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Discount Airlines
Date: Apr 12, 2005
Contributor: Jerri Jowett
Low-fare airlines flying more of worldwide flights
Discounters operate 12% of flights, double the number before 9-11
Low-cost airlines such as Ryanair Holdings Plc, JetBlue Airways and AirAsia Bhd. account for one in eight flights worldwide, double the number from before the Sept. 11 terror attacks.
Discount airlines operate 12 percent of the more than 2.27 million scheduled flights worldwide, according to figures from the Bedfordshire, England-based Official Airline Guide. The number of flights now exceeds those in the first quarter of 2001, before the attacks battered demand for air travel, the guide said.
The growth of low-cost carriers contributed to combined losses of $9.2 billion for U.S. network carriers last year and prompted consolidation among European airlines. Southwest Airlines, the world's largest discount carrier, is the only major U.S. airline to remain profitable since the terrorist attacks and earned $313 million last year. Discount airlines JetBlue, AirTran Airways Inc. and Frontier Airlines Inc. were profitable as well.
"They're transforming aviation, forcing the large network carriers to cut costs and move toward setting up operations that can compete with the newcomers," said Klaus Breil, senior portfolio manager at Frankfurt, Germany-based Adig Investment, whose $6 billion under management includes Ryanair shares.
The 2.27 million flights this month is 111,000 more than a year ago and 45,000 more than in April 2001, the guide said.
This month, the airlines will have a potential 260 million available seats for sale, the organization said. Low-cost airlines will account for just shy of 300,000 flights, or about 38 million seats. That's 15 percent of all seats worldwide.
Discount airlines accounted for only 6 percent of the world's flights and 8 percent of available seats in April 2001, according to the guide, which tracks flight details for 1,000 airlines and about 3,500 airports.
The Official Airline Guide is following 160 new discount carriers across the world that plan to start flights within the next 18 months, Alexander said.
"It remains to be seen if there will be a brake on this level of growth," said Alexander. "Fuel prices at the moment are unprecedented and could be that brake."
Low-cost carriers have been more active in purchasing new aircraft during the past two years than network carriers. They may have trouble finding slots at airports for all the new planes, said Chris Tarry, an independent analyst based in London.
Europe, the Middle East and Africa are showing the fastest growth for discount airlines, the guide said. In Europe, there are 24 percent more budget flights today than in April last year. Ryanair is Europe's biggest low-cost airline, followed by the U.K.'s EasyJet Plc and Air Berlin GmbH in Germany.
Discount Airlines in the U.S.
In the U.S., where the discount airline industry first got started, the number of flights has increased 12 percent from a year earlier. Since April 2001, the low-cost airlines have boosted their share of the U.S. market to 17 percent from 12 percent.
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