LONDON — With the dollar down and fuel prices up, U.S. airlines are fighting to stay afloat. But they’re also fending off another challenge: increasingly powerful European rivals.
Analysts say European airlines are in a much better position to weather the current storm as they enjoy the benefits of a strong euro, newer fleets and a recent wave of consolidation.
And it shows. While many U.S. airlines are putting expansion plans on hold, British Airways has just launched a new premium subsidiary, OpenSkies, with direct flights between Paris and New York.
Perhaps most significant for consumers, analysts say, is that European airlines might be in position to offer better deals to passengers.
“I think it’s a good and interesting possibility, especially as the European carriers test the waters in U.S. markets,” said Betty Stark, a travel consultant in Madison, Wis. “Cheap flights here in the U.S. will surely go the way of the dodo bird if the airlines are to avoid total shutdown.”
The Europeans hold several advantages right now.
“The major European carriers have stronger balance sheets than their U.S. counterparts,” said Ernest Arvai, president of the Arvai Group, an airline consulting firm based in Windham, N.H. “They also run more modern aircraft that typically use less fuel.”
What’s more, European carriers are buying that fuel, which is priced in dollars, with euros that have soared in value from 85 cents seven years ago to $1.54 now.
European operators also have done a better job of locking in fuel purchases against the possibility of price hikes, a practice called hedging.
While Southwest Airlines has saved billions since 2000, “on the whole European airlines are in a much better position,” Arvai said.
Many European airlines also have benefited by serving a higher proportion of long-haul international routes, which tend to be more lucrative.
Even the discount carriers that have proved to be such a threat to full-fare U.S. airlines don’t pose the same kind of challenge in Europe.
“In Europe, slot and gate availability is more difficult for discount carriers,” Arvai said.
