Adapt or Die

The past few years has seen a major shakeup in the global aviation scene.

Once large airlines with positive cash flow rate, enjoying relatively low fuel prices, these airlines transported millions of passengers around the world. They were global icons.

Decades later they found themselves between a rock and hard place.

The airline industry is a highly volatile industry.

Another SARS outbreak tomorrow could cripple many airlines in ways unimaginable. The Global Financial Crisis in 2008 had huge effects world wide. People lost jobs, banks showed little mercy to consumers unable to repay mortgages, money stopped circulating.

Airlines were hit hard, people didn't want to travel for fear of not knowing when their next pay packet was coming in.

Airlines had to adapt or die.

Many agreed to buy out deals from larger airlines with balance sheets in the black. Dragonair still operates today but is owned today by Cathay Pacific. Germanwings was 100% acquired by Lufthansa in 2009.

Another alternative was to do a merger.

The America's led the way in this. There was United, Continental, Delta, Northwest, American and US Airways. Six of world largest carriers operating in a highly competitive world wide market. The balance sheets began to change and revenue started to decline.

In 2008 Delta merged with Northwest and kept the Delta name. It is currently the largest American airline in terms of passengers moved.

In 2012 United merged with Continental and kept the United name.
Very shortly Us Airways will merge with American Airlines and keep the American Airlines brand.

From six globally recognised brands to 3. These mergers have kept people in jobs and kept competition in the market for consumers.

Codeshare agreements offer another safety net to airlines.

Simply use Company A's aircraft and allow Company B to sell seats on the same aircraft under a different flight number.

These deals work out well for airlines. They get access to routes others operate without all the fuss of going through negotiations.

One of the most high profile code share agreements deals to settle recently was the Qantas-Emirates deal which saw both airlines get access to a large portion of each others network.

Government buy outs are another avenue for airlines to go down.

I personally don’t agree with this. Joe Blogg’s Carpentry service can’t go to the government for a loan why is an airline any different? Airlines are businesses, if they are run poorly then they should suffer like most other businesses do. The public shouldn’t be forced to save companies, the publics taxes should spent on health care, education etc. There needs to be accountability. This is a blog I can voice my opinion, whats yours?

With rising fuel costs, airlines have to ensure every seat is filled and maximum revenue is achieved.

Takeovers, mergers, codeshare agreements and government buyouts are part of the world of aviation.