Charter airlines in Greece

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1 Charter airlines in Greece P. Arvanitis, G. Williams & I. Stockman Air Transport Group Cranfield University, United Kingdom. Abstract Charter operators have been serving the Greek islands for over the past thirty years. Air Transport liberalisation has stimulated an increased amount of services between Northern Europe origins and Greek destinations. The market tends to grow and the city pairs to increase year by year. As in the scheduled market, there are some key carriers which have survived all these years, whilst new entrants are continually entering and exiting the market. The most dominant carriers though, seem to be those vertically integrated with major Tour Operators in their origin market. In other cases, scheduled carriers operate chartered services as well in order to achieve better fleet utilisation and higher revenues. This paper examines charter operations over a three-year period to specific destinations in Greece from the major leisure markets of Northern Europe. It concludes that some destinations have expanded their catchment areas fast, while some remain the same and others lose their market share. 1 Introduction Charter operators have been serving the Mediterranean market for over thirty years carrying holidaymakers from Northern Europe. During the 199 s though, the tour-operating sector underwent a considerable consolidation of both a vertical and horizontal nature. The poor image of the charter airlines with travellers, led tour operators to set up their own in-house airlines. Today, most European charter carriers form part of a vertically integrated organisation incorporating a tour operator, travel agency chain and airline [1]. Greece has been a major tourism destination with numbers of tourist arrivals booming in the

Air Transport liberalisation has stimulated an increased amount of services between Northern Europe origins and Greek destinations.

2 198s. The main factors leading to this increase have been the charter airlines and the airport development in Greece that took place over the past twenty years. The reason that United Kingdom, Germany, Netherlands and Sweden have been selected to be examined is because these four tourism generating countries are responsible for more than 6% of the total tourist arrivals in Greece. Over recent years, the European charter market has been undergoing change. There has been a strong growth of self-catering inclusive tours with tour operators selling seats on their charter flights on a seat-only basis [2]. 2 The situation in Greece According to the Civil Aviation Authority, charter traffic from destinations in Northern Europe to destinations in Greece has been constantly increasing over the past four years, although several fluctuations have occurred. Heraklion airport is the busiest one in the summer months having links to major and minor airports in Northern Europe. Out of all the airports examined it is the one which is stable in terms of routes and serviced frequencies. By contrast, many the other airports such as Kos, Rhodes and Mykonos have regular charter services but a significant proportion of them represent ad hoc operations. 2.1 Small Regional Airports The island of Karpathos (AOK) is a very interesting case whith many summer time connections with Europe whereas in the winter the only existing services are the ones to Athens. Four German destinations have been connected to the island of Karpathos and one from the Netherlands. Additionally, Mykonos and Santorini were not examined thoroughly, since the charter services to those destinations are extremely seasonal with the number of flights now exceeding 25. The vast majority of operations to these destinations is ad hoc operations from almost any part of the world. 3 Origin and Destinations The tourism destinations, namely Heraklion, Chania, Corfu and Kos are well connected to Northern Europe with a vast number of frequent services over the six month tourism peak season. For instance, there are services to Heraklion from 1 UK destinations and 18 German ones (Table 1) whereas Athens is connected only to London and Manchester. Thessaloniki on the other hand is connected to a greater number of destinations compared to Athens. This probably reflects the lack of airports in the destinations in Northern Greece, as well as the expansion of

tourist arrivals in Greece. Over recent years, the European charter market has been undergoing change.

3 the seat only market, since the scheduled services to Thessaloniki are extremely limited compared with these at Athens. Another point that has to be stressed is that Thessaloniki is the only airport where the non-scheduled services have a longer duration. At airports like Kos and Corfu it is very likely that a service by a certain carrier to a specific destination can last not more than 1 flights; assuming that the service is weekly, easily can someone assume that it lasts almost three months, over the summer months. Table 1. The Development of routes and carriers to selected destinations ROUTES CARRIERS ROUTES CARRIERS ROUTES CARRIERS FROM UK ATH SKG HER CHQ CFU KGS FROM GERMANY ATH SKG HER CHQ CFU KGS Source: authors The number of carried to and from the destinations although tending to rise every year does not seem to follow a specific pattern. This can be easily explained by the fact that IT holidays are mainly driven by the major tour operators and in addition the increased market share of seat only (Figures 1-5). This means that the number of holidaymakers cannot be easily forecasted. During there was a significant decrease in passenger numbers to almost all the destinations which in some cases was recovered the following year.

