Consolidation in the Airline Industry

Ronald Lieber (1997, p. 88) has stated that "as long as there are airplanes, there will always be some crazy entrepreneur trying to get you from here to there for less than United and Delta." In the international airline industry, the notion that "bigger is better" has led to industry-wide consolidation via mergers and acquisitions as national barriers to market expansion are diminished (Merger, 2000). At the same time, there are growing concerns being expressed by consumers and regulatory agencies alike that consolidation of airlines on a global scale may not necessarily be in the best interest of these groups. The airlines may be opening the door to some kind of re-regulation both in the United States and in Europe.

For example, Air Cargo World (Merger, 2000) reported that consolidation and the creation of designated hubs and well as codesharing agreements among carriers is proving troubling to regulators across the globe. Questions of treaty obligations and rights, coupled with impact issues such as restraint of competition, are of increasing significance. The purpose of this report is to examine these matters in the context of an international industry environment that faced difficult times in 1999, when a rise in fuel prices and growing market competition drastically effected the budgets of both domestic and international carriers (World: International airlines..., 2000). An overview of the industry will be followed by a

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level, O'Toole (2000) suggests a increase in underlying traffic of 8.6 percent for the long haul routes of the European majors and 7 percent for the international routes of the North American airlines. Business Times (Eight Asian airports..., 2000) reported that the International Air Transport Association (IATA) claimed that the world's airlines carried 1.6 billion passengers on regularly scheduled flights in 1999. Of the total, 489 million of these passengers flew on international flights. The number of passengers carried on systemwide scheduled operations grew by 6 percent, within international passenger growth at 7 percent. The passenger load factor improved by 1 percentage point to 69.1 percent no systemwide scheduled operations as passenger growth (revenue per kilometer, or RPK) grew ahead of available seat capacity with a growth of 6 percent and 5 percent respectively. The Hub System The "hub and spoke" system that has become a standard of airport and route design was originated in the United States; over time, the system has been generally accepted by the traveling public (Walker, 1997). In essence, a hub or the larger "fortress" hubs are nothing more than mega-airports at which an airline or groups of airlines
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Some common words found in the essay are:
Commission Codesharing, Standard Poor's, British Airways, Northwest United, Airbus Industrie, Plane Sense, Latin America, United Europe, France Swissair, Office GAO, airline industry, british airways, air transport, major carriers, walker 1997, major airlines, standard poor's, jumbo jets, super jumbo, international airline, standard poor's 1995, super jumbo jets, international airline industry, regional airline industry, world international airlines,
Approximate Word count = 5521
Approximate Pages = 22 (250 words per page)

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