Gonzalo
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The Next Big "consolidation" In The Industry?

Tue Jun 26, 2012 1:54 pm

In the recent years we have an outbreak of mergers and, like the CEOs like to say, "consolidations" in the industry, with UA/CO, AF/KL , IB/BA, LA/JJ, and so on. I'm not an expert but apparently this is the tendency in order to survive in a very competitive world, specially in an industry that suffers with a lot of factors ( oil, volcanoes, flu, economic crisis, competition ).
So, assuming this is the future, where ( or who ) do you think will be the next major mergers between big carriers ?
Besides the USA carriers ( where there is a lot of noise with AA/US ), Is it possible to think in a EK/EY/QR merger ?
Or a new entity with SQ/QF ?

Thoughts ?

Rgds.

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mikey72
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RE: The Next Big "consolidation" In The Industry?

Tue Jun 26, 2012 2:07 pm

One of the middle eastern carriers is going to get into bed with..............

(tune in tomorrow for the next exciting episode)

Would be my bet anyway.
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
flyingcat
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RE: The Next Big "consolidation" In The Industry?

Tue Jun 26, 2012 9:17 pm

Foreign ownership will no doubt come up if AA, UA or DL have a bad enough run that their alliance has to save them.

It seems that for now the Euro carriers are in more trouble but most of the issues they face are not legal but those of pride.
 
Phen
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RE: The Next Big "consolidation" In The Industry?

Tue Jun 26, 2012 9:26 pm

Quoting mikey72 (Reply 1):
One of the middle eastern carriers is going to get into bed with..............

Watch out for an EY/EI tie-up, EY already own 3% of EI and word has it would like to own more...
 
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Coal
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RE: The Next Big "consolidation" In The Industry?

Tue Jun 26, 2012 11:13 pm

Quoting Gonzalo (Thread starter):
SQ/QF

  

Surely you mean MH, not SQ.

Cheers
Coal
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mayor
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RE: The Next Big "consolidation" In The Industry?

Tue Jun 26, 2012 11:19 pm

Quoting flyingcaT (Reply 2):
Foreign ownership will no doubt come up if AA, UA or DL have a bad enough run that their alliance has to save them.

Not as long as there's a restriction on foreign ownership in the U.S.
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bhmdiversion
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RE: The Next Big "consolidation" In The Industry?

Tue Jun 26, 2012 11:34 pm

I'd say that several US Regional carriers close up shop... That's my honest opinion...
 
Gonzalo
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RE: The Next Big "consolidation" In The Industry?

Tue Jun 26, 2012 11:58 pm

Quoting Coal (Reply 4):
Surely you mean MH, not SQ.

Everything is possible. What it seems like total craziness today could be the best option in a few years if some holes in the cheese are properly aligned. Obviously some moves are more logical or expected, but I never say never.

Personally I'm not a big fan of mergers, I love to see competition and I would like more players in the field over a few big giants fighting, but some times the ( economic ) reality is the boss.

Rgds.

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9252fly
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 12:29 am

Quoting bhmdiversion (Reply 6):
I'd say that several US Regional carriers close up shop... That's my honest opinion...

I see it as more consolidation for the regional carriers. It's a tough business with tight margins,if any.
 
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aerorobnz
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 7:28 am

I think that Europe is where the next major consolidation/s will happen - it was very evident on a recent 6 week spotting tour of Europe how quiet the airports like BCN/ZRH/FRA/AMS/CDG/ORY have become and how many flights have already been reduced. I think it will only become worse with all Eurozone problems.

One thing I think should happen is carriers like LX and OS should be absorbed fully into LH financial results & fleets and smaller carriers like SAS/Croatia/Aegean/Adria/LOT potentially as well. Then they could be incorporated/downsized into the larger airline's regional carriers and flights/aircraft types rationalized so that they are not flying duplicate flights on routes already flown even more than they are already. Effectively this would mean they are only operating as fully integrated feeder carriers for LH and as such any future aircraft orders made from the combined group not from an individual brand, and that any aircraft in the fleet could be chopped and changed if one regional carrier was underperforming or needing extra capacity.. I would envisage that the non local airline would pull out of routes to allow the local brand to maintain flights and any remaining national pride. All aircraft would have "Operating on behalf of Lufthansa or something on the aircraft but maintain overall liveries.

