Why Europe Has 3 Airlines Pretending To Be 15

Añadido: 2026-05-26

[00:00:05]In 2004, Air France and KM Royal Dutch Airlines attempted something the continent had never seen. Two flag carriers, symbols of national pride, separated by centuries of colonial rivalry, attempted to combine under a single holding company. Analysts called it a marriage of desperation because neither carrier could survive alone.

[00:00:27]Against the rising lowcost tides sweeping across Europe, the French government retained a golden share. The Dutch demanded operational autonomy.

[00:00:37]Every stakeholder assumed the structure would collapse within a decade. For 20 years since, European aviation has accepted a painful truth. Airlines are national institutions first and businesses second. Sovereignty always wins. Yet by January 2025, three holding companies, I AG, Lufanza Group, and Air France KM had accumulated over a dozen of distinct airline brands between them, controlling more than 40% of European longhaul capacity. In the past few years alone, Luanza Group finalized a 41% stake in ITA Airways. Air France KM acquired 19.9% of SAS Scandinavian Airlines and IIA was still aiming to secure the full acquisition of Air Europa before dropping those plans in August 2024. But here's what makes no sense. In April 2026, Europe's four largest airline groups had a market share of 25% of the departing intrauropean capacity. In the United States, the top four's market share is 79.1% of the domestic departing weekly capacity. Europe remains fragmented.

[00:01:49]These three groups can't dictate prices the way American carriers do. They can't fully merge their operations across borders. I A tried to buy Air Europa and walked away after the European Commission demanded what the group had deemed as unacceptable concessions. Yet, every independent airline in Europe is either already absorbed, under negotiation, or bracing for a bid. So, how can three holding companies that technically [music] control less than half the market dictate the future of an entire continent's aviation? To understand why these three groups dominate European skies, you need to understand what they actually are.

[00:02:27]Because most passengers have no idea.

[00:02:30]When someone books a flight on British Airways, they're buying a ticket from International Airlines Group. When they fly Viewing from Barcelona to Rome, that's also I AG. He alingus from Dublin to New York, I AG, the budget carrier level operating from Barcelona, still I AG. Lufanza Group operates the same model across an even wider geography.

[00:02:53]Lufanza itself serves Germany. Swiss covers Switzerland. Austrian Airlines handles Vienna. Brussels Airlines connects Belgium. Euro Wings competes in the lowcost and leisure space. And as of January 2025, ITA Airways adds Italy as the group's fifth home market. Air France KM runs Air France from Paris Shalt KM from Amsterdam Shipol Transavia as its budget arm and Martin Air for Cargo. With SAS now entering the fold, Copenhagen becomes a third major hub for Air France KM. The holding company structure is the critical innovation here. Each brand maintains its own identity and its own national landing rights. A passenger flying Austrian Airlines from Vienna to Tokyo experiences an Austrian product. But behind the curtain, fleet purchasing, fuel hedging, maintenance contracts, and route planning are increasingly centralized. Combined, the groups carried 359.4 4 million passengers in 2025, more than the entire population of the United States, flowing through just three corporate entities every single year.

[00:04:03]The playbook has been remarkably consistent. Identify a weakened national carrier, acquire a minority stake, navigate regulatory approval, sometimes over multiple years, integrate operations behind the scenes while preserving the brand. Lufanza perfected this first. Swiss in 2005, Brussels Airlines in 2008, Austrian Airlines in 2009. Each acquisition followed the same logic. These carriers served wealthy catchment areas. Zurich, Vienna, Brussels, but couldn't compete against lowcost rivals on short hall or golf carriers on long haul. Lufanza absorbed them, fed their passengers into Frankfurt and Munich, and turned previous unprofitable flag carriers into feeder networks for its intercontinental operation. IIG took a different approach. British Airways and Iberia merged as equals in 2011, creating a holding company that combined BA's dominance on the North Atlantic, the single most profitable aviation corridor in the world, with Iberia's extensive Latin American network from Madrid. They added fueling for short hog in 2013, then Air Lingus in 2015, which gave them a transatlantic stepping stone through Dublin. Air France KM pioneered the model in 2004, but moved more cautiously afterward. The group focused on deepening its dual hub strategy between Paris and Amsterdam rather than acquiring additional carriers. [music] That changed dramatically in recent years. The acquisition of ITA Airways represents perhaps the most politically complex airline deal in European history. ITA itself only launched in October 2021 as the successor to the perpetually bankrupt Alitalia, an airline that had consumed billions in Italian government subsidies over decades. Lufanza signed the agreement in May 2023 for a 41% stake at a price of €325 million. The deal then spent over a year grinding through European Commission review. Brussels demanded significant competition remedies, requiring Lufanza to release slots and open routes to rivals on key city pairs between Italy, Central Europe, and North America. The transaction finally closed on January 17th, 2025. Under the agreement, Lufansza holds options to acquire full 100% ownership of ITA Airways at a later date. What Lufanza gains is substantial. ITA operates a modern fleet of 106 Airbus aircraft including longhaul A35900s and A33900s.

