KPMG STUDY CLAIMS AIRLINES ARE CIRCUMNAVIGATING MERGER RULES

Dino D'Amore
By Dino D'Amore December 21, 2010 10:30

KPMG STUDY CLAIMS AIRLINES ARE CIRCUMNAVIGATING MERGER RULES

A new study by KPMG has stated that airlines are circumnavigating strict merger rules by entering into partnerships that garner many of the benefits of merging without the legal restrictions.

The report says that codeshare agreements, increased alliance participation, joint service agreements or strategic procurement partnerships are being used by airlines to work around restrictive international route rights rules and foreign ownership restrictions.

“Consolidation in the global airline industry will increase as the pressures on costs and revenues in the present economic climate continue,” said Dr Ashley Steel KPMG’s global chair for transport. “The severe weather conditions in the UK and elsewhere are placing an additional burden on the industry and will only add to the pressures many airlines are facing. Despite the regulatory constraints placed on the industry many airlines are now working together to a degree they have never done before, simply because they have to.”

He added: “Interestingly, after 100 years of aviation history the airline industry has only recently begun to take action on consolidation. In this regard it lags behind many sectors.

“The exciting times are yet to happen with a new frontier yet to be exploited by the industry.”

Dino D'Amore
By Dino D'Amore December 21, 2010 10:30
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