Vienna has become a battleground for LCCs, but which major European capital city airports actually have the largest LCC penetration?

There has been a massive growth in LCC capacity in Vienna over the past 12 months, but Flughafen Wien’s co-CEO and COO Julian Jäger said recently that he does not envisage an LCC market share of 30% to 40% at Vienna International Airport in the coming years. However, the airport “will soon reach well over 20%”. The Blue Swan Daily analysis shows that It has actually already exceeded 20%, with LCC capacity accounting for almost 165,000 weekly seats or 22.3% of Vienna Airport’s total seat capacity for the week commencing 13-Aug-2018.


Summary:         

  • Vienna isn’t a ‘low cost’ airport (LCA) by LCC market share yet, though over 20% of seats are now provided by budget airlines;
  • 35% is estimated as the minimum LCC share to acquire ‘status’ as a LCA;
  • Few primary European hubs reach that figure yet; most that do are in the Nordic countries.

While Austrian Airlines remains the largest operator with around half of the weekly seats at Vienna,  Eurowings, easyJet and Laudamotion between them have 16% of capacity – the balance being provided by other smaller LCCs. Vienna is one European airport that Ryanair has steadfastly avoided on account of “high charges” but it now has an indirect presence there through Laudamotion, the start-up LCC in which it invested earlier in 2018.

Laudamotion’s projected growth will have played a part in Mr Jäger’s calculations, as well as IAG’s intention to launch a new short/medium haul LCC based in Vienna using the LEVEL brand.

CHART – Austrian Airlines still dominates in Vienna, but competition is intensifying, especially from the LCC sectorSource: CAPA – Centre for Aviation and OAG (data: w/c 13-Aug-2018)

Mr Jäger’s comments raise the question, “at what stage does an airport become a ‘low-cost’ one?” (an ‘LCA’), implying that many of its flights will be direct to other ‘low-cost’ ones (which may not be close to a large city), that the airlines will not be part of any alliance and that they will charge passengers for everything surplus to the basic seat cost.

Although lines between LCCs and traditional airlines have blurred, it is easier to identify LCAs and in Europe there are plenty of them. They may be situated far from the nearest major city that they are named after (e.g. Düsseldorf Weeze or Oslo Sandefjord [100% and 74% LCC seat capacity share respectively]). They may be slightly closer, and to a ‘global city’ such as London (e.g. London Stansted (92.6%).

It is interesting to compare the position at Vienna, which is an important European hub for east-west network carrier traffic particularly, and these outright LCAs such as Sandefjord and Weeze, with the principal European hubs in the UK, France, Germany, the Netherlands and other countries.

In order to identify as far as possible what level of LCC seat capacity defines an airport as an LCA, one should take into account Mr Jäger’s comments about “not envisaging an LCC market share of 30% to 40% at Vienna International Airport in the coming years.” No major European gateway/hub will ever obtain 75% or more LCC seat capacity. He appears to set the benchmark at 30% to 40% (why else mention it?) So the benchmark for this exercise is 35%, a little over a third of capacity.

This is how the main gateway/hubs match up. Only one is selected for each country and city – the busiest by passenger numbers.

TABLE – The Blue Swan Daily analysis of LCC penetration at major European airports delivers some interesting insightsSource: CAPA – Centre for Aviation profiles (data: w/c 13-Aug-2018)

The table shows that LCC penetration by this measure varies from 0.3% to 47.7%. Some airports, such as London Heathrow, Moscow Sheremetyevo and Istanbul Atatürk  (which will be replaced by a new airport soon anyway) are not going to see many LCCs in the near future.

Just three airports exceed the benchmark ratio – Oslo (47.7%), Dublin (42.7%) and Keflavik (41.7%). Oslo rebuffed LCCs for several years but saw traffic increase at the distant Sandefjord and Moss Rygge airports, the latter of which is now closed, and reversed its strategy, Dublin is Ryanair’s home base of course, which explains the high ratio despite it attracting more full service airlines.

Keflavik’s ratio is explained mainly by the growing impact of WOW air, which is ironic as that airport owes its existence to Icelandair, which was a low cost transatlantic carrier but which has been supplanted in that role by WOW air.

Copenhagen comes to within a whisker (less than 1%) of the benchmark 35% ratio and the Nordic airports generally have high ratios, partly owing to small highly-taxed populations with limited discretionary spending power seeking out travel bargains.

In several cases there are higher ratios than might be expected because there are no alternative LCAs for the LCCs to operate at (Madrid, Lisbon, Zurich, Copenhagen, Athens etc). Yet at the same time ratios can be high even where there is such an alternative (Brussels, Rome).

Ironically, in the case of the raison d’être for this article – Vienna Airport – its alternative is Bratislava Ivanka, 75km from Vienna’s downtown by the most direct road route and where 49.6% of seats are LCC and almost all the rest are ‘charter’. Bratislava is not unique in being a capital city and an outright LCA but there are few other examples.