flymusic
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Can 2 International Airlines Merge?

Sun May 22, 2005 3:42 am

This might be a dumb question, and please forgive me if this has been posted before. But is it possible that 2 airlines from 2 different countries merge? For example: United & Lufthansa, Cathay Pacific& British Airways. You get the idea.
And if this would be possible, what would be the consequences for every other airline?

[Edited 2005-05-21 20:59:27]
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PA006
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 3:44 am

2 international airlines merging: AF and KLM?
 
oldeuropean
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 3:50 am

Quoting Flymusic (Thread starter):
For example: United & Lufthansa

Yes like Daimler-Chrysler! Why not? If it makes economically sense.

Axel
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GuyBetsy1
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 3:52 am

Air France + UTA French Airlines
British Airways + British Caledonian

X-country:
Air France + KLM
Lufthansa + Swiss

Or do you mean an international OVERSEAS airline plus a US one?
 
stirling
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 3:53 am

Ownership laws in US currently prohibit foreign investment above 1/4.
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dtwclipper
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 3:54 am

No, "The US limits the amount of foreign ownership in its domestic airlines to a maximum of 49%, with a maximum of 25% control.

Most other countries have similar protective provisions limiting ownership of their airlines, but there are some notable exceptions - for example, the Australian government allowed Sir Richard Branson to start up an airline called Virgin Blue. In return for this permission, Sir Richard had to agree that the airline would be incorporated in Australia under Australian law, and that it would be staffed and managed by Australians, and have an Australian board of directors. The net result has been tremendously beneficial to the Australian public, while the major carrier (Qantas) does not seem to have been unduly harmed, either
The restrictions on international ownership of US airlines are a historical remnant of a different era. Their origins date back to the days of sailing ships in the 19th century. During the period of airline regulation they were of course extended, and since then these restrictions have been perpetuated primarily due to the political fact that US airlines are a very effective lobbying group, whereas international investors have virtually no lobbying clout in Washington.

There are actually two very different restrictions that prevent a full open market for airlines in the US at present. Opponents of an open market have tended to try and mix together the 'worst' of each issue as support for their opposition to the other concept.

http://www.thetravelinsider.info/2003/0404.htm

[Edited 2005-05-21 20:55:25]
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avek00
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 4:05 am

I support a modification of the existing rules to permit 49% equity and 49% control of a US airline, as well as limited cabotage rights, all on the basis of reciprocity with an Open Skies agreement being a mandatory prerequisite to any such allowances. Majority ownership/control and full cabotage are unacceptable given the relative size and lucrative potential of the US aviation market relative to most others - the US side would experience a net loss from any such reciprocal arrangement.
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exFATboy
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 4:08 am

I'd support that, but also would support - as long as it was reciprocal - allowing 100% ownership and control by Canadian airlines. Given the nature of the US/Canada market and relationship, I think this would be reasonable.
 
avek00
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 4:12 am

Quoting ExFATboy (Reply 7):
I'd support that, but also would support - as long as it was reciprocal - allowing 100% ownership and control by Canadian airlines. Given the nature of the US/Canada market and relationship, I think this would be reasonable.

Sounds fair and reasonable.
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juanchito
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 5:26 am

Aviateca, Taca, Nica, Taca Honduras and Lacsa merge and created Grupo Taca.

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SLC1
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 8:37 am

Here's a question I have:

If there were some airline-owning billionaire with a whole crapload of money, who happened to have dual citizenship, in say Germany and the United states, theoretically, could he merge his airline and say, Spirit together?
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allstarflyer
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 8:59 am

Quoting SLC1 (Reply 10):
Here's a question I have:

If there were some airline-owning billionaire with a whole crapload of money, who happened to have dual citizenship, in say Germany and the United states, theoretically, could he merge his airline and say, Spirit together?

Under that line of thought, I would conclude that the said billionaire would be able to invest up to 100% in each country's respective airline, but, due to the laws (of those countries, in particular), that billionaire would not be able to merge them, but would have significant advantages through codeshares and a single FF mile program for both.

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CXYYZ
Posts: 177
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RE: Can 2 International Airlines Merge?

Sun May 22, 2005 9:29 am

Quoting SLC1 (Reply 10):
If there were some airline-owning billionaire with a whole crapload of money, who happened to have dual citizenship, in say Germany and the United states, theoretically, could he merge his airline and say, Spirit together?

As Allstarflyer said, I think a merger of two such airlines would be impossible. That said, Hong Kong billionaire Victor Li was very much interested in taking control of AC during its restructuring. Because he has Canadian citizenship, this wouldn't have posed a legal problem even though he would have been calling the shots from HK.

Quoting ExFATboy (Reply 7):
I'd support that, but also would support - as long as it was reciprocal - allowing 100% ownership and control by Canadian airlines. Given the nature of the US/Canada market and relationship, I think this would be reasonable.

This is talked about relatively frequently in Canadian business and aviation circles. I think there is general support for such a move in Canada on the condition that it is reciprocal.

The US government (congress especially - though at the executive branch too) is defying WTO and NAFTA rulings on a number of trade matters right now though. It seems that the Canadian government is more worried about other issues such as softwood lumber, energy and beef rather than opening up a new round of open skies talks. Then there's the issue of the election that has been promised within a year up here.

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