I used the star alliance as the example only.
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Burkhard
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 8:16 am

I agree that consolidation will be in Europe over the next years, and predict that in ten years there will be only three network carriers left:
LH (including LX, SN, OS?, ...?)
AF (including KL, AZ, OK?,...?)
BA (including IB,AB?...?)

This process will largely go along the current alliances, but also have some surprises. Mergers need money and financing, and a solid banking sector that can do its job and not only burn hundred billions of tax money. So I expect consolidation of the banks to happen faster.
 
Sean-SAN-
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 8:35 am

Most likely will be HA/AS merging, branding will be maintained between island/mainland but the company will run as a combined entity.
 
mikey72
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 9:06 am

Nobody knows what's going to happen in Europe, the EU the Euro etc

We can't make any predictions on anything let alone its airlines until the dust cloud (from an explosion that hasn't even happened yet) has settled. Let's just hope it is an explosion that improves matters.

The trouble with the 3 alliances and in some cases a few of the mergers is that their members are beginning to resemble married couples that are growing apart.

What seemed like common sense and worked when they were formed in some cases appears not such a good idea now.

(through no fault of any particular airline...........it's just the way things have 'panned' out)

Impossible I know but it's a shame the situation cannot be more fluid and more adaptable to outside change so every airline involved in Star, Sky and One can wring the most out of what is available and each other in their partnerships.

We live in exciting (not always in a good way) times.

Fingers crossed but the whole damn thing is like LHR at Easter (strung out with the reserve tank empty)....one unexpected event (natural, economic, terrorism etc) and the whole edifice will collapse.

Like I said...fingers crossed.
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magpie75
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 12:29 pm

How about a QF, SQ & NZ alliance , that would keep the middle Easters at bay for a little longer!
 
Burkhard
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 12:48 pm

Quoting magpie75 (Reply 13):
How about a QF, SQ & NZ alliance , that would keep the middle Easters at bay for a little longer!

How would it? Removing competition between them would strengthen the middle Easters...
 
airbazar
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 1:48 pm

Quoting mikey72 (Reply 12):
We can't make any predictions on anything let alone its airlines until the dust cloud (from an explosion that hasn't even happened yet) has settled. Let's just hope it is an explosion that improves matters.

But there is one major airline that has a significant part of it's business outside of the EU and Euro: LH operated by LX  
 
mikey72
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 2:04 pm

Quoting airbazar (Reply 15):
But there is one major airline that has a significant part of it's business outside of the EU and Euro: LH operated by LX

Not sure I follow...........
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A388
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 2:12 pm

I also see Europe as the next and probably only continent where more consolidation will happen in the coming years. Asia in my opinion will remain as it is as I don't see any of the big players there wanting to consolidate (due to pride issues).

The Middle Eastern carriers in my opinion will also not merge because they all have big growth ambitions each. Unless one of the airlines in this region is going downhill faster than speedy gonzales, I don't see consolidation happening there in the foreseeable future but Europe, yes (in my opinion the Scandinavian region is the next target).

A388
 
time2lyme
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 2:12 pm

Quoting aerorobnz (Reply 9):
it was very evident on a recent 6 week spotting tour of Europe how quiet the airports like BCN/ZRH/FRA/AMS/CDG/ORY have become

Are you nuts?  Wow! I've recently been in FRA, ZRH and CGN and they were buzzing.

Try and book a flight to virtually anywhere in Europe from the UK 4 weeks in advance, and you'll get a nice cheap flight. Try doing so within a week of travel and you might as well stick to a major
I've seen business class seats cheaper than cattle class  

Get yourself on a flight - and it's FULL !!

Europe might be suffering, but the UK has gone mad !   
 
Ezra
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 2:14 pm

Quoting mikey72 (Reply 16):
Quoting airbazar (Reply 15):
But there is one major airline that has a significant part of it's business outside of the EU and Euro: LH operated by LX

Not sure I follow...........

Switzerland isn't part of the Eurozone.
 
mikey72
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 2:21 pm

Quoting Ezra (Reply 19):
Switzerland isn't part of the Eurozone.

Oh if only it were that easy !
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
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aerorobnz
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 6:30 pm

Quoting time2lyme (Reply 18):
Are you nuts?   I've recently been in FRA, ZRH and CGN and they were buzzing.

Busy, but not by comparison to previous visits. ZRH has not dropped back too much but FRA you could see the difference.

