Airline Consolidation Reducing Airports’ Negotiating Power: Accepting Low-Cost Airlines and Expanding into Asia will Restore Power Balance Dynamics
- Pages: 21
- Published: June 2018
- Report Code: ML00028-029
Consolidation in the airline industry is reducing their reliance on airports. Airports will have to diversify their operations abroad and welcome low-cost airlines to negate this power imbalance.
In the year 2000 for example, the top four players in the US airline industry had a combined market share of 61%. By 2015 the top four players namely American Airlines, Delta Air Lines, Southwest Airlines and United Continental had a combined share of 84%.
Airports Council International (ACI) Europe head Olivier Jankovec speaking on this issue stated that "Consolidation means less airlines in the market to chase, to serve your airport and open destinations. It also gives airlines more purchasing power, more power to dictate the conditions under which they serve an airport. An airport cannot move, [but] an airline can move to another location”.
The balance of power between airports and airlines has increasingly been tilting towards airlines in recent years, as their consolidated nature has allowed them to dictate terms more so than airports. However airports can negate this tilt by themselves expanding their operations to other parts of the world, thereby reducing their reliance on a select few airlines.
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