Too many airlines
14 April 2010
British Airways and Iberia finally signed their merger agreement and United Airlines and US Airways revealed they are in get-together talks - again. CNN anchor/ correspondent Richard Quest comments in an exclusive column to domain-b
We have been told time and again that the world has too many airlines chasing too few passengers. All the experts agree that there needs to be consolidation in the industry. That process took a step forward last week with two announcements; British Airways and Iberia finally signed their merger agreement and United Airlines and US Airways revealed they are in get-together talks - again.
But the way that these two different deals may be implemented (assuming the UA-US deal goes through) tells us a lot about the problems of the aviation industry.
Firstly, in Europe: The new company which will own British Airways and Iberia is called International Airlines Group (heavens; I hope they didn't pay a lot of money for someone to ''create'' that boring name….surely they could have done better.)
The deal is expected to close by the end of the year when hopefully the savings will start to flow.
The United-US Airways deal is far trickier. These two have tried before and failed on regulatory concerns and union opposition. What makes them think things will be any different this time? Coming on the heels of Delta's merger with Northwest, they must hope that the regulators will see a changed landscape where airlines need to be bigger to survive.
But there is a huge difference between US domestic airline mergers and those involved cross border carriers. Internationally, the industry is hidebound by archaic decades-old rules on ownership that hinder such transactions.