Major U.S. carriers are already confronting discounters on domestic routes, and to top it all international low-cost rivals are also making it tough with foray on transatlantic routes. This has obviously lowered the airfares putting up even more pressure. The situation has been such that American Airlines had to recently lower its transatlantic fares by 9.1 percent, which is the biggest ever dip since recession in 2009.
The entry of European budget carriers like Norwegian Air Shuttle entering the transatlantic market in a big way has not only made American Airlines worrisome but also causing concern to Delta Air Lines and United Continental as well. Even Delta Air Lines reported significant drop in airfares somewhat similar to that of American, while United Continental made little gains.
Travel experts said that these are happier times for travelers looking out for cheap airfares, though the U.S. legacy carriers are bearing the brunt. The seat supply has sharply increased with the entry of international LCCs driving down airfares in the lucrative transatlantic market. Even the domestic pricing is not going to look up for quite some time and making the situation to look shaky.
Media reports quoting multiple travel experts said that the investors of American Airlines and United Continental have been rattled with the news of depleting revenue growth caused by international low-cost carriers. The experts were unanimous in their opinion that European discounters have the wherewithal to cause revenue loss to major legacy U.S. carriers by cornering incremental bookings and pressurizing them to lower airfares. Moreover, there’s no reason at all as why not to believe in the damaging potential of European LCCs to leading U.S. airlines.
However, the reports at the same time stated that major U.S. carriers such as American Airlines, Delta Air Lines and United Continental would not give up so easily and without a tough fight. These carriers are readying to extend their so-called basic economy or no-frills fares even on European routes on the similar lines what is being currently offered back home. These fares while offering cheaper fares limits the passengers’ choices, though quite important in bringing revenues to the U.S. carriers.