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Why No International Airline Mergers  
User currently offlineBoston92 From United States of America, joined Aug 2006, 3390 posts, RR: 7
Posted (7 years 7 months 3 weeks 4 hours ago) and read 4467 times:

I just wanted to know why airlines from different countries never merge (and if it is even possible). Just think of what a UA/BA merger would look like, that would be ONE BIG AIRLINE!

Any Input is Great!


"Why does a slight tax increase cost you $200 and a substantial tax cut save you 30 cents?"
38 replies: All unread, showing first 25:
 
User currently offlineVasu From United Kingdom, joined Apr 2005, 3861 posts, RR: 0
Reply 1, posted (7 years 7 months 3 weeks 4 hours ago) and read 4451 times:

Quoting Boston92 (Thread starter):
ust think of what a UA/BA merger would look like

Christ... NOOOOOOOOOO!


User currently offlineBoston92 From United States of America, joined Aug 2006, 3390 posts, RR: 7
Reply 2, posted (7 years 7 months 3 weeks 4 hours ago) and read 4443 times:

Quoting Vasu (Reply 1):

That was just an example, CALM DOWN!!!!!!



"Why does a slight tax increase cost you $200 and a substantial tax cut save you 30 cents?"
User currently offlineAirCop From , joined Dec 1969, posts, RR:
Reply 3, posted (7 years 7 months 3 weeks 4 hours ago) and read 4425 times:

How about KLM/Air France, aren't they in the process of merging?

User currently offlineGigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Reply 4, posted (7 years 7 months 3 weeks 4 hours ago) and read 4419 times:

The United States, and several other countries, have foreign ownership laws. There's also the issue of regulatory affairs.

NS


User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 5, posted (7 years 7 months 3 weeks 4 hours ago) and read 4404 times:

The big stumbling block to international airline mergers is the flying rights, plus government restrictions on ownership. Currently in the US it is 25% while over in Europe it is 49%.

An EU/US openskies deal would have erased a lot of restrictions but the US balked at raising the ownership/control to the same as EU because of opposition from politicians, unions and CO.

The same reasons that forced the selling of P&O Ports operations in the US to a US company when P&O Ports were taken over by a company in Dubai.

Xenophobic claptrap if you aks me!


User currently offlineUSADreamliner From , joined Dec 1969, posts, RR:
Reply 6, posted (7 years 7 months 3 weeks 1 hour ago) and read 4311 times:

KLM/Air France
SAS
Malaysia-Singapore Airlines ( this was more a separation than a merger)

And not sure about Air Afrique, I think AF founded the airline from zero, not merging national airlines.


User currently offlineKiwiandrew From New Zealand, joined Jun 2005, 8544 posts, RR: 13
Reply 7, posted (7 years 7 months 3 weeks 1 hour ago) and read 4309 times:
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Quoting AirCop (Reply 3):
How about KLM/Air France, aren't they in the process of merging?

they have merged - they are one company which just happens to have two brands . LH/LX are in much the same boat though I think that LH's ownership of LX is a bit more complicated



Moderation in all things ... including moderation ;-)
User currently offlineJetdeltamsy From United States of America, joined Nov 2000, 2987 posts, RR: 8
Reply 8, posted (7 years 7 months 2 weeks 6 days 22 hours ago) and read 4238 times:

There is KLM/Air France, Swiss/Lufthansa, Air Canada/Canadian Airlines, Singapore owns 49% of Virgin Atlantic.

There are a lot of international tie-ups out there.



Tired of airline bankruptcies....EA/PA/TW and finally DL.
User currently offlineTWFirst From Vatican City, joined Apr 2000, 6346 posts, RR: 52
Reply 9, posted (7 years 7 months 2 weeks 6 days 22 hours ago) and read 4232 times:

Quoting Scotron11 (Reply 5):
Xenophobic claptrap

 Big grin Big grin Big grin

You got it!



An unexamined life isn't worth living.
User currently offlinePanHAM From Germany, joined May 2005, 9181 posts, RR: 29
Reply 10, posted (7 years 7 months 2 weeks 6 days 22 hours ago) and read 4223 times:

Quoting Jetdeltamsy (Reply 8):
There is KLM/Air France, Swiss/Lufthansa, Air Canada/Canadian Airlines, Singapore owns 49% of Virgin Atlantic

All these mergers and acquisitions are within the legal limits that allow continued operation under the agreements with third countries.

