Coronavirus to drive European airline industry shakeout

The coronavirus will accelerate a Darwinian shakeout in Europe’s overcrowded airline industry that ultimately benefits Ryanair and BA owner IAG, industry experts predict. Nobody is exempt from the short-term pain that has already seen Flybe collapse and Norwegian Air stock lose about 70% of its value in a month, with no end to the crisis in sight. But the extreme stress-test already promises to increase the power of a handful of key players, when the epidemic eventually recedes and passengers return en masse. “It’s inevitable in the next couple of weeks we’ll see more failures,” Ryanair CE Michael O’Leary said, citing Flybe and Norwegian as vulnerable. Within days, the British regional carrier had ceased operations, blaming the virus outbreak for a sudden cash drain, and Norwegian scrapped 2020 guidance. Whereas four airlines now control 80% of the US market, Europe remains fragmented, with governments, unions and bilateral agreements impeding tie-ups. Consolidation happens when airlines grab routes and traffic from bankrupt rivals. Flybe’s demise reduces price competition on routes it shared with Ryanair and easyJet, just as a Norwegian exit would support competitors’ fares and traffic.<br/>