Regional Market Page Europe
Europe is an increasingly challenging market for the aviation industry. A growing number of constraints such as additional taxes, a rising number of night curfews, changing customer behavior or growing competition mean that aviation businesses have to continuously update their strategy and efficiency to ensure sustainability. To support you in dealing with upcoming challenges, we keep track of the latest industry developments and continuously develop our service portfolio.
Lufthansa Consulting enjoys a strong market presence in our European home region and we have a long-standing track record of successfully completed project assignments. Although our focus is on the aviation industry - airport, airlines, investors and service providers are our key clients - we also serve adjacent industries such as tourism, logistics and other modes of transportation in elaborating customized solutions.
Please contact me to discuss your business venture.
At the GAD World airport leaders, airlines, financiers, governments and regulators come together to discuss airport development and finance issues. Strategies concerning airport investings will be presented and overviews of the impact of demographics on airports’ finances will be given. Airport investment opportunities in emerging markets will, thus, be a relevant topic at the event.
Lufthansa Consulting is sponsoring the event and our experts will speak on topics regarding airport development and financial growth
26th World Route Forum hosted by SEA Milan Airports, in partnership with local stakeholders Lombardy Region, the Muncipality of Milan, ENIT- Italian Tourist Board and Bergamo Airport.
The event is designed to discuss and negotiate new and existing services on a global scale and is aimed at senior decision makers from the world’s leading airlines, airports, tourism authorities and other aviation stakeholders. Furthermore, World Routes 2020 offers the possibility to meet new and existing industry peers and gain valuable insights into what’s happening in the market.
Visit our Lufthansa Consulting exhibtion stand and meet our delegates.
The conference, being hosted by Oman Air and being organized once again in conjunction with the recently formed AGIFORS Aircraft Maintenance Operations study group is a Forum for airline senior managers, airline personnel, vendors, and members of academia to review the most pressing issues facing airline operations today and offer potential solutions. It is designed to address all aspects of Flight Operations, Ground Resources and Maintenance. To be more specific, major topics to be discussed and reviewed relate to aircraft maintenance, airport systems, aviation security, operations control, dependability, robust scheduling, integrated schedule management, tactical planning, ground resource management, disruption management, and air traffic management. Therefore, leading experts in the airline industry as well as representatives provide the opportunity for a high level of networking.
Our Managing Consultant Martin Sedlacek is looking forward to share his views within his speech “Airline Operational Excellence – What is it and are we there yet?”.
As health authorities around the world combat the spread of the COVID-19 virus, airlines are taking drastic measures to minimize the impact on their business. How should one maneuver an airline through these stormy times? Six questions to Christine Weigner, Associate Partner at Lufthansa Consulting in Frankfurt:
COVID-19 has a massive impact on aviation. What is your assessment of the current situation for our industry?
Following years of strong growth, the aviation industry already slowed down in 2019 in some markets, driven by economic and political uncertainties as well as the rising debate about the effect of travel on the climate. With COVID-19, we see a significant cut for the entire industry. The shut-down and isolation measures that began with countries like China or Italy escalated to the closure of the US market for European travelers, traditionally a very large traffic flow. This was then dramatically worsened by most large countries closing their borders to international visitors. Domestic travel may also be hit, as seen by the week-long suspension of flights in India and the drastic reduction of capacity in the USA. These global restrictions on travel are an existential threat to many players in our industry. Only those who have built up a financial buffer and resilience, with the flexibility to react immediately to this development, will be able to emerge from this crisis stronger.
What financial impact will the crisis have on aviation?
In my opinion, it is still too early to evaluate the real cost of the crisis for our industry. In its latest update, IATA estimates a global loss in passenger revenues of over 250 billion USD. That is a little over 40% of airline revenues in 2019, and does not account for the losses that will be borne by other operators along the aviation supply chain. And, given the scale of the disruption, every airline, especially smaller ones, have to respond to the individual threats to their revenues and cash flows in order to survive.
What are your recommendations to airline leaders in these days?
First of all, to protect your employees and promote compliance with hygiene recommendations. Besides that, the biggest challenge is uncertainty. Nobody knows, how exactly the virus will spread, which markets will eventually be affected most and how long the slowdown will last. While everybody is hoping for a short-term impact only, I would rather recommend to anticipate a challenging 2020 and maybe beyond. Demand may bounce back in one or two quarters, but the financial aftershocks will be felt longer.
From a business perspective, the foremost priority must be ensuring financial liquidity. Drastic and courageous cuts are necessary to minimize cash out and optimize those products and routes that still deliver a positive cash contribution. The challenge lies in identifying those in times of daily changes in demand and travel regulations. Examples of selected air freight routes show that these opportunities do exist. And, looking ahead, this is an opportunity to rethink business models and recommit to leaner, more efficient ways of operating. For some airlines, the crisis might even be a chance to play an active role in further consolidation of the market.
Looking at cost positions – what are the main drivers from your perspective?
Airlines need to ensure that they have the liquidity to cover all costs that are relevant for operations, such as fuel cost, ATC fees, leasing/financing costs, salaries, etc. They can only ensure this through drastic measures of cost reduction. We recommend bold moves on one side and on the other hand keeping a strong focus on those actions that allow for a fast and smoothest-possible recovery from the crisis.