[00:06:43]It carried 16.2 million passengers in 2025. Rome fumicino and Milan Lenante became strategic hubs for the group.

[00:06:52]Italy becomes Lufanza's fifth home market. The integration is already moving quickly. ITA's Valair loyalty members began earning and redeeming through Miles and More in February 2025.

[00:07:04]The carrier withdrew from Sky Team in 2025 and joined Star Alliance in April 2026. This single alliance switch immediately strengthened Star Alliance's Mediterranean presence while weakening Sky Team's footprint in southern Europe.

[00:07:20]While Lufanza was navigating Italian politics, I faced its own acquisition drama and was forced to concede defeat.

[00:07:28]I had pursued Air Europa, Spain's second largest fullervice carrier for years.

[00:07:34]The prize was Air Europa's Latin American routes from Madrid, which would have consolidated IAG's position as the dominant transatlantic operator from the Iberian Peninsula to Latin America. But in August 2024, after receiving the extensive list of remedies from the European Commission, I AG concluded the regulatory demands would destroy the deal's financial value. They walked away, paying a 50 million euro break fee. The commission's demands were simply too much. But I pivoted with remarkable speed. Rather than acquiring, the group invested internally. In May 2025, IG placed a landmark order for 71 widebody aircraft from Airbus and Boeing, including 32 Boeing 78710s and 21 Airbus A330 Neos with options for more. The fleet renewal strategy underpins IG's longhaul expansion without the regulatory burden of acquiring another airline. The result is striking. I a posted5 billion euros in operating profit for 2025, an operating margin of 15.1% making it comfortably the most profitable of the three European groups.

[00:08:44]For comparison, Lufanza Group managed €2 billion in operating profit at a 5.1% margin. Air France KM recorded a€2 billion euro operating result at a 6.1% margin. Air France's KLM move on SAS represents the group's most ambitious expansion in two decades. In August 2024, the group completed its purchase of a 19.9% stake in SAS as part of a consortium that helped the Scandinavian carrier exit its restructuring proceedings. Then in July 2025, Air France KM announced formal proceedings to increase its stake to a controlling 60.5% with the majority acquisition expected to close in the second half of 2026. The strategic logic is compelling. Both Paris Shardigore and Amsterdam Shipol are effectively full. Shipol faces particularly severe constraints. The Dutch government sought to reduce annual flight movements at Amsterdam Shipole to address noise concerns. A battle Air France KM fought bitterly. Though in March 2026, the Netherlands highest court anoldled the cap, ruling it was legally inadequately justified.

