EU airlines take slow route to US-style shakeout

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Oliver Taslic

LONDON, Sept 8 (Reuters Breakingviews) - “We are definitely, post-Covid, entering a four- or five-year period of consolidation,” Michael O’Leary told Reuters in early 2023. The Ryanair CEO’s thinking, also expressed in other interviews, has been that the European airline industry would eventually consolidate around four major groups — British Airways owner IAG, Deutsche Lufthansa, Air France-KLM and Ryanair — much as the U.S. sector came to be dominated by Delta, United, American and Southwest. The evidence so far from 2026 suggests a slower-growth, higher-fare and more “rationalised” industry is indeed coming — but it may take a while to get there.

Americans and Europeans are among the world’s foremost fliers, taking an average of around two trips per person per year, according to Airbus. But their airline sectors have evolved quite differently. Europe has been marked by relentless growth in available seats. Much of the extra “capacity”, to use the industry term, came from upstart low-cost carriers like Ryanair, Wizz Air and easyJet. Bernstein analysts calculated a 4.6% compound annual growth rate in European Union capacity between 2004 and 2019, compared to a 1.4% growth rate for real GDP. In contrast, U.S. capacity rose at 2.2%, only slightly above the 2% compound annual increase in real GDP.