Quoting time2lyme (Reply 18):
Get yourself on a flight - and it's FULL !!

That is because they have reduced so many flights a) frequency b) aircraft size.
Flown to 120 Airports in 44 Countries on 73 Operators. Visited 55 Countries and counting. Wanderlust is like Syphilis, once you have the itch it's too late for treatment.
 
jfk777
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 6:54 pm

The last two single Latin Amerian airlines, Copa merges with AeroMexico. Or Copa merges with LAN, but Copa's single days are over, the Panama hub is just to wonderful to be part of a small airline.
 
mogandoCI
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 7:37 pm

Quoting A388 (Reply 17):
Asia in my opinion will remain as it is as I don't see any of the big players there wanting to consolidate (due to pride issues).

Most of the major East Asian airlines have top notch seats, lounges, and service. Japan, Korea, and Taiwan each have 2 large carriers, yet none of them are focused on the race-to-the-bottom like the jaded US aviation industry wants you to believe is inevitable.

As an example - all of them refuse to move to 3-4-3 on their 777s despite oil being so high. They're not stupid at math, but they know there's a fine line between lowering CASM and turning themselves into a long-haul Ryanair.

As long as you're service focused and making money, there's no pressing need to consolidate.
 
Gonzalo
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 7:40 pm

Quoting jfk777 (Reply 22):
Or Copa merges with LAN

I don't see LAN buying any airline ( like Copa or Pluna ) in the foreseeable future, they are focused in the LATAM project and IMHO they are not interested in new adventures until the integration with JJ is totally consolidated.

Rgds.

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mogandoCI
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 8:30 pm

Quoting Gonzalo (Reply 24):
I don't see LAN buying any airline ( like Copa or Pluna ) in the foreseeable future, they are focused in the LATAM project and IMHO they are not interested in new adventures until the integration with JJ is totally consolidated.

Even if they're totally done with JJ, I don't think Pluna is an attractive partner at all.

As for Copa, I thought it started as a central American arm of the old Continental Airlines, and the new UA still own some portion of it. Can't imagine them leaking to LAN. But I can envision if Avianca-Taca merge with Copa.
 
civetfive
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 10:06 pm

Quoting mikey72 (Reply 20):

well that, and the fact that LH indicated LX was outperforming the rest of the network for good parts of the last few years.

Both MUC and ZRH are similar sized, can serve approximately the same medium-haul and long-haul traffic flows, and both have good O&D to support. But does LH really need 2 hubs like that side by side?

My guess is no, they would rather consolidate at ZRH, but MUC has the capacity that ZRH doesn't, so they have to keep both as-is for now.
 
planemaker
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RE: The Next Big "consolidation" In The Industry?

Wed Jun 27, 2012 11:55 pm

Lot's of good points presented and I would venture along the lines that there will be ongoing consolidation in fits and starts until the airline industry starts to resemble most major global industries. As someone pointed out, a lot has to do with national "pride" (and politics, of course) that we still have so many carriers. There is an incredible amount of waste and duplication... not differentiating among the different categories but I think there are about 240 IATA airline members... definitely ripe for consolidation.
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RE: The Next Big "consolidation" In The Industry?

Thu Jun 28, 2012 2:07 am

I have a few ideas for fun, almost all in threes:

- ME and CY, with CY running the show. ME would become an integral part of an EU carrier, which could then merge with A3. That would create a strong portfolio of destinations in Southern Europe, the Middle East as well as the business markets in Germany, France and England. Long-haul flying would potentially grow from ATH/BEY/LCA as a result of the merger.

- There needs to be more consolidation in Eastern Europe. I'm thinking OK could start by merging with RO. Then we might see that group merge with LO, but I'm not sure who in that bunch has that kind of money. We might see OK fail first for some reason; I'm not too optimistic about the PRG hub with it being so close to FRA and MUC. Even OS has a hard time making VIE profitable.

- HA and AS will happen, it's just a matter of time. But then they might be tempted to merge with B6. Or get bought by the newly invigorated, independent AA. DL might be better given its flying between Hawaii and Japan, but DL might not want such a combination for that very reason.

- SK and AY, then SK/AY as a part of LH.

- TP with AF/KL after AF/KL/AZ. AF doesn't seem to want this, but I don't see TP on its own for much longer.
 
