Airline mergers are not good news for consumers
By Darren Cronian on Saturday, November 1st, 2008

I do not think that the merger of airlines is good news for consumers. This week you may have heard that German airline Lufthansa has taken over British airline BMI. This will surely mean in the long term that we will see routes being withdrawn, giving consumers less choice.

Airline mergers are not good news for consumers

Will this mean less competition equals higher prices?

Choice for long haul flights affected

For short haul European destinations, the low cost carriers will plug this gap in choice, but will consumers wanting to travel long haul find less choice to destinations such as the United States and the Caribbean islands.

Inevitable airlines will merge

It is inevitable that airlines will merge as the airlines struggle with reducing passenger numbers and the fluctuations in the price of oil. Rising fuel costs have led to a number of airlines seeking ties with competitors, such as British Airways plans to tie-up with American Airlines.

It will not surprise me if we hear of more airline mergers during the winter.

Expanding our airports is not the answer

Then there is a lot of talk about expanding Heathrow and other airports but surely this is this not a good time considering the increase in airlines going into administration, airline mergers and surely passenger numbers are likely to reduce as people cut back on their spending.

Let me know what you think.


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4 responses to “Airline mergers are not good news for consumers”

Andy Hayes | 2 November, 2008 at 1:19 am

Given that the airlines don’t seem to be able to find a middle-ground where the industry is sustainable in good times and bad, it seems the cycle continues to ebb and flow. Consolidation will happen, consumers will loose.. then in the good times new entrants will come in with rose-coloured glasses. Consumers rejoice, enjoy the good times, then bad times come and ….

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Darren Cronian | 3 November, 2008 at 2:13 am

@ Andy

Good point. Do you think we will see ‘good times’ again though?

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Nick | 3 November, 2008 at 1:27 pm

Darren

Same queston is asked every 10 – 15 years….. so I am guessing like the last 4 times “good times will come round again”

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Kevin May | 3 November, 2008 at 9:53 pm

As i’ve said on here before, Darren, it’s a natural correction in the market.

It’s like someone picks up the industry and gives it a big shake – some things survive, those that aren’t hanging on enough will fall by the wayside.

Consumers, generally, have had it very good for a ling time in terms of prices, especially with flights, where routes along the Long Tail have sprung up. It is worth remembering that consumers still managed to take a holiday before routes from, for example, Tyne-Tees to La Rochelle materialised for (primarily) second homeowners.

However, you say that airline mergers will not be good for consumers. Not sure i understand the economics of why you say that.

If a merger means that two airlines which are inefficient individually and on the verge of collapse but then come together, make savings and ultimately survive, then i suspect that is A Good Thing for consumers.

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