Consolidating miles in airline mergers

Their adoption would allow airlines to offer the kind of hyperpersonal, customized environments that consumers are experiencing in retail, entertainment, and communications.

But these solutions require substantial investment – something that’s difficult for most European carriers, given their current finances.

Service synergies To create revenue and cost synergies, European consolidations will need to work harder to realize corporate integration, operational harmonization, and centralized administration and governance.

Group-level activities will evolve from holding companies to shared-service organizations and maybe even to single commercial entities that deal with revenue.

Further capacity rationalization may come from asset purchase agreements rather than mergers, reducing the governance challenges.

However, absorbing a distressed asset or partial franchise often carries a greater near-term cost.

Even so, the prospect of consolidation looms as a necessary, if not inevitable, next step for European aviation.

Yet another constraint on growth, European airlines – like their North American counterparts – face shortages of pilots and mechanics to service a fleet that is gaining size annually.

Although European industry profit margins were more than four percentage points behind those of the US industry in 2017, European airlines overall achieved a 6.8 percent margin that helped maintain market value. While the European Union may function as a single market, differences in culture and language cannot be ignored, even in business.

For Europe, most consolidation efforts will require multiple air operator certificates (AOC), in contrast to what happened across the Atlantic.

A decade ago when airlines based in the United States began to consolidate, the industry was in a terrible state.

Between 20, American carriers lost billion and cut 160,000 jobs.

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