Double Whammy: Overcapacity? Check. Weak Demand? Check. Both, alas, are bedeviling the transatlantic

With four transatlantic joint ventures between them, it looked like a sure victory for the goliaths. American joined forces with IAG. United locked hands with Lufthansa. And Delta built ventures with Air France/KLM and (separately) Virgin Atlantic. In some cases, these JVs featured other participants such as Finnair, Air Canada and Alitalia. A triopoly was in the making.

Well, ask these transatlantic JV participants to name their biggest network challenge right now, and at least some will say— ahem—the transatlantic market. What’s happening?

Overcapacity, for one. This month last year, an Airline Weekly cover story discussed a sudden surge in low-cost carrier competition between Europe and North America, led by Norwegian, Wow Air, Air Canada Rouge, WestJet and tour operator-linked airlines like Thomas Cook/Condor, TUI and Air Transat. Lufthansa deployed its Eurowings unit across the Atlantic. Semi-LCCs like Air Berlin and Icelandair, moreover, sharply grew their North Atlantic capacity.

Not only hasn’t this trend eased in the past year. It has accelerated, with more growth planned for this winter and beyond. For Air Berlin, transatlantic flying is its last-chance saloon, prompting it to add new routes like Düsseldorf to Boston and San Francisco, a prelude to next year’s entry to Orlando. Condor began flying to Austin and Halifax this past summer. Icelandair added Chicago. Thomas Cook is connecting Manchester with California. Wow Air just announced Miami. And so on. But most consequentially for the market, Norwegian keeps adding one route after another, operated from multiple gateways in Europe—the latest was Paris this summer, with Barcelona next. The onslaught will only get worse when Norwegian starts flying narrowbodies to the U.S. It could get worse even before then if it’s cleared to use its Irish- and U.K.-based subsidiaries to fly there, even though—to be clear—there’s nothing it’s prohibited from operating between Europe and the U.S. today with its core Norwegian unit. JetBlue and Aer Lingus are themselves contemplating transatlantic operations with A321-NEO LRs.

LCC growth, however, represents just one of many forces shaping the transatlantic market—mostly for the worse—in the latter half of 2016. It’s actually not just LCCs and tour operators adding North American routes. So are fuller-service…

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