German carrier airberlin has shelved its plans to launch new service to DFW airport in May 2016 following a lower-than-forecasted response from the local market. Airberlin had announced in November 2015 that it would launch its DFW service as part of a broader international expansion program to North America in Summer 2016, which included new service to Boston, San Francisco and Havana. The service was intended to operate to its Dusseldorf hub four times per week on an Airbus A330-200 aircraft.
This is the second blow that has been dealt to DFW in recent weeks, following KLM’s announcement that it would not resume its summer-seasonal service to Amsterdam in May 2016. Both KLM and Airberlin were scheduled to launch services between DFW and Amsterdam and DFW and Dusseldorf, respectively, the same week. It is unfortunate that KLM likely decided to cancel the resumption of its DFW route due to airberlin, but now neither carrier will be operating to North Texas next summer. This will effectively leave DFW with nonstop service to four European markets: London, Frankfurt, Paris and Madrid, the lowest number of points offered from DFW since 2009.
Schedule of DFW – Europe flights for S16
Europe is one area where DFW has failed to achieve significant growth
DFW airport has attracted service from numerous foreign carriers and growth its international reach in North Asia, mainland China, Oceania, the Middle East and Latin America. Europe, however, is one area where it has failed to achieve salient growth due to the Eurozone crisis, the growth of the Middle East carriers (who compete for similar fifth-freedom traffic as European airlines) and a relatively small market size for DFW-Europe in general. Beyond Tier-A markets such as London, Frankfurt and Paris, the local traffic volumes drop off significantly for other markets, such as Amsterdam, Brussels, Rome, Barcelona, Berlin, Dusseldorf, Manchester, Munich and Milan.
Madrid is one of the few markets that DFW is capable of supporting owing to OneWorld connections on both sides, as well as a transatlantic Joint Venture between IAG, parent company of Iberia, and American Airlines. Madrid is Iberia’s home base and largest hub, and far more powerful than airberlin at Dusseldorf. Airberlin has also struggled financially over the past five years and has undergone several restructuring programs with a consistent track record of replacing CEOs every 18 months. Though airberlin has a good control on keeping a low-cost base, revenue mixes have been a challenge for the carrier. In a market like DFW, which relies heavily on transit traffic, and does not have the same tourism draw that other alpha US cities have, such as Boston, Miami, Chicago and San Francisco, this becomes problematic.
Airberlin also has a limited connecting market beyond Dusseldorf that would provide incremental benefit to DFW, aside from what is already supported by British Airways and Lufthansa. Airberlin also has a messy battle ongoing with the German court over the future of its codeshare agreement with Abu Dhabi-based Etihad, and continued frustrations over the delayed opening of Berlin Brandenburg airport (BBI) where it intends to open its largest base. Overall, it is a carrier that does not have many ducks in a row.
It would be prudent for DFW airport officials to court Aer Lingus for 2017
Even though the loss of two foreign carriers is never easy, it is necessary for foreign carriers to adjust capacity into DFW in order to support the appropriate level of supply with demand. The exit of KLM and airberlin, along with the capacity down-gauge of Emirates from an Airbus A380 to 777-300ER, will help stabilize the market.
While DFW airport intends to shift its focus from growth to retention, now that it still has a nice portfolio of foreign carriers and service to pride itself upon, it should consider pursuing Aer Lingus as a suitable carrier to round out its European profile. The Irish carrier, which has been acquired by IAG, intends to integrate itself into the Joint Venture alliance with American and British Airways + Iberia. The Dublin hub will complement IAG’s other large bases at London Heathrow and Madrid, and for DFW, the windows opened to Latin America are tremendous. DFW would fill a critical hole for Irish traffic destined for Mexico, Central and South America, as well as reach many markets in the US South, Southwest and South Central regions.
Dublin also is home to numerous companies with heavy technical presence in Ireland, such as Amazon, Apple, Cisco, Dell, Dropbox, E-bay, Facebook, IBM, Intel, Logitech, LinkedIn, Microsoft, Oracle, Paypal, Salesforce, Yahoo, TATA, SAP and Yahoo. This has helped Aer Lingus grow its North American presence in recent years, and the carrier expects to receive new aircraft deliveries in 2018 with the Airbus A350-800 XWB.
Airberlin is wisely chasing yields instead of ASMs
Airberlin is making a tough but sound call by abandoning its DFW route in hopes of deriving stronger yields on some of its other markets that have higher expected demand and fewer competitors. The reality is that even with a heavy OneWorld presence, DFW does not fit into the profile of airberlin. Then again, airberlin struggles almost on a daily basis in defining what its profile consists of to begin with. Perhaps that would be a better place for it to start rather than chasing market share in regions where yields would be weak.