That is exactly the reason why KLM and Air France are still operating under separate names. Lufthansa has not merged with LX but acquired exactly the amount of shares legally possible without Swiss losing traffic rights.

The Air Canada/Canadian merger took place in Canada, a domestic affair. SAS is incorporated under a special treaty between the three Scandinavian states. The SQ ownership of VS stays within the legal limits of foreign ownership.

Once an open skies agreement is signed with the US. the negotiation of traffic rights will go from the single EU countries to the EU commission in Brussels. ÖLatest then, the AF/KL merger will be completed and more multinational mergers and acquisitions will take place. There will be no small state or government sponsored airlines any longer, simply because from that date on, any EU carrier can fly from any place in the EU to any place worldwide.

In reality, this will still be through the hubs, but airlines like LOT, Austrian, Malev, Alitalia will either be taken over completely by one of the big 3 or run as a dependent business unit.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 11, posted (7 years 7 months 2 weeks 6 days 21 hours ago) and read 4201 times:

Quoting Scotron11 (Reply 5):
An EU/US openskies deal would have erased a lot of restrictions but the US balked at raising the ownership/control to the same as EU because of opposition from politicians, unions and CO.

Not true. The US never considered changing (i.e. asking Congress to approve) a change to the ownership and control provisions in US law. The US Department of Transport considered changing how they interpreted the 'control' provisions of US law but they have dropped this now.

Quoting PanHAM (Reply 10):
Once an open skies agreement is signed with the US. the negotiation of traffic rights will go from the single EU countries to the EU commission in Brussels. Latest then, the AF/KL merger will be completed and more multinational mergers and acquisitions will take place. There will be no small state or government sponsored airlines any longer, simply because from that date on, any EU carrier can fly from any place in the EU to any place worldwide.

That will only occur once the air service agreements with ALL third countries has been completed. So far the EU has reached 'community air carrier' agreements with Chile, Paraguay, Morocco and some of the 'Stans', they have a long way to go.


User currently offlineCO767 From United States of America, joined Oct 2006, 44 posts, RR: 0
Reply 12, posted (7 years 7 months 2 weeks 6 days 21 hours ago) and read 4201 times:

You answered your own question, because it's international (in the USA of course). As already mentioned, KLM (the Netherlands) and Air Frace (France) have merged. But seeing how your from the U.S., i'm assuming your talking about American carriers.

U.S. carriers will merge with international carriers as soon as they all absorb into one gigantic, disfunctional and mis-managed carrier that insists on having the largest regional subsidiary on the planet. Wink

[Edited 2006-12-15 10:55:01]

User currently offlinePanHAM From Germany, joined May 2005, 9181 posts, RR: 29
Reply 13, posted (7 years 7 months 2 weeks 6 days 21 hours ago) and read 4199 times:

Quoting ANother (Reply 11):
That will only occur once the air service agreements with ALL third countries has been completed. So far the EU has reached 'community air carrier' agreements with Chile, Paraguay, Morocco and some of the 'Stans', they have a long way to g

It will happen very quickly once the EU/US open skies becomes reality, Brussels wants tp have its hands on everything.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 14, posted (7 years 7 months 2 weeks 6 days 20 hours ago) and read 4152 times:

Quoting PanHAM (Reply 13):
It will happen very quickly once the EU/US open skies becomes reality, Brussels wants tp have its hands on everything.

It, no doubt, will speed if (and I do mean IF) the EU/US open skies becomes a reality - but it is not a given that some of the more significant 'partners' will give this up easily.

Why, for example, would a country like South Africa want to allow any EU airline to fly from London to S. Africa? What's in it for them - possibly more tourists, but potentially at the cost of (higher paying) jobs at S. African airlines.

Don't get me wrong, I encourage each and everyone of them to throw these stupid rules into the rubbish bin, but, being realistic it isn't going to happen that fast.


