US-America West merger setting air carrier trend
Assuming the proposed merger of US Airways and America West Airlines is approved by regulators, there’s a likelihood of more consolidations.
“The airline industry is buzzing with talk of more consolidation,” said the Boston Globe.
Airlines with hubs and networks that don’t overlap such as the eastern-based US Airways and America West might make the best fits.
That has led to speculation that Delta’s strong East Coast base and trans-Atlantic stopovers would fit with Northwest’s Midwest focus and various Asian routes.
“There are too many hubs in the United States,” said Susan Donofrio, transportation analyst at Fulcrum Global Partners in New York. “We need more consolidation so the airlines can run more efficiently.”
Analysts have predicted more consolidation since 9-11. Instead, a large group of low-fare start-ups has tried to steal passengers from an already saturated market.
That later development is helping to promote more mergers. And the regulatory environment has changed to the point where Justice Department and other officials are more inclined to approve alliances to save the airlines, analysts say.
Airlines quoted by the Boston Globe declined to comment on specific potential partners, but few ruled out the possibility of mergers.
“We have said that we believe that the environment in the US needs to be more open to consolidation,” said United spokeswoman Jean Medina. “The domestic market is suffering from an excess of capacity and our international peers don’t face that.”
Some airlines have been finding ways to partner without merging.
Southwest Airlines, for example, invested $87 million in ATA Holdings Corp., parent of ATA Airlines. That helped ATA pull out of bankruptcy protection. At the same time, it gave Southwest access to ATA gates and routes in cities where it had no presence.
Report by David Wilkening
David
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