EUROPE INSIGHT: Irish market has strongest patriotism to its home airlines

In a world of globalisation national brands are increasingly crossing borders. Even in the highly regulated aviation business airline groupings have found ways around restrictive ownership and control limits to firmly plant their flags in other nations. In Europe, the open market has delivered open skies within the Continent and has allowed airlines to truly become pan-European operations.

This all means that there is effectively no longer a need for a traditional flag carrier as foreign carriers can now take on a de facto role delivering connectivity. This is nothing new as SAS Scandinavian Airlines has been the tri-national flag carrier of Denmark, Norway and Sweden since the early 1950s. However, the likes of easyJet, Ryanair and Wizz Air are great of examples of airlines that have taken advantage of the liberal environment to establish operations across Europe and take this to another level.

Less obvious, even the Lufthansa Group can be well defined as a pan-European business due to its ownership of Austrian Airlines, Brussels Airlines and Swiss International, albeit it has been careful to keep their national identities to maintain intercontinental traffic rights.

As easyJet confirmed its plans this summer to establish a new Vienna-based ‘European’ operation to safeguard its activities after the United Kingdom leaves the European Union (EU), The Blue Swan Daily thought it timely to look in closer detail at airline service across the 28 EU nations and see which have the strongest connectivity patriotism to their home carriers.

According to CAPA analysis of OAG schedule data for the week commencing September 18, 2017, it is the Republic of Ireland which has the strongest home airline connectivity with almost four in every five seats available from the country being provided by an Irish airline.

CHART – Republic of Ireland Airline Capacity Split (weekly seats)Source: CAPA – Centre for Aviation and OAG

This is facilitated by the country being home to two of Europe’s strongest operators – its largest, Ryanair and one of its fastest-growing majors, Aer Lingus. Together they account for 77% of the total seats on offer in the Republic of Ireland, increasing the local count to 78.8% when you add other operators, including the likes of white-label provider CityJet and Norwegian Air International. British Airways is the largest foreign airline in the Irish market ahead of the US majors United Airlines and American Airlines.

CHART – Largest Airlines in Republic of Ireland (weekly seats)Source: CAPA – Centre for Aviation and OAG

It is no real surprise that Ireland leads the way as it has for a long time been a major hub for commercial aviation, although not necessarily in an obvious way. Almost all of the world’s top aircraft leasing companies have bases in Ireland. Around half of the 20,000+ commercial jet aircraft in use around the world today are leased by airlines, and half of that total are actually managed from Ireland.

On the airline side the attractiveness of the market has already delivered Norwegian Air International, while SAS will soon establish an Irish operation flying from London and Malaga.

After Republic of Ireland it is a sizeable step to Finland, which has the second highest level of local connectivity and where just under two in three departure seats is provided by a local airline. The strength of the local market, controlled by flag carrier Finnair and a 64.8% local seat offering, is most likely explained by the country’s geographical location and the reliance on a local entity to deliver connectivity.

Finnair has used the country’s Nordic location to its benefit working with airport operator Finavia to establish Helsinki as one of the most efficient gateways between Europe and Asia. The largest foreign airlines in Finland are Norwegian and SAS.

Latvia offers the third highest level of local airline operation in Europe with a 57.6% share, while Netherlands (56.2%), Germany (55.8%), the United Kingdom (55.3%), Luxembourg (55.2%)  and Austria (52.2%) all see a stronger local offering than that provided by foreign airlines. Among the EU28, the average share of local airline operations is 41.2%, with Belgium (41.6%) the only other nations to have stronger local airline operations.

At the other end of the scale, our analysis highlights one European nation where all scheduled flight operations are provided by foreign airlines, and two others where less than one in ten seats is provided by a local airline. Lithuania (0.0%) currently has no local airline operations having been through a host of failed operators over the past couple of decades. Estonia (2.1%) has seen Estonian Air fail and its successor Nordica become controlled by LOT Polish Airlines, while in Denmark (5.6%) operations are dominated by SAS, registered in Sweden.

CHART – Scheduled Annual Airline Capacity From Lithuania (2012 – 2017)Source: CAPA – Centre for Aviation and OAG

Lithuania is a fast growing market where capacity grew 11.8% in 2016 and is forecast to rise a further 9.7% in 2017, based on published schedules. It is home to a number of local airlines, but these are purely ACMI providers providing capacity for third party operations. The market is dominated by Wizz Air and Ryanair, while airBaltic from neighbouring Latvia has for a long time provided flight operations from the country. This has made it difficult for any local airline – the latest being Air Lituanica – to successfully compete.

The strength of local airlines with home nations across Europe is diluted more when you look further afield across the Continent and include all 51 nations that are accepted as part of Europe. With the inclusion of the EFTA countries (Switzerland, Norway, Iceland, Liechtenstein), the western European microstates (Andorra, Monaco, San Marino, Vatican City), the Balkan countries (Turkey, Serbia, Bosnia & Herzegovina, Former Yugoslav Republic of Macedonia, Albania, Kosovo, Montenegro) and the former Soviet Republics (Russia, Ukraine, Kazakhstan, Belarus, Moldova, Azerbaijan, Georgia, and Armenia (many not technically European but are considered as such politically)), the average share of local airline operations falls from 41.2% to just over a third.