Airline consolidation
The inevitable is here: After years of declining revenue, 9/11 and rising fuel prices, the airline industry now has few options to survive. America West and US Airways just announced their intention to merge operations. Rumors are abound that American could be a takeover target. Regardless, we will see 1-3 more merger announcements between this year and next as the airlines battle for survival and profitability. However, the question remains: Will consolidation be enough? Delta’s survival plan hinged upon their cutting fares, and eliminating Saturday night stay overs–yet, that failed, too.
Where is this industry headed? Within the next 10 years, the airline industry will face a massive overhaul. Low-cost carriers JetBlue and Southwest will also be forced to change their current models to compete with upcoming regional carriers which will greatly impact their businesses. Only the leanest, fittest, and most agile will survive what is bound to be a huge shakeout.
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