[00:09:54]Copenhagen solves this problem. SAS dominates the wealthy Scandinavian market, a region where Air France KM has never been strong, as strong as SAS at least. The addition of Copenhagen as a third major hub provides growth capacity that the group simply cannot achieve at its existing airports. SAS's transition from Star Alliance to Sky Team completed on September 1st, 2024, immediately expanded the alliance's reach. But here's where this entire story takes a big unexpected turn. The significance of these acquisitions isn't about adding passengers, and it isn't really about adding roots. It's about what the final remaining targets can do to the entire competitive balance of European aviation. With ITA absorbed by Lufanza and SAS moving to Air France KM, there is essentially one major independent flag carrier remaining in Western Europe. Tap Air Portugal. TAP holds something no other European airline possesses. Lisbon sits as the closest major European hub to South America. TAP controls a massive share of the Europe to Brazil market. The carrier also maintains extensive connections to former Portuguese colonies across Africa and Asia. The Portuguese government relaunched the long delayed privatization in July 2025, aiming to sell a 44.9% stake to a strategic airline partner with a further 5% earmarked for employees. No binding bids were due by April 2nd, 2026 and the chess match has officially clarified. Both Lufanza and Air France KM submitted non-binding offers by the deadline. IAG which had initially expressed [music] interest announced it would not proceed with the acquisition saying it was prioritizing growth opportunities within the existing group. That leaves two. Under the privatization process, the stakeholding company Parabublica has 30 days to prepare a report on each proposal's merits. Binding bids are then expected within 90 days. The privatization will then have to be approved by the European Commission. The stakes couldn't be higher. If Air France KM wins, it secures a southern European hub unconstrained by Sheepo's capacity pressures and locks in the South Atlantic network it has long coveted. If Lufanza prevails, it completes a sweep of southern Europe, adding Lisbon to Rome and achieves the broadest continental coverage of any European group. This is still the real chess match. Not airline versus airline, but two holding companies maneuvering for geographic coverage that cannot be replicated. These three groups are vying for strategic control of the European aviation market. Consider the paradox.

[00:12:39]Europe's top airline groups controlling 24.9% of departing intra-European flights compared to the top four having a market share of 79.1% of the domestic departing capacity in the United States.

[00:12:52]By that metric, Europe remains competitive. But this statistic obscures a critical reality. On longhaul routes where margins are highest, the concentration is dramatically more severe. On premium corporate routes, the North Atlantic, Latin America, Southern Africa, their share climbs higher.

[00:13:10]Still, the holding company structure makes this dominance nearly invisible to consumers. A [music] passenger choosing between Lufanza, Swiss, Austrian Airlines, and now ITAs [music] believes they're comparing four independent competitors. They're not.

[00:13:25]They're choosing between four brands owned by the same parents, [music] optimized to cover different price points and different geographies without cannibalizing each other. Meanwhile, Ryionaire carried 206.5 million passengers in 2025, far more than any individual European legacy group. But Ryionaire doesn't compete on long haul. It doesn't control hub infrastructure. The lowcost carriers dominate volume. the holding companies control value. In 2004, when Air France and KLM merged, everyone assumed national pride would tear the structure apart. Within a decade, the Dutch demanded autonomy, the French demanded control. Divorce seemed inevitable. 21 years later, Air France KM is not only intact, but expanding. It's absorbing SAS, a carrier that represents Scandinavian identity as powerfully as KM represents the Netherlands. This is what the market underestimated. The holding company model doesn't eliminate national identity, it monetizes it. Each brand retains its flag, its livery, its cultural positioning. ITA Airways will carry echoes of Alatalia's legacy and Italian design. SAS will still represent Scandinavian efficiency. But behind every branded departure gate, the same three financial engines make the decisions. Loyalty programs cross-pollinate. The passengers see brands. The industry sees balance sheets. When I AG placed that $21 billion widebody order at list prices in May 2025, it wasn't British Airways buying planes. It was a holding company leveraging the combined purchasing power of five airline brands to negotiate pricing that no individual carrier could achieve alone. When the Tap Air Portugal privatization concludes sometime in 2026, the last significant piece will have been placed. Two groups, not three, are now vying for it. Whoever wins will control the aviation infrastructure connecting Europe to South America to Lucifer and Africa to a network that Lisbon alone can serve. A handful of corporate boards in London, Frankfurt, and Paris are determining which cities get longhaul connections, which routes justify investment, and which fairs the market will bear. three balance sheets, limited alternatives, and proof that sometimes the most significant transformations in an industry don't require deregulation or disruption.

[00:15:52]Sometimes they require patience, holding company structures, and the willingness to bet that passengers will never notice who actually owns the plane. The question isn't whether three groups can control European aviation. It's whether the rest of the continent is really paying attention.

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