Consolidating miles in airline mergers

Yet, resistance continues, despite the fact that European consolidation need not and probably won’t mirror American restructuring.

The European difference First, for even the weakest European airlines, valuations are nowhere near the distressed levels that some US carriers faced a decade ago.

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.

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.

Today, the top five intra-North American carriers command a 77 percent market share versus a 51 percent market share for the top five intra-European airlines.

And that difference explains in large part why the American industry enjoys steady profitability and impressive capacity discipline, while Europe’s doesn’t.

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The merged Avianca operations became a pan-Latin American network carrier after addressing the daunting challenge of migrating six airlines into a single modern maintenance and engineering organization.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.For too long, some carrier groups have passed up what should be the most valuable, if challenging, points of integration.Many have allowed customer experience, operations, and technology guidelines and mandates to be set and managed by the various operating carriers in their group rather than by the consolidated management.

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