User currently offlinePanHAM From Germany, joined May 2005, 9181 posts, RR: 29
Reply 15, posted (7 years 7 months 2 weeks 6 days 20 hours ago) and read 4144 times:

Quoting ANother (Reply 14):
Why, for example, would a country like South Africa want to allow any EU airline to fly from London to S. Africa? What's in it for them - possibly more tourists, but potentially at the cost of (higher paying) jobs at S. African airlines

sure, that's a point you have, however in reality it will be that the current hubs will keep their main tenants (or vv) AF/KL or LH would not fly LHR-JNB. Beeing part of an alliance is the betgter protection and the real "enemies" for SAA and other Africa airlines are the Gulf carriers with EK on top.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineAirCanada014 From Canada, joined Oct 2005, 1513 posts, RR: 0
Reply 16, posted (7 years 7 months 2 weeks 6 days 20 hours ago) and read 4135 times:

I would love to see AC and UA merge together, they would be a huge airline and allow two countries formed as one airspace and 8th freedom..

User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 17, posted (7 years 7 months 2 weeks 6 days 20 hours ago) and read 4135 times:

Quoting PanHAM (Reply 15):
Beeing part of an alliance is the betgter protection

Without the outdated ownership and control rules, there would be no need for alliances. (and no reason for regulators to give them anti-trust immunity)


User currently offlinePanHAM From Germany, joined May 2005, 9181 posts, RR: 29
Reply 18, posted (7 years 7 months 2 weeks 6 days 20 hours ago) and read 4127 times:

Quoting ANother (Reply 17):

Without the outdated ownership and control rules, there would be no need for alliances. (and no reason for regulators to give them anti-trust immunity)

I challenge that. Large mergers like an AC/UA or any other thinkable combination would still need clearance by the anti trust agencies of the EU and the US. Happens in other industries fequently, the reqason is that no single company should have market dominance.

If you want to know what would happen if we had an open skies agreement on a worldwide scale look at ocean shipping and holiday cruises. It is reality in that industry and now check how many US based container lines we have.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 19, posted (7 years 7 months 2 weeks 6 days 18 hours ago) and read 4072 times:

Quoting PanHAM (Reply 18):
If you want to know what would happen if we had an open skies agreement on a worldwide scale look at ocean shipping and holiday cruises.

Did you ever wonder why 'Alaska Cruises' sail from Vancouver, and not Seattle? Gee, the US has ownership and control rules (even worse that aviation) on ships sailing between two US ports. Ship must be owned by US citizens, ship must be crewed by US citizens, ship must be built in a US port.

Again - I favour 'more than' open skies, but I don't think we are going to get it.

Also I don't disagree that any/every merger would have to pass anti-trust scrutiny - my point was if they were allowed to merge, we wouldn't need alliances. If it were to be anti-competive from a merger perspective, the same analysis has to apply for an alliance agreement.


User currently offlinePanHAM From Germany, joined May 2005, 9181 posts, RR: 29
Reply 20, posted (7 years 7 months 2 weeks 6 days 17 hours ago) and read 4026 times:

Quoting ANother (Reply 19):
Also I don't disagree that any/every merger would have to pass anti-trust scrutiny - my point was if they were allowed to merge, we wouldn't need alliances. If it were to be anti-competive from a merger perspective, the same analysis has to apply for an alliance agreement.



Quoting ANother (Reply 19):
Also I don't disagree that any/every merger would have to pass anti-trust scrutiny - my point was if they were allowed to merge, we wouldn't need alliances. If it were to be anti-competive from a merger perspective, the same analysis has to apply for an alliance agreement.

I don't know the company size from which it applies, but when 2 IT firms in the US merge, the EU has to give their OK as well.

Seattle-Alaska would be a cabotage route which is not allowed and regulated by the unions, not by the government. The Caribbean cruises from Florida is lss restricted.

Back to air - as long as domestic services are involved, a global merger would not make sense. Such a company would be very difficult to manage, different cultures, different labour laws. That is problematic enough in Europe, let alone on a flobal scale. EK and SQ don't have to worry about domestic, they are pre-destined to become truly global airlines but will always concentrate on medium and long haul.

The alliances are perfect - by combining the strenght of various companies in marketing and purchasing, you get the economics of scale while you still maintain smaller managable business units working under local conditions.

Nothing new BTW, freight forwarders operated like that long before airlines adopted the idea.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 21, posted (7 years 7 months 2 weeks 6 days 16 hours ago) and read 4011 times:

Not true. The US never considered changing (i.e. asking Congress to approve) a change to the ownership and control provisions in US law.

I beg to differ. That was what the DOT was proposing, but it ran into so much opposition in congress they shelved the idea. Then, after the elections, they canned it all together. Oberstar was quite vocal in his opposition to this rule change.

