are increasing as compared to the rest of the country. Eurowings and the airport’s status as a major low-cost carrier hub are the reason for this positive growth. It currently hosts 1,100 departures of low-cost airlines in the country. It is followed by Berlin-Tegel airport.

In the European market, the low-cost carrier market grew by 4% to more than 67,000 departures per week. Ryanair and EasyJet are expanding their operations in Europe. Ryanair has 17,000 departures around Europe per week, while EasyJet has 13,100. This summer, Ryanair added 500 routes to its current route network, while EasyJet added 150 routes.

When it comes to competition, there’s not much competition between budget airlines in the region. Out of all the 10,414 routes operated by these airlines, 8,763 routes get service from one airline.

What is the DLR?

The German Aerospace Center is Germany’s research center for aerospace, energy and transportation. It is located in Cologne and they are engaged in various projects to improve national and international projects for these three industries. DLR is also Germany’s space agency thanks to its research for the industry.

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American carrier Delta Airlines is one of the country’s top carriers and many fly it for its perks and fare prices. Because of its offers to passengers, they report that it has led to a high turn out this past summer.

Passenger Traffic Data for Summer 2019

On Thursday, the airline reported that they had a third-quarter profit increase to 13% or $1.5 billion. This increase is thanks to the high number of passengers over the summer and the low prices thanks to cheaper airplane fuel. However, Delta is not yet relaxing because they released their fourth-quarter forecast that is lower than Wall Street’s expectations.

According to CEO Ed Bastian, travel demand remains strong, especially now that the holiday season is fast approaching.

The company did find itself short on pilots during the summer run, leading to a lot of overtime flying according to its pilots’ union. The airline is working on this problem by adding 6,000 people a year and replace 4,000 employees who are leaving or retiring.

Investors find these hiring trends dangerous because it may affect the costs of the airline. Excluding the fuel prices, spending per seat is 2.4% higher in the third quarter. Delta expects these numbers to increase in the fourth quarter between 4% and 5%.

The airline also reported during the end of the quarter that they earned $173 million more than last year’s record. Revenue had also increased to 5% to $12.56 billion. It mostly earned its profits in domestic travel.

What is next for Delta

Bastian did add that Delta still has three major issues to contend to until the end of 2019.

The first issue deals with the rising costs because the airline needs more people to keep operations running. During the summer, the airline had to spend for overtime payments. They also gave a 4% raise to ground workers and flight attendants for their hard work.

The second issue is the investment they are making overseas. Last month, they agreed to pay the $1.9 billion 20% stake in Latam Airlines to get access to South America. Bastian said that the premium they paid is reasonable since it has a long-term benefit for the airline’s expansion to the region.

Finally, the return of the Boeing MAX can also make an impact with Delta’s plans. Analysts believe that the airplanes will return early next year and give airlines a reason to slash ticket prices. It may affect Delta’s prices since it does not have a MAX in its roster. Bastian said that the predictions are too unrealistic and the new plane will only provide other airlines the chance to replace their old fleets.

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