U.S. airlines see increasing competition from European budget airlines in the trans-Atlantic flight market.
Bloomberg reported American Airlines Group saw a 9.1 percent drop in trans-Atlantic fares — the biggest drop since the end of the recession in 2009. American wasn’t alone — Delta also saw a downturn.
European budget carriers like Norwegian Air Shuttle ASA and Iceland’s WOW air add new flights, breaking into American markets at a fast clip and cutting into the domestic heavy hitters’ profits. The bump in seat supply is forcing fares down.
American blamed low-cost competitors for a recent second quarter decline in average fares per mile. Delta, which saw a similar decline, also laid blame on these budget carriers.
That’s bad news considering these airlines also face domestic pressure from low-cost carriers like Spirit and Frontier.
The solution will likely be to extend the basic economy pricing to overseas flights. These stripped-down fares do not allow travelers to select their own seats or choose upgrades.
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