Airline consolidation reducing airports’ negotiating power: Accepting low-cost airlines and expanding into Asia will restore power balance dynamics
Airline consolidation reducing airports’ negotiating power: Accepting low-cost airlines and expanding into Asia will restore power balance dynamics
Summary
Consolidation in the airline industry is reducing their reliance on airports. Airports will have to diversify their operations abroad and welcome low-cost airlines to negate this power imbalance.
In the year 2000 for example, the top four players in the US airline industry had a combined market share of 61%. By 2015 the top four players namely American Airlines, Delta Air Lines, Southwest Airlines and United Continental had a combined share of 84%.
Airports Council International (ACI) Europe head Olivier Jankovec speaking on this issue stated that "Consolidation means less airlines in the market to chase, to serve your airport and open destinations. It also gives airlines more purchasing power, more power to dictate the conditions under which they serve an airport. An airport cannot move, [but] an airline can move to another location”.
The balance of power between airports and airlines has increasingly been tilting towards airlines in recent years, as their consolidated nature has allowed them to dictate terms more so than airports. However airports can negate this tilt by themselves expanding their operations to other parts of the world, thereby reducing their reliance on a select few airlines.
Scope
- Examines the state of the airline and airport industries
- Explains why the airline industry is witnessing consolidation
- Analyzis the impact airline consolidation is having on the airport industry
- Explores ways in which airports can reduce their reliance on a few airlines
Reasons to buy
- Why is consolidation occuring in the airlines industry?
- How is this impacting the airport industry?
- How can the airport industry respond and restore power balance with the airlines industry?
Summary
Consolidation in the airline industry is reducing their reliance on airports. Airports will have to diversify their operations abroad and welcome low-cost airlines to negate this power imbalance.
In the year 2000 for example, the top four players in the US airline industry had a combined market share of 61%. By 2015 the top four players namely American Airlines, Delta Air Lines, Southwest Airlines and United Continental had a combined share of 84%.
Airports Council International (ACI) Europe head Olivier Jankovec speaking on this issue stated that "Consolidation means less airlines in the market to chase, to serve your airport and open destinations. It also gives airlines more purchasing power, more power to dictate the conditions under which they serve an airport. An airport cannot move, [but] an airline can move to another location”.
The balance of power between airports and airlines has increasingly been tilting towards airlines in recent years, as their consolidated nature has allowed them to dictate terms more so than airports. However airports can negate this tilt by themselves expanding their operations to other parts of the world, thereby reducing their reliance on a select few airlines.
Scope
- Examines the state of the airline and airport industries
- Explains why the airline industry is witnessing consolidation
- Analyzis the impact airline consolidation is having on the airport industry
- Explores ways in which airports can reduce their reliance on a few airlines
Reasons to buy
- Why is consolidation occuring in the airlines industry?
- How is this impacting the airport industry?
- How can the airport industry respond and restore power balance with the airlines industry?
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