The forces of consolidation are about to hit the global airline industry. Rising jet fuel costs and the increasing need to maximise profits by capturing market share means a period of furious mergers and acquisition activity looks inevitable, according to analysts.
British Airways (BA) and the Dutch carrier KLM have confirmed they are in merger talks, while, in the United States, United Airlines has tabled a bid for US Airways Group and Continental Airlines has admitted 'discussing the possible consolidation of the industry' with rival Delta Air Lines.
'We are going to see increasing consolidation in the US and separately in Europe,' said Robin Horne, airlines analyst at HSBC Securities.
The catalyst for the change arguably found its origins in two virtually simultaneous events taking place on either side of the world: the Asian financial crisis triggered by the collapse of the Thai baht in July 1997 and the unprecedented deregulation in Europe ahead of the launch of the single currency.
Daniel Solon, a senior associate at Avmark International, a London-based aviation consultancy, said the financial crisis meant that airlines suddenly found themselves with empty seats on Asian routes.
'What had been something of a candy store for East Asian-based carriers and airlines such as United Airlines and Northwest Airlines because of their trans-Pacific routes, suddenly came to an end,' Mr Solon said.