Viscount724
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RE: The Next Big "consolidation" In The Industry?

Thu Jun 28, 2012 2:20 am

Quoting aerorobnz (Reply 21):
Quoting time2lyme (Reply 18):
Are you nuts? I've recently been in FRA, ZRH and CGN and they were buzzing.

Busy, but not by comparison to previous visits. ZRH has not dropped back too much but FRA you could see the difference.

Your impression of FRA isn't confirmed by recent statistics. For example, total passenger traffic at FRA for the month of May 2012 was up 1.4% over the same month last year, and was an all-time record for the month of May.
 
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kordcj
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RE: The Next Big "consolidation" In The Industry?

Thu Jun 28, 2012 2:41 am

What about the possibility of NH/OZ?
A NZ/VA might be good too but I'm not sure their governments would allow such a venture. Maybe they could do something like LA/JJ did.
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TWA772LR
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RE: The Next Big "consolidation" In The Industry?

Thu Jun 28, 2012 3:01 am

Quoting mogandoCI (Reply 25):

Copa started as an independant airline. Then when Bethune took over CO, CO pumped lots of cash into Copa to make it what it is to day. I could see Copa merging with UA, if intl. laws approve, in the far future. Also, a PLUNA Copa merger would be a huge one too because it would give one of the best airlines in the Americas a much larger foothold and hub in the South American continent. Of course I don't even think this will happen until like 15, 20, or even 30 years down the road...
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aerorobnz
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RE: The Next Big "consolidation" In The Industry?

Thu Jun 28, 2012 3:03 am

Quoting Viscount724 (Reply 29):
total passenger traffic at FRA for the month of May 2012 was up 1.4% over the same month last year,

Aircraft movements at FRA dropped by 0.4 percent for the same period. fewer flights that are fuller in other words. So my impression is quite correct.
Flown to 120 Airports in 44 Countries on 73 Operators. Visited 55 Countries and counting. Wanderlust is like Syphilis, once you have the itch it's too late for treatment.
 
Gonzalo
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RE: The Next Big "consolidation" In The Industry?

Thu Jun 28, 2012 12:10 pm

Quoting TWA772LR (Reply 31):
Also, a PLUNA Copa merger would be a huge one too because it would give one of the best airlines in the Americas a much larger foothold and hub in the South American continent. Of course I don't even think this will happen until like 15, 20, or even 30 years down the road...

Pluna is trying to survive for the next 15,20 or 30 months.....in 15 years could be a giant ( if they do very big changes and got a good share of Luck ) or just bones six feet under ( as a national of Uruguay I don't want that, but sometimes is really hard to "believe" in Pluna as a viable business ).

Quoting aerorobnz (Reply 32):
Quoting Viscount724 (Reply 29):total passenger traffic at FRA for the month of May 2012 was up 1.4% over the same month last year,
Aircraft movements at FRA dropped by 0.4 percent for the same period. fewer flights that are fuller in other words. So my impression is quite correct.

With all due respect, for an airport of the size of FRA, +1.4 or -0.4 % variations are less than marginal, the overall situation looks pretty "stable" to me.

Rgds.

G.
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Rara
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RE: The Next Big "consolidation" In The Industry?

Thu Jun 28, 2012 4:43 pm

Quoting aerorobnz (Reply 32):

Aircraft movements at FRA dropped by 0.4 percent for the same period. fewer flights that are fuller in other words. So my impression is quite correct.

Your impression is quite wrong. Nearly all German airports operate at record numbers, i.e. never in history have they handled so many flights and passengers. However, if you're in all seriousness telling us that you can detect a 0.4% change in flight numbers by simply passing through the airport, then you may know a lot more than simple numbers can tell us..



[Edited 2012-06-28 09:44:36]
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Viscount724
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RE: The Next Big "consolidation" In The Industry?

Thu Jun 28, 2012 9:13 pm

Quoting aerorobnz (Reply 32):
Quoting Viscount724 (Reply 29):
total passenger traffic at FRA for the month of May 2012 was up 1.4% over the same month last year,

Aircraft movements at FRA dropped by 0.4 percent for the same period. fewer flights that are fuller in other words. So my impression is quite correct.

A drop of 0.4% in movements at FRA equates to roughly 3 takeoffs and 3 landings a day. I can't believe that such a tiny change would be "very evident" to you at an airport that handles close to 1,400 movements a day.