|EUROPE’S BIG AIRLINES NO LONGER WANT TO FLY IN EUROPE|
Aruba, September 26, 2014 - The biggest airlines across Europe are finding it tricky to make money in their own backyards. Air France-KLM (AF:FP) said on Thursday it will transfer a major portion of its European flights to Transavia, a low-cost airline acquired by KLM 11 years ago, as part of a major restructuring aimed at reversing losses on short flights. The same strategy has been adopted in Germany with Lufthansa’s (LHA:GR) steady shift since 2012 of its European flying from Frankfurt and Munich to its lower-cost Germanwings unit.
The shunning of European routes by the global flag carriers reflects the cutthroat nature of fare competition in the continent, where airlines such as EasyJet(EZJ:LN), Ryanair (RYAAY), and Wizz Air dominate the short-flight market. Those carriers’ labor costs are substantially lower than at Lufthansa, Air France, and British Airways, which also have routes that don’t touch their hubs.