Ask the Editors: The Aviation Week Network invites our readers to submit questions to our editors and analysts. We’ll answer them, and if we can’t we’ll reach out to our wide network of experts for advice.
What is your view on likely consolidation in the airline sector?
Air Transport World Editor-In-Chief Karen Walker responds:
The Virgin Australia bankruptcy demonstrates there are still people with money and interest in buying failing airlines, but that list will grow shorter as the number of airline failures increases. Regional carriers likely will be the first to be consolidated into the majors, resulting in fewer carrier names in each country. We might also see mergers between big flagship airlines and low-cost carriers, such as Malaysia Airlines and Air Asia.
Europe was ripe for more consolidation before the coronavirus pandemic, and the crisis will likely speed that up considerably. In the U.S., however, airline consolidation is much further along. The picture in Asia is more complicated because of state ownership of airlines, particularly in China.
A lack of coordination and inequality about how state aid is provided are already distorting the market. Some of the worst-managed and least structurally sound airlines before the COVID-19 outbreak, such as Alitalia, could be the ones that survive because of large government infusions, while some better-managed airlines will get next to nothing.
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