Troubled Austrian Airlines downsizes network, but grows in selected markets

Last month, Austrian Airlines let its subsidiary Tyrolean take over all flight operations in a cost-cutting move, which also has resulted in capacity reduction. The airline saw its passenger numbers decline by almost 6% during the usually busy July summer month, while its Lufthansa Group siblings Swiss and Lufthansa recorded small growth the same month; however, Austrian’s 10% reduction in seat capacity actually means that the airline is becoming increasingly efficient.

The airline is gradually phasing out its 737 aircraft and the seven 737-800s currently remaining will have left the fleet by the start of the summer scheduling season next year. In all, seven A320s will replace 11 737s, meaning that capacity will reduce further.

Although Austrian has grown its passenger numbers by more than a quarter in the last decade, the way there has been bumpy and Austrian Airlines’ load factor is still lower than that of Swiss and Lufthansa.

Downsizing and reshaping network

Although the airline’s overall capacity is downsized, Austrian is also reorganising its network, not the least to make use of the improved connection opportunities the airline now has at its Vienna hub, where a new terminal with reduced connection times just was completed in June for Austrian Airlines and its partners. The effect of the overall capacity reduction is therefore different in different markets.

Several of Austrian’s biggest country markets are experiencing considerable variation in capacity. Italy falls from being the airline’s third biggest market to fourth place after a reduction in capacity of more than 20%. Austrian has dropped flights to Milan Linate and cut capacity to Milan Malpensa and Rome Fiumicino.

Meanwhile, other markets see large capacity increases on Austrian. Romania has climbed to sixth position thanks to Austrian’s strong growth between Vienna and Bucharest and in the case of the United Kingdom, which Austrian serves through London Heathrow only, the growth can be attributed to Austrian Airlines compensating for losing its Star Alliance partner bmi. The growth in the Spanish market is thanks to Austrian increasing capacity to Barcelona by 40%. Notably, the two other operators on the Vienna – Barcelona route, niki and Vueling, are also growing rapidly on the route; +74% and +37% respectively. As a consequence, total seat capacity between the two cities is up by almost 50%.

Notably, Austrian has not launched any new routes since Baghdad flights were relaunched in June last year. However, notable routes to have been dropped in the last year are to Helsinki, Gothenburg, Donetsk, Damascus and Sochi. In the long-haul segment, Austrian has dropped its services to Mumbai, meaning that the airline now serves eight long-haul destinations from Vienna; Bangkok, Tokyo Narita, New York JFK, Washington Dulles, Toronto Pearson, Delhi, Beijing and Malé.

However, in spite of the downsizing and changes to Austrian’s network, the greater network composition remains largely the same as a year ago. Capacity within Austria, to Germany and Switzerland still makes up 26% of total seat capacity, while the airline’s eastern focus is evident in that capacity allocated to flights to CEE and CIS countries has increased by a percentage point to 29%. Capacity to remaining Europe makes up 31% of total capacity, down from 33% last September, while intercontinental capacity is unchanged, constituting 14% of Austrian Airlines’ network capacity.