Airlines ‘circumnavigate’ merger rules says KPMG

Airlines are increasingly finding new ways to co-operate and circumvent industry restrictions, according to a new study.

Many are finding ways of achieving the benefits of mergers without actually merging, the global report by professional services firm KPMG finds.

They are working around restrictive international route rights rules and foreign ownership restrictions which prevent many of them from forging full mergers.

Methods used include expanded codