After Air Berlin and the Small Planet Airline, the third German airline based in Berlin must cease operations within 15 months. Once again an airline from the holiday/low-cost segment.
A paradox: The major airlines worldwide are reporting record load factors and often solid profits. Nevertheless, in addition to the German airlines mentioned, other players have also disappeared from the market. Ryanair has just reported a loss and companies such as WOW Air or the Norwegian Airlines are significantly reducing the size of their route network and fire employees in the hope of reducing their massive losses.
How can this strong polarisation be explained? The aviation industry has traditionally been a very low-margin industry. Evaluations by the aviation association IATA for the period from 2004 to 2014 show that the average profit margin of airlines has been only 2.8 percent. In addition to high market entry costs, the industry is also extremely dependent on external influences such as fuel prices or geopolitical events.
For larger airlines, such as Lufthansa or American Airlines, the sale of miles via the subsidiary Miles & More is a very important source of income - not the ticket sales.
Smaller airlines such as Germania cannot fall back on such sources of profit outside their core business, which puts them at a further competitive disadvantage.
On the one hand, this increasing discrepancy between small and large airlines leads to mergers, but on the other hand, it also forces many airlines into insolvency.
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