Thomas Cook may bring more competition to low cost airline industry

Thomas Cook appears set to infuse the airline industry with more competition, as it announces that it is contemplating creating a new alliance with Lufthansa and German discount carrier TUI. If these plans end up succeeding, analysts believe that Thomas Cook would give Europe’s largest low cost carriers-namely, easyJet, Ryanair and Air Berlin-a lot stiffer competition than ever before.  But Thomas Cook, TUI and Lufthansa are in talks aimed at restructuring their business mainly because they have been pressured into doing so, due to the high price of fuel and the burden that this has placed on the commercial aviation industry. For example, while oil prices have dipped slightly over the course of the past few days, a barrel of oil once again reached $120 today on the world market.

A report in the Financial Times indicated how 25 carriers have gone bankrupt over a period of less than a year, due to unmanageable oil costs. As such, a merger between TUI and Lufthansa may serve as the best way to weather the current economic storm, and it appears as though Thomas Cook is interested in taking part in this partnership as well. If Tuifly goes ahead and merges with Germanwings, as well as with Condor, another German carrier, it is likely that the new airline to emerge from this deal would be the third largest low cost carrier in Europe, right after giants like Ryanair and easyJet.

www.thomascookairlines.co.uk