May 07th 2014

The airline industry today and tomorrow.

The challenges confronting Europe's airlines.
Christian Lesjak, Managing Director, NIKI Luftfahrt GmbH

On May 6, 2014 Christian Lesjak, Managing Director of NIKI Luftfahrt GmbH, was the visiting speaker in the MCI Alumni & Friends lecture series at the MCI.

In an interesting presentation, he offered revealing insights into the complex world of civil aviation and the challenges confronting the airline industry today.

NIKI Luftfahrt GmbH was launched as a tourist airline operation in 2003. Collaboration with and subsequent integration into the Air Berlin group enabled the charter operator to develop scheduled airline business, too, and thus access a new customer segment. Nevertheless, NIKI continues to focus on its charter business, which is less cost-intensive and involves fewer risks for the company.

For Christian Lesjak, the main challenge for today’s airlines is the high level of costs that are largely beyond the control of the airlines: Fuel costs, airport charges and also regional taxes are all items where the company has little scope for negotiation. At the same time, economic crises, as experienced in southern Europe in the last few years, lead to pronounced fluctuations in demand. The speaker also said that the operating framework as dictated by EU policies was a problem with regard to international competition.

According to the speaker, there are still excess capacities on the European air travel market, with fierce competition from low-cost airlines and from national carriers that only survived in the past with the help of the tax-payers’ money. He also sees the railways as a strong competitor on regional markets.

Cheap fares became a significant market phenomenon with the advent of the low-cost carrier in the mid 1990s. Since then, there has been a paradigm shift from a natural demand- to a supply-driven market. “Today’s passengers simply want to get somewhere. The low-cost carriers can take advantage of their sensitivity to prices. The value of the product has greatly declined.” Christian Lesjak sees this development as the main problem and one that will continue to make European air travel a challenging market in the future.

The talk was rounded off with a lively discussion to produce a highly successful event, which was chaired by Dr. Andreas Mehrle, Program Director for Mechatronics.