The US airline industry's voyage toward consolidation is just beginning, key executives told the Phoenix Sky Harbour International Aviation Conference in May.
Delta Air Lines president Fred Reid told the meeting: "We are at the very beginning of a long, multi-event, multi-year shake-out of the industry. There will be three to eight very large, mega global carriers and a bunch of successful, sharp niche players." Within the USA, says US Airways chief executive David Siegel, "it is irresistible that we consolidate to three or four network carriers, with similar consolidation on the low-fare side."
Even the low-fares sector may shrink, with American Trans Air (ATA) chief executive George Mikelsons saying he "foresees some consolidation in the low-fare area". Within weeks of the conference, ATA, a larger low-fares network airline, announced it would seek out alliances with low-cost point-to-point carriers, the first ever such move by one of the 10 US majors. Mikelsons later said he had in mind AirTran Airways or Frontier Airlines.
For now, alliances rather than outright combinations will shape the global consolidation. Delegates agreed that internationally, fierce opposition to Deutsche Post's proposed expansion of DHL makes foreign investment in US carriers all the more difficult, while domestically, the government had dropped its opposition to the codesharing deal among Continental, Delta and Northwest Airlines. This represents a major change in the administration's view of consolidation, says America West chief executive Doug Parker.
Reid suggested the departments of justice and transportation ought to have the power to allow "the scheduling, pricing and yield management to be done in a centralised entity, immune from anti-trust laws" within the alliance structure.
Parker responded that "the idea of a holding company...is not pro-consumer, but pro the airlines that can collude".
Source: Airline Business