Whatever the case, while the present executive branch would like an openskies deal and relaxation on foreign ownership laws, those "free traders" in congress will never allow it. But if UAL or someother US entity wanted to take over AZ, that's alright then!

But god forbid it took over a domestic one!


User currently offlineIADLHR From Italy, joined Apr 2005, 735 posts, RR: 0
Reply 22, posted (7 years 7 months 2 weeks 6 days 16 hours ago) and read 4004 times:

I think that with all the merger rumor talk, recently, in the USA and the threat of airline competition decreasing that Congress amy once again talk about and perhaps vote on increasing the foreign ownership levels in the USA.

I find it a bit interesting that the merger talks in the USA only intensified after congress put a stop to any change at all to the status quo.

So it could well be that the new congress, at least, debates this issue again. It just might the lesser of 2 evils.


User currently offlineSJCRRPAX From , joined Dec 1969, posts, RR:
Reply 23, posted (7 years 7 months 2 weeks 6 days 13 hours ago) and read 3953 times:

Quoting IADLHR (Reply 22):
I think that with all the merger rumor talk, recently, in the USA and the threat of airline competition decreasing that Congress amy once again talk about and perhaps vote on increasing the foreign ownership levels in the USA.

I find it a bit interesting that the merger talks in the USA only intensified after congress put a stop to any change at all to the status quo.

So it could well be that the new congress, at least, debates this issue again. It just might the lesser of 2 evils.

IMHO, I doubt it. Unlike most European countries the USA has a trade defecit with almost every country in the world, we almost don't make anything anymore, everything seems to come from China, our national corporations are trying to outsource every single job we have, we have had 12 million South Americans cross the border without permission to take all the low paying jobs and drive wages down further, we import 1/2 of our oil. So in short, the American public for the most part is tired of the Rich Cats trying to destroy the jobs and lives of the ordinary guy and think this "internationalization" has gone far enough and have started to elect people who don't want to go down the road of destroying our civil aviation by letting Europeans get a piece of the pie. Enough is Enough and we ain't gonna take it no more and with the Democrats in control there is very little chance you will see ownership rules change. Why don't the European companies go try to buy up the Chinese airlines or something?


User currently offlineANstar From United Kingdom, joined Nov 2003, 5176 posts, RR: 6
Reply 24, posted (7 years 7 months 2 weeks 6 days 13 hours ago) and read 3944 times:

Air NZ and Ansett tried it a few years back and we know how that one ended up.

25 PavlovsDog : British Midland is largely owned by Lufthansa and Spaniair by SAS. Iberia owned Aerolineas Argentinas for a while. It is still in Spanish ownership if
26 Post contains links ANother : "The Jones Act (aka Merchant Marine Act) is a United States Federal statute that requires U.S.-flagged vessels to be built in the United States, owne
27 SJCRRPAX : This is a great law. If we didn't have this law our ship building industry would be non existant, which we need for our national defense. If we didn'
28 Stirling : We already have International Airline Mergers. They are called Star, SkyTeam, and OneWorld. It is not just about corralling Frequent Flyer programs in
29 PanHAM : LH is not happy with that investment. LX and Air Dolomiti work much better for them. But these are strategic investments, alliances are the answer. J
30 Stirling : They control capacity, which in turn dictates demand and the end-price to the consumer. I am afraid I don't understand the question. No, it prevents
31 Jimyvr : That's because Mr. Bishop still decides what to do with bmi and obviously he has no clue what's going on. LH have major say in LX and EN so it went w
32 PanHAM : ehh, rather not. They are independent companies and each company CEO is responsible to his share holders which also means they have to avoid everythi
33 Bobnwa : Our ship building industry is already virtually non existent. How many large cruise ships, tankers or container ships have been built in the U.S. rec
34 Post contains images AirCanada014 : Lets have North American Union one airspace for Canada, USA and Mexico. Then it would be a challenging allow AC and UA merge along with CO
35 Post contains images USADreamliner : George W., is that you..? Ha,ha,ha this was a simple question, and as usual, it ended up like this...
36 SJCRRPAX : Obviously not, as George W. is a free trader, let the best economy win, who cares about U.S. Jobs, if you can't compete you shouldn't be in the game,
37 FlyboyOz : Qantas and Air New Zealand were trying to merge together but the Australia and NZ governements say "NO"
38 ANother : Not a merger. This from NZ Commerce Commission website: On 9 December 2002 the Commerce Commission (the Commission) received two interdependent appli
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