The past year has brought the demise of North
America-Europe low-cost carriers (LCCs) and a capacity-share shift toward
traditional airlines in transatlantic travel.
The diminished scope of the LCCs, however, has not resulted
in a decrease in the availability of low fares.
"Across the board, economy and basic economy fares are still
down," said Hayley Berg, an economist for Hopper, an app-only booking platform
that specializes in price predictions.
According to a Hopper analysis, seat capacity in the North
America-Europe marketplace is up 2.6% in 2019.
But this growth has come entirely from major carriers, which
are offering 3.8% more seats this year. Transatlantic LCC capacity is expected
to end 2019 down 11% after doubling between 2017 and 2018.
The declines have occurred in the aftermath, most notably,
of the March closure of Iceland's Wow Air, which flew 13 U.S. routes in the
summer of 2018. More recently, the demise of British tour operator Thomas Cook
also spelled the end of Thomas Cook Airlines, which flew eight U.S. routes last summer.
Discount transatlantic carrier Primera Air, which flew six
U.S. routes in the summer of 2018, failed last fall. And France's XL Airways,
which flew four U.S. routes, shut down in September.
Other discount transatlantic carriers, most notably
Norwegian Air, Lufthansa's Eurowings and International Airline Group's Level,
continue to fly but have scaled back growth.
Those changes, though, haven't resulted in higher prices -- not
even close. Consumers in search of budget fares are enjoying 17% cheaper
airfares on U.S./Canada-Europe routes this year, according to the
Hopper analysis. On LCCs, ticket prices are down 23%.
The analysis states: "There are instances where prices on
specific routes are slightly higher, such as U.S. to Iceland due to the closure
of Wow Air, but prices remain down overall."
Hopper defines budget fares as the lowest 10% of the fare
quotes it tracks.
George Hobica, president of Airfarewatchdog.com, said he has
anecdotally observed similar conditions.
"The Wow effect seems to have stuck around," he said.
Hobica recently noticed a roundtrip basic economy fare of
$343 between New York and Paris on American.
"I have a feeling that’s not an anomaly," he said.
At its peak, the seat-share of LCCs on routes between the
U.S./Canada and Europe was 8.7%. Share is likely to fall to 6% or less through
the end of 2019, Hopper said. But the presence of LCCs has an outsized effect
According to Berg, airfares on a specific city-pair
typically drop approximately 20% when a discount carrier enters that market. If
the low-cost entrant subsequently leaves the market, prices, on average,
recover just 11%.
Berg said a primary reason prices continue to go down on
transatlantic routes is that the major carriers continue to expand aggressively
as they chase market share.
"There’s so much competition, and no one wants to give up
even an inch of share, so prices are the easiest way to compete," she said.
Berg also noted that fuel, though relatively steady this
year, is still low compared with the decade-long trend.
While the cheapest North America-Europe fares have gotten
even less expensive over the course of 2019, Hobica said he has also noticed a
new trend in the market: a widening gap between basic economy and
"I'm seeing a lot of $70, $80, $90 differences on one-way
tickets where it used to be $40 or $50," Hobica said.
The abundance of cheap tickets available on flights across
the Atlantic over the past few years, he said, has conditioned a certain
segment of consumers to expect to fly to Europe for something like $300.
"Millennial travelers and Gen Z travelers are price
conscious, not status conscious," he said. "It's not about possessions or
perks. It's about the Instagram and getting there as cheaply as possible with a
Those travelers can expect more good news next year,
according to Hopper. U.S./Canada-Europe LCC capacity is projected to be down
16% in 2020. But overall, as traditional carriers take on new aircraft and
expand routes, networks and frequencies, capacity is expected to grow 4.5%
compared with this year's 2.6% rise.
"Transatlantic prices are likely to remain lower than
historical levels, barring a significant change in jet fuel prices," the Hopper