Not so bleak future

Wed, July 28, 2010
World Business Press Online
LONDON


The European Commission's ruling that deal between United and Continental does not affect competition, helps both companies in the US too. The US anti-trust authorities must take into consideration a simple fact, stressed by Brussels: the market shares increase only slightly for both companies' networks are complementary.

Their hubs are in different US cities. If the deal is approved, American Airlines will sink into No 3 position in the US ,pushing the company to find its partner too. There is more money for the consolidation in the industry as the post-recession business travel revives. The fear of terrorism and costs brought on by an Icelandic volcano only add to the whole process. Smaller airlines will benefit too, given they survive.

Merged carriers are usually smaller than the two separate carriers, so there will be more space for other airlines as well. The profits should be driven by higher costs of the tickets next year as well as by the savings associated with less flying after the mergers. Traffic is slowly picking up and this, along with an open minded approach from the anti-trust authorities, makes the future of both US and European airlines, less bleak than we thought just months ago.

Milan Sebo

PHOTO: ISIFA

 
 
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