Prominent measures are immediate budget reductions in routine functions and projects. A hiring freeze and the negotiation of short-term work compensation programs can also lead to a significant relief of the cash-outflow. Obviously, in times of shortage of skilled labor, large-scale layoffs can only be the very last solution. Airlines also need to consider carefully which of their strategically relevant projects should continue in order to ensure fast recovery and achieve a potential competitive advantage after the crisis. Grounding aircraft is a measure that needs careful consideration of the costs for ‘mothballing’ and recovery as well as the resulting real benefit. If aircraft are leased, negotiating with your lessors and financiers might offer more relief. Airlines have learned from prior crises that the pace of recovery after the slump depends on the decisions made at the beginning.
For airlines that were already struggling to produce sustainably positive financial results before the crisis, often only fast and well organized ‘stop-the-bleeding’ programs to optimize cost positions are the solution.
You also mentioned securing revenues. What are your thoughts on this one?
Obviously, at a time when travel is so significantly impacted, this is easier said than done. First of all, an efficient and highly flexible network as well as revenue steering can help. On a daily basis, the network planning experts need to ensure that the combination of offered frequencies and operated aircraft type is steered to an optimum. This should be complemented with state-of-the-art highly flexible revenue/pricing management that allows airlines to react to demand and competition in order to remain attractive without wasting revenue potential. Dealing with the uncertainty of travelers is a key success factor. Therefore, introducing flexible re-booking and cancellation policies can also be of help to avoid cancellations (which would then negatively affect your cash position) and secure demand in markets, which are not affected too much. For airlines in full or sub-charter business as well as for those players with a high share of large accounts (for example, business travel), we recommend a very close exchange with your clients to understand their current issues and assess the impact on your business to reduce the risk of uncertainty.
Have you experienced similar situations? What was your advice to clients back then?
We are supporting several airline leaders in these days and the reaction is always the same. This situation, especially in Europe and North America, is unprecedented because of the global and simultaneous effects on business as well as leisure travelers. Nevertheless, there were similar situations in the past from which we can learn such as the Asian crisis, 9/11, SARS in 2003, the global financial crisis in 2008/2009 or the ash cloud over Iceland in 2010. This crisis is unique in its global scale and duration, yet manageable amid the uncertainty. Every crisis had its own dynamics, but the combination of revenue protection, cost cutting and preparing to jump-start the business after the crisis was the common denominator to navigate through them. In the last 30+ years Lufthansa Consulting has successfully guided its clients through these situations to not just survive the crisis, but thrive in the recovery. An experience from which our current and future clients all over the world will benefit.
If you would like to discuss the measures you have taken or challenge the scenarios you see for the future, we offer complimentary 60-minute consultation calls. Please contact our Associate Partner Christine Weigner for further information.
Airports are vital to provide safe, reliable and efficient air transport. The aviation industry is growing rapidly: worldwide passenger figures have doubled within the past 15 years and will continue to evolve by 3.5 percent annually over the next 20 years, according to ICAO and IATA. This growth is leading to capacity constraints and infrastructural needs at airports to provide state-of-the-art and reliable operations. Flight delays and thus disruption costs are rising due to limitations of infrastructures and in collaboration with system partners; according to SITA the aspect of mishandled baggage alone globally accounts for U.S. Dollars 2.4 bn in financial burden. The individualization of airline product demands and passenger expectations for a seamless travel experience require airports to adapt operational excellence measures.
Our experts at Lufthansa Consulting are envisioning continuous improvements in operations to tackle current industry challenges. We are looking to turn these challenges into success factors empowering airports to grow profitably while ensuring customer satisfaction and enabling dynamic advancements to infrastructural and capacity needs. To better understand the latest developments and perspectives of airports in relation to operational excellence Lufthansa Consulting has created an online survey on this relevant issue.
We would like to invite airport managers (Chief Executive Officers, Chief Operating Officers, Operations Directors, Operations Excellence Managers and Heads of Operations Control) to take part in our research by 31 March 2020.
The survey focuses on Operations Steering and Performance Management, Data Analytics and Organization as well as Partnerships and Services. Areas of research range from the use of data to forecasting tools, the presence of operational excellence programs and cover particularly topics such as the state of digitalization in operations and collaboration with joint partners.
The questionnaire consists of 30 questions and will take less than 20 minutes to complete.
If you would like to participate or have any questions, please click here, fill in your details and put the word “SURVEY2020” into the message.
Your Benefit: The outcomes of this anonymous study will be published in spring 2020 allowing you to benchmark your airport with the industry and identify your individual strengths and areas for development. You can also select to identify your company and receive a more detailed individualized report about the status of your operational excellence.
Airport marketing efforts on behalf of the German Airport and a tailored route study convince targeted Russian airline to commence services from the German airport to Russia and CIS.
The charter airline required support in entering the scheduled commercial aviation market. The Lufthansa Consulting team analyzed the market, facilitated cooperation with a major scheduled carrier and recommended a commercial and fleet plan.
Fuel policies and procedures were evaluated and benchmarked against best practice to identify potential fuel saving initiatives. The recommended implementation program promises considerable yield savings.