At airports like Kos and Corfu it is very likely that a service by a certain carrier to a specific destination can last not more than 1 flights; assuming that the service is weekly, easily can

4 Figure 1: Traffic from United Kingdom Figure 2: Traffic from Germany Figure 3: Traffic from Norway

5 Figure 4 Traffic from Sweden Figure 5: Traffic from Netherlands Entry and Exit of carriers The market seems to be stable enough without many major fluctuations in terms of entries and exits. In every country there are the dominant or major carriers such as Britannia, Air 2 and Air International in the UK, Hapag Lloyd, Condor, Germania and LTU in Germany, Transavia in the Netherlands, Blue Scandinavian and PremiAir in the Scandinavic countries. In some routes the carrier has remained the same over the three years whereas in other ones, there has been a change of carriers. This phenomena was more noticeable in the German market which seems to be more nervous than the UK one. In the UK market there are carriers which operate specific routes and have not tried to enter a different market than the one they serve. The latter can be justified though, since a great number of carriers operate only to the destinations the tour operator they are integrated, merger or affiliated with operates.

In every country there are the dominant or major carriers such as Britannia, Air 2 and Air International in the UK, Hapag Lloyd, Condor, Germania and LTU in Germany, Transavia in the Netherlands,

6 The year of had been very dynamic for the Greek market. New routes were introduced and the number of carriers on each route was significantly increased. The number of though did not so the following year the carriers evaluated their positions. As far as the Greek carriers are concerned, none of them seems to be a major one, connecting destination in Northern Europe with ones in Greece. The only exceptions are Galaxy Airways and Cronus Airlines operating to Germany from Thessaloniki and some other services by Air Greece before Aegean Airlines absorbed it. On the other hand the majority of the Greek carriers do not operate on a charter basis and tend to operate scheduled ones, mainly domestic and intra European. In addition to that, the fleet numbers and high utilisation do not allow them to operate such services as well. Finally it has to be mentioned again, that the integration of tour operators and charter carriers does not easily allow new entries since the markets are highly driven by the IT holidays and not the seatonly market. 5 Conclusions The UK market seems to be more careful in its choices regarding new destinations which do not seem to produce a lot of traffic whereas the Netherlands, Germany and the Scandinavic countries are more adventurous in their decisions. Norway and Sweden although they do not produce as much traffic as Germany and the UK operate in a different way. It is very likely that the preferences of both Germans and Scandinavians to different holiday types leads them to fly to not very popular destination seeking for the alternative, whereas Britons tend to travel to the fashionable destinations. The same concept applies to the Netherlands as well, but the market size does not allow a huge expansion. These should be the markets that Greek carriers could possibly enter and start operating. References [1] Williams, G., Will Europe s charter airlines be replaced by no-frills scheduled airlines? Journal of Air Transport Management, 7, pp , 21. [2] Doganis, R., Flying Off-Course. The economics of international airlines. [3] Hellenic Civil Aviation Authority, Air Traffic Statistics [4] Hellenic Civil Aviation Authority, Air Traffic Statistics.

As far as the Greek carriers are concerned, none of them seems to be a major one, connecting destination in Northern Europe with ones in Greece.

OPENING UP OF THE AIR TRANSPORT MARKET IN GREECE UNDER LIBERALIZATION. (Submitted by Greece)

February 2003 English and French only OPENING UP OF THE AIR TRANSPORT MARKET IN GREECE UNDER LIBERALIZATION (Submitted by Greece) 1. INTRODUCTION 1.1 Until 1991, Greek air transport had developed within