Aviation Platform

Airline Consolidation

Airline consolidation or just plain working together on a greater scale - because on your own you struggle and possibly drown - is not new, but certainly is considered more during economic downturn. During these periods of downturn airlines tend to focus on operations and cost, during positive periods airlines focus on service and revenue.

Source: IATA

The current economic downturn has made the aviation industry search for options for survival, one option is consolidation. More and more we see forced consolidation due to financial difficulties, wherein mergers and acquisitions are used as a last resort to survive, instead of an opportunity when all is well.

So what consolidation can we distinguish, there are operational partnerships for instance on maintenance or ground handling services, there are the commercial alliances where code sharing and common branding is applied and the financial consolidation with mergers and acquisition of the other airline. The last one is the most difficult as this involves regulation from different countries, politics, and cultural differences and more challenges facing this type of consolidation.

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The missing pillar in sustainability

In the dictionary the definition of sustainability is “capable of being sustain”. This refers to sustainable projects that can continue into the future and go on forever. Airports want to accomplish the same and need to be one step ahead of the competition. Therefore sustainable airports are the future, but what is needed to apply sustainability at an airport?

Sustainability exist out of three pillars; environment-, economy- and a social aspect. Most often airports focus immediately on the environment, because aviation in popularly is a polluting transport mobility because of the use of fossil fuel and therefor the aircraft emissions CO2. Researching sustainable aviation, lots of journals use Biofuel as a topic. The focus is on the aircraft that pollute, not on the changes that can be made within, for instance the terminal building.

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Possible solution for full service carriers? If you can’t beat the low cost carriers, join them?

The position of the low cost carriers (LCC’s) is undeniable. Especially here in Europe, Ryanair and Easyjet are daily found in aviation news. Many of my friends have travelled by plane, but only half of them has ever flown with a full service carrier. Especially the friends who aren't interested in aviation, they just want to fly with the cheapest airline, they don’t care about the rest. And that is what makes LCC’s so strong in today´s society. On non-business related short haul flights, passengers hardly care whether they get extra service or not, as long as they can save that extra ten euro’s. The old FSC’s like Airfrance/KLM can no longer deny it.

The start of Easyjet and the start of the new market strategy of Ryanair was the mark of a new era in the aviation world. While the FSC’s and flag carriers like Airfrance/KLM and British Airways just stood there and watched, as the LCC’s grew exponential. There was nothing they could do against it. This whole LCC market was made possible by the 7th freedom of the air within European Union: cabotage. Cabotage is when a company from one country, for example Ireland (Ryanair), is allowed to exploit profitable flights from a different country (Germany) to another country (Hungary), without making a stop in the company’s home country. This opened up an entire continent for the market of LCC’s.

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Wi-Fi, airlines must have!

The in-flight connectivity has developed in a gather demanding market, and airlines now have a wide range of options for the systems they can install on their aircraft to give passengers in-flight Wi-Fi. The Washington DC writer, Kristin Majcher, wrote an articleabout how airlines are now hunting for Wi-Fi for their fleet. Over the last years, passengers started bringing more types of personal electronic devices on board and the demand to stay connected while traveling has grown. Therefore, airlines are choosing to install Wi-Fi regardless of whether it comes packaged with an embedded IFE system or not.  

Since the demand for Wi-Fi is very high, surprisingly only about 16% of the world's global commercial fleet in 2012 provides passengers with connectivity and is expected to grow to 23% in 2016 according to a recent market report from UK-based consultancy IMDC.

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