Small Planet Airlines falls to low cost competition

Small-Planet-Airlines_641907.pngSmall Planet, based in Lithuania but with Polish and German subsidiaries, has finally collapsed.

The Lithuanian Government revoked its licence on 29th November and the airline will now be wound up. It operated up to 20 A320’s across its three branches.

Once again another European small airline succumbs to the pressures of not being able to reach that key size – around 50-100 aircraft minimum now, that keeps a single-aisle dependent airline in a position it can muster sufficient bookings and advanced sales to keep flying.

The speed of modern news announcements means even the hint of being insolvent, causes potential passengers to run for the hills and bookings, and any chance of the airline keeping its cash flow running, evaporates almost overnight. It was that reason that forced WOW to rush from one likely owner into the arms of another before the news had tome to impact bookings and cash flow.

Small Planet had  been running for over ten years but simply couldn’t ride out the oil price changes, currency fluctuations and the seasonality of its business, which was very much focused on summer operations. The group tried to diversify by operating winter services in Cambodia for European tourists, but that too wasn’t very successful.

There seems to be a critical mass of aircraft numbers and business size in Europe now, where airlines with less than 50 single aisles simply can’t make it in the low-cost environment. There’s too much variability, too much competition and larger airlines are so predatory that they will, and do, legally price others out of the market, because they can afford to.

Even more pressure is applied when big owners like Lufthansa and IAG own their own semi and low-cost airlines – Vueling and Eurowings, and can force their market share up through numbers and huge amounts of rapid investment in routes and aircraft.

Europe seems to be heading to a point where just a handful of massive low-cost airlines have the skies to themselves in that segment. RyanAir, EasyJet, Vueling, Eurowings and Wizz look set to be all that remains within a very short time.