5 Jun, 2006
Low Cost Airlines Changing European Travel Patterns
Low-cost airlines (LCAs) in Europe are significantly growing the volume of travellers but leading to numerous other changes in travel patterns, choice of destinations and expenditure, according to a Market Intelligence report of the European Travel Commission.
Said the report, released last week, “2005 looks like being the best for European tourist arrivals growth since 2000. And although overnight volume grew at little more than half the rate of arrivals, its growth was also the best since 1999.”
It says two of the main drivers of this growth are the “accelerating demand for low-cost / no-frills air travel and the increased prominence of Central / Eastern Europe, not just as a tourism destination but also as a source market. New European Union members – i.e., those which joined the EU on 1 May 2004 – were the ones that benefited most.
“The continued expansion of low-cost airline services to the new EU member states in Central / Eastern Europe has stimulated demand to and from the different destinations, and even relatively remote parts of the region now have direct airline access,” the report says.
Although the growth in shorter, more frequent trips means more people travelling more often, the number of overnights they spend in any one destination is not growing at the same levels.
The report quoted research by IPK / European Travel Monitor as noting that trips using network carriers and costing over €150 return) increased by a mere 1% in volume in 2005 while low-fare flights (those operated by low-cost carriers or simply flights by any airline costing less than €150 return) rose by 28%. As a result, low-fare flights gained nine percentage points in share to 33%.
Analysis of data from some 96 airports across Europe shows that the strongest increases were enjoyed by airports handling fewer than 5 million passengers a year, thanks largely to the LCAs.
The overall growth in passenger throughput for these airports was 13.3% in 2005, compared with 6.4% for airports handling 5-10 million passengers, 6.3% for airports handling 10-25 million annual passengers and 4.0% for airports handling over 25 million.
Riga airport in Latvia recorded the biggest increase, of 76.6%, with Rome Ciampino up 66.6% and Valencia up 49.4%. Valencia enjoyed a doubling of arrivals from the UK, after being served directly from eight different UK airports by four new LCAs.
Barcelona attracted a 10% increase in arrivals and 9% rise in overnight volume.
Dubrovnik attracted 23% growth in arrivals and 19% in nights – as against a 7% increase in arrivals for Croatia overall. The German city of Dresden saw arrivals grow by 7% and overnight volume by 14%.
LCAs have helped open up many secondary cities in Poland and Slovakia with both recording stronger than average growth from long-haul markets eager to visit Europe’s newer tourism destinations.
The fact that the UK has the largest number of low-cost / no-frills airline services is also a major reason why the market has been so buoyant, and why Europe should continue to benefit from growth in UK short-break travel abroad, the report says.
New Italian destinations such as Puglia are attracting increasing interest since the 2004 inauguration of LCA services from the UK to Bari and Brindisi. The report says low-fare airline trips to Spain out of the UK rose 36% in 2005, by 17% out of Germany and by 8% out of the Netherlands.
As for German tourists, according to data filed with TourMIS, their fastest growing destinations were Ireland, Estonia, Lithuania, Cyprus, Poland and the UK.
France is finally catching up fast in terms of no-frills airline capacity, after lagging behind the European leaders for a number of years.
As most of the LCAs are booked directly online, there has been a commensurate rise in the use of the internet. According to the European Travel Monitor, actual bookings grew by 35% compared with just 1% growth for information gathering.
The report says that “there is little doubt that (LCA) capacity will further increase in 2006, expanding to more secondary airports in more remote parts of Europe, as well as to competitive destinations such as Morocco.
“The problem for European destinations now is that many believe they cannot afford not to have them, because it makes them look much less attractive to potential holidaymakers.”
There are downsides, however. The report noted that of the 20 or so new airline routes overall launched in 2005, several proved to be non-viable. “Also negative is the fact that no-frills airline services have boosted urban tourism at the expense of rural destinations, and bed & breakfast accommodation has suffered.”
Destinations like Cyprus suffered. According to the Cyprus Tourism Organisation, it is too far from the main source markets to attract LCAs, making the destination less competitive. Malta, too, feels it is losing out to the competition because of a lack of LCAs.
Others fear that the LCAs may use them simply as a hub, diverting tourists who might have stayed in the country to destinations further afield. Countries with good domestic markets, like Hungary, are increasingly seeing their citizens lured by foreign shores, the report says.
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