Stricken Airlines Seek Lifeline From Transatlantic Opening

PARIS (Reuters) -
Air Canada planes are parked at Toronto Pearson Airport in Mississauga, Ontario, Canada, April 28. (Reuters/Carlos Osorio)

Diplomatic moves to ease transatlantic air travel could unleash fierce competition to entice passengers back into near-empty cabins at a time when tottering airlines can ill afford a price war in the world’s richest aviation market. Talks between Brussels and Washington on resuming mass travel for vaccinated tourists have raised hopes of a summer rebound – further buoyed by new EU reopening proposals. Airlines are desperate for good news after a year of COVID-19 lockdowns that pushed many to the brink of collapse, or into the arms of governments.

The United States will reopen to Europeans in “a matter of the next two or three weeks,” Lufthansa Chief Executive Carsten Spohr predicted last week. But the German airline boss also cautioned against any race to the bottom on fares.

“The North Atlantic is historically the most disciplined traffic region,” Spohr told investors. “I expect this discipline [to] prevail.”

United Airlines, American Airlines and Delta Air Lines have added summer routes to countries like Iceland and Greece that plan to welcome vaccinated travelers. Consumers are showing some interest.

Air France-KLM said U.S. sales twitched back to life last month after French President Emmanuel Macron announced restrictions may be eased for vaccinated Americans – and again when the EU confirmed talks with Washington. Air France is adding a Paris-Denver service, in what network chief Olivier Piette described as a “big bet” on a secondary U.S. leisure route with less direct competition.

The Franco-Dutch group is partnered with Delta and Virgin Atlantic in one of three transatlantic joint ventures that allow extensive commercial cooperation. Lufthansa is paired with United, and British Airways with American.

Virgin is expecting a scrap, Chief Executive Shai Weiss said recently. “I’m sure there’s going to be tremendous competition and we’ll rise to it.”

But airlines bled dry by the crisis will resist aggressive discounting, predicts analyst John Grant of data specialist OAG.

“The bean counters will be keeping a close eye on that,” he said. “Investors will also want to see airlines behaving responsibly in the recovery.”