IAG Pulls Plug on Low-cost Subsidiary Level Europe

 - June 18, 2020, 10:57 AM

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

Level Europe, the low-cost subsidiary of International Airlines Group (IAG), has ceased trading with immediate effect and intends to file for insolvency, the company announced on Thursday. The Vienna-based airline blamed the impact of the coronavirus and the related travel restrictions or border closures for its demise. Its flights have been grounded since lockdown restrictions were imposed in Europe from mid-March.

“Level Europe has been impacted by the unprecedented crisis caused by the Covid-19 pandemic. Once insolvency proceedings are filed, an Austrian Court will appoint an administrator,” the company said in a short statement emailed to AIN.

IAG launched the Level brand in June 2017 to serve some long-haul destinations in North and Latin America with a low-cost product, initially from Barcelona, to compete with Norwegian Air Shuttle. Its Airbus A330-200s were operated by IAG’s Spanish subsidiary Iberia.

The group expanded the concept to Paris Orly Airport before branching out to low-cost short-haul flights, with bases in Vienna and Amsterdam. While observers thought the move was slightly odd since IAG had already a well-established short-haul low-cost carrier in the shape of Barcelona-based Vueling Airlines, CEO Willie Walsh argued that not all markets had accepted the Spanish Vueling brand and that Level could provide a more international offering. Level’s short-haul flights were operated by the Austrian airline Anisec, which IAG late last year renamed to Level Europe GmbH.

The decision to shut down Level Europe coincides with the Austrian government’s plans to raise its air transport levy to €30 for flights of less than 350 km (218 miles)—up from the current €3.50 for short-haul flights and €7.50 for medium-haul flights. At the same time, it is introducing “anti-dumping” legislation prohibiting the sale of tickets that are cheaper than the sum of all levies and taxes. The plan surfaced earlier this month alongside the bailout agreement for Austrian Airlines and is supposedly intended to support the country’s green ambition and stimulate a shift from air to rail for short trips.

Level Europe operated six leased Airbus A320 family aircraft, two A320-200s, and four A321-200s fitted with 180 and 210 seats, respectively.