Braathen på hogget - Utfordrer "The majors"

Per Braathen sier ikke noe om Bombardier CSeries som han er launching customer av. Flyet flyr igjen etter 100 dagers grounding.

Braathen Promotes U.S. Model for European Regionals

AIN AIR TRANSPORT PERSPECTIVE » OCTOBER 6, 2014

by  GREGORY POLEK

Per Braathen’s holdings include Malmo Aviation of Sweden.

October 2, 2014, 10:12 AM

Europe’s regional airlines need to achieve further consolidation and move to a U.S.-style business model of cooperating directly with mainline carriers if they are ever to expect to return consistent profits. That was the assessment delivered to this week’s European Regions Airline Association general assembly in Barcelona by Braathens Aviation Group chairman Per Braathen. But he didn’t seem too confident that this change will come.

“It looks a bit problematic,” he told a roundtable discussion. “We really need to consolidate to keep costs down. But to connect to smaller cities in Europe you need to travel by air…Yes, there is a future, but not necessarily a financially sound one.”

Braathen placed the blame largely on the attitude of the major airlines, which, in his estimation, prefer and perpetuate the status quo.

“It’s just a matter of being willing to think about having competitors in one basket,” he added. “The majors don’t like that [idea].”

In the U.S., major airlines have embraced the concept of partnering with multiple regional airlines, which, almost by necessity, work with several mainline partners of their own. Meanwhile, consolidation of the industry in the U.S. has led to a situation in which only 12 regional airline companies control 99 percent of the sector’s traffic. By contrast, in Europe, smaller independent operators more oriented toward point-to-point service still dominate the regional industry.

“What has happened in America that has not happened in Europe is…consolidation among capacity providers,” said Braathen, whose company’s holdings include Sweden’s Malmo Aviation. “Long term, Europe has to look at having fewer, bigger capacity providers that actually can work with different competing airlines. In regard to our own situation, [at] a small destination in Sweden, you can find two aircraft leaving in the morning; they look the same, the same make; one is in SAS colors and one is in [the colors of] our own brands. They’re both operated by us. That hardly happens in Europe and I think that has to happen to lower the cost base, because, in Europe you see as everywhere else you have low-cost carriers coming in, reducing the yields, and the cost is coming up at the same time.”

But while trumpeting the need for consolidation on one hand, Braathen also stressed the flexibility benefits of a small-scale operation and the need to maintain the unique services only a regional airline can provide. Generally operating from smaller airports, regionals can offer far faster check-in and boarding times than can major airlines, for example. Regionals need to compete on that basis and generate slightly higher yields than those of the low-fare carriers, he added.

 “So on the cost side it’s about consolidation, but if a regional is going to survive [in] a local market, you really need to look at service level and be able to provide something that majors and the low-cost carriers can’t provide,” he concluded.