Turbulences in German and European Air Traffic

The insolvency of Air Berlin has stoked fears of dominance of the Lufthansa group in Germany, the second-largest air traffic market in Europe. Consumer protection agencies predicted significant fare increases, and took it as proof that, at the beginning of November – just days after Air Berlin ceased operation – the spot fares on some German domestic flights rose by up to 30%.

An analysis by PROLOGIS STRATEGY provides a much more differentiated picture (Since the news of last week about the failed takeover of Lufthansa did come in after the copy deadline, this analysis is based on the assumption that Niki would be integrated into Eurowings).

Intercontinental routes from and to Germany have seen only marginal capacity shifts. When they ceased their long-haul operation without substitution in October, Air Berlin had a seat share of only 6% in that segment. Lufthansa/Eurowings announced they would be inaugurating their own flights between Düsseldorf and Miami/New York, as well as Berlin and New York, while Condor opened up routes from Dusseldorf to the Caribbean. Accordingly, Air Berlin’s stake is equally shared between Lufthansa (+3% to 43%) and other airlines (+3% to 53%). Read More

Fierce bidding competition for Air Berlin – why slots boost attractiveness of the insolvent airline

After the insolvency of Air Berlin, numerous parties are fiercely competing with bids for parts of or even the complete group. This is surprising, as the group has accumulated debts exceeding 1 billion Euros und has been overindebted for several years. Still, within just one weekend, the German Government was willing to grant a loan of 150 million Euros as a bridging loan enabling the airline to continue operations until its expected sale. The German ministers responsible for the loan showed confidence that this loan will be refunded using revenues from the sale of the airline group.

What drives the attractiveness of a company that reports such poor economic figures? In this paper, we will show how the strong interest of former competitors to get a share of Air Berlin is determined by airport slots. Read More

Weeze Airport and PROLOGIS Strategy run successful route campaign for Summer 2017

Airport_Weeze_Logo.svgWeeze Airport, a German airport serving approximately two million passengers per year, has engaged the services of PROLOGIS Strategy to enhance its existing airline and route portfolio.

“While the airport clearly values the role of Ryanair, which operates one of its largest German bases at Weeze, the management has a strong interest in acquiring additional suppliers to serve routes that are complementary to Ryanair’s existing strong network of more than 40 destinations,” explains Stephan Nagel, Executive Vice President at PROLOGIS Strategy.

What could at first glance be seen as a routine task, is in actual fact a complex endeavor, considering the ongoing consolidation of the airline industry in Germany and Europe. Driven by the continued rapid growth of the low cost carriers on the one hand and the growth of integrated airline groups such as IAG, AF/KL or Lufthansa Group on the other hand, market concentration is quickly moving forward. Independent market players, who, in addition, are simultaneously focusing on large catchment areas and bigger airports is much to the detriment of midsized and smaller airports. The German airports are no different in this respect. In 2016, the top 4 German airports, each of which serves over 20 million passengers per year, grew by 3.5%, whereas the smaller airports with 500,000 to 2 million passengers shrank by 3%. Read More