Foto: © Karl-Josef Hildenbrand / dpa /
According to Bernstein Research analysts, the passenger transportation market in Europe is approaching a point where some winter flights may become unprofitable. Despite the fact that airlines are still holding volumes, the pressure on margins is intensifying – and it is the winter season that could be the tipping point.
According to Investing.com, the main reason is fuel. After a period of surging prices, jet fuel remains significantly more expensive than pre-crisis levels, and cheaper hedging contracts entered into before the price spike are expiring. This deprives carriers of the “financial cushion” that has smoothed market fluctuations over the past few years.
In winter, demand falls, costs rise
Analysts note: in summer airlines can still compensate for expenses by high demand and flight load. But in winter the situation changes. Demand falls, while fixed costs remain, and some destinations, especially short- and medium-haul ones, may go into negative territory.
“Winter flights risk becoming completely unprofitable,” Bernstein’s analysis concludes, which also notes that airlines are still fighting for market share rather than profits in the short term.
If the pressure intensifies, carriers may reduce the frequency of flights, optimize routes or temporarily close some destinations. In the most stressful scenario, even stable market players could be affected.
Not everyone will survive the turbulence
Among the companies that could potentially survive turbulence better than others, analysts highlight large European groups with strong balance sheets and efficient cost models, including International Airlines Group and Ryanair Holdings.
At the same time, the industry remains in a fragile equilibrium: airlines are trying not to cut capacity for fear of losing passengers and market share, but rising costs are gradually narrowing the room for maneuver.
In fact, winter may become a test of survival for some European carriers – between preserving routes and their economic viability.
