The Rare European Airline

The European aviation market has one common theme: consolidation. The majority of the continent is split between airlines under the ownership of International Airlines Group, (an Anglo-Spanish multinational airline group compromising of British Airways, Aer Lingus, Iberia, Level & Vueling), and the Lufthansa Group (who own Lufthansa, Austrian Airlines, Brussels Airlines, Swiss & Eurowings).

Such consolidation pushed some airlines to pair up, for fear of being a ‘stand-alone’ carrier, such as Air France and KLM — who paired up to become ‘AirFrance–KLM’, while others stand relatively strong as low-cost carriers, including EasyJet and Ryanair, of whom have multiple bases across Europe. The integration across Europe has ultimately led to the demise of smaller, weaker, ‘stand-alone’ airline players, amid the pressures of a somewhat unlevel playing field. Europe’s lost airlines including Primera Air, and Monarch Airlines.

Nevertheless, there’s a rare European airline that’s strategically avoided the pressures of avoiding consolidation, with a business model that has driven the carrier from island-hopper air services, to becoming one of the fastest growing carriers in Europe: Aegean Airlines.

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Greece’s national airline Aegean originally expanded to replace defunct Greek flag-carrier Olympic Airways, and built on the foundations of Olympic to transform itself into a major European airline. Nine years since the company was privatised, Aegean is in the rare position of not belonging to any airline group, and instead is one of the few full-service ‘stand-alone’ carriers in Europe — despite interest from investors worldwide.

The airline has gone from strength to strength, becoming a full member of Star Alliance, and establishing codeshare agreements with airlines from countries with large Greek communities, such as Air Canada. Airbus current CEO, Tom Enders recently described Aegean as “a great example of a resilient and superbly managed airline. One that weathered the country’s financial crisis and came out of it much stronger than before.”

Despite operating in a fierce market with heavy low-cost airline competitors and a year-long high oil price, Aegean is financially profitable — with consolidated revenue at €939.3m for 2018, 5% higher than in 2017. Commenting on the state of finances, Aegean’s CEO Dimitris Gerogiannis said: “We have once again delivered strong profitability in the summer season, through developing our Athens hub”.

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What many passengers know Aegean for, is being one of the only European airlines still offering complimentary meals & drinks in all cabin classes — a rarity for even the most ‘legacy’ of airlines. The carrier serves Greek dishes, and even continues to play new-release movies on overhead inflight screens.

Over the last few years, Aegean has sought to reduce maintenance and fuel costs — two of any airlines’ largest overheads. The Greek airline invited Airbus and Boeing to engage in a single-aisle sales battle, pinning the A320neo against the 737 Max. Excluding Aegean’s ‘Olympic Air’ subsidiary (which operates local, regional flights), the airline is an all-Airbus operator, following the retiring of all of its classic Boeing 737s.

After a very long consideration period, Airbus emerged as the winner.

Aegean sealed an agreement with the European planemaker for the purchase of 30 A320neo family aircraft + 12 options, an order worth $5 billion at list prices. The order was the largest by a Greek carrier and one of the largest investments by a private Greek company in recent years.

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Aegean will take 10 x A321neos and 20 x A320neos, all powered by Pratt and Whitney’s Geared-Turbofan engine. Pratt & Whitney were selected as the company’s engines already power many of Aegean’s Airbus jets.

The airlines’ chairman, Eftichios Vassilakis said the A320neo family jets will allow Aegean “to travel farther to new destinations and continue to improve the world’s first impression of Greece”  — which means upon the delivery of the NEO jets, Aegean’s route network is likely to expand to previously unserved territory.

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With ‘NEO’ engines, every new Aegean aircraft will have extended range capabilities compared with the existing A320 aircraft in-service today. While the carrier added 11 new routes last year, including Basel, Malaga, Palermo, Turin and Bologna, the Greek airline has its sights set on routes a little more mid/long-haul.

Aegean’s CEO explained that while there’s no immediate prospect of Aegean entering the long-haul market (on routes once served by Olympic), it’s something that will be considered going into next decade — when the new Airbus jets begin arriving.

Furthermore, an introduction of long-haul routes in Aegean’s business model would be easily proven both cost-effective & efficient, should Aegean convert some of its existing A321neo orders into the longer-range, A321LR — an option the Greek airline is able to exercise, as per its agreement with Airbus.

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Airbus’ A321LR is the largest member of the A320 family and can seat up to 240 passengers, and has the ability to fly more than 4,000 nautical miles nonstop (based on a 206 seating capacity).

For now, Aegean’s long-haul links are very well-served through its Star Alliance partners, but heavy passenger traffic flows from destinations within 4,000 nautical mile radius of Athens could push the airline to explore territory a little further than Moscow, or Riyadh, it’s two current longest routes.

Final Thought 

Aegean has become one of the fastest-growing full-service airlines in Europe, and its future growth will be driven by the order for new Airbus jets. The carrier will also invest €30 million euros to build a new 12,000 square metre facility in Athens for flight and cabin crew training. While the airline has the secure position of a constant flow of long-haul traffic to/from Aegean via Star Alliance partners, Aegean looks set to launch new destinations in 2019, and destinations further afield from 2020 onwards, following the first delivery of its NEO jets.

This year, Aegean will boost its presence in the North African market, launching flights to Marrakesh, Casablanca and Tunis.

Aegean’s resilience should be celebrated, and bookmarked in aviation history.

In what was a monumental economic downturn in Greece, the airline has weathered the storm, and evolved into a strong market player — with plenty of growth still to come.

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One thought on “The Rare European Airline

  1. Great artie, about a great airline. I have not seen that they “play new-release movies on overhead inflight screens“ though! Usually just a moving map or scenes of Greek islands. They do however have a new in-flight WiFi entertainment system, in which you can lsten to music or read magazines from their library.

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