Continued strategic evolution
Airline operations in Europe continue to evolve with the launch of new ventures, routes, and business models. Norwegian Air Shuttle continues to expand their long-haul low-cost carrier (LCC) operations, while Lufthansa has launched a long-haul LCC subsidiary to compete for leisure passengers.
The introduction of the 787 has allowed operators to economically serve long-haul, nonstop markets that have not been served before. European operators have been on the forefront of this trend, with 96 long-haul routes introduced since 2012—the most of any region.
LCCs continue to grow short-haul markets, providing over 47 percent of intra-Europe capacity in 2015. Network airlines are shifting short-haul flying to their LCC subsidiaries, and are focused on flowing long-haul passengers through their hubs with connecting itineraries. Smaller flag carriers and charter airlines must carve out a profitable niche to be able to compete in an environment where LCCs dominate short-haul, point-to-point service and large network carriers and their alliance partners exploit the cost advantages of mega-hubs for long-haul traffic.
Large Middle East airlines have captured significant long-haul share from Europe's network carriers by providing one-stop service from Europe to destinations such as India, Australia, and Southeast Asia, where the geographic advantage of Middle East carriers is greatest. In response, Europe's network carriers have shifted long-haul capacity to more profitable markets—notably the North Atlantic, where their capacity has grown over 20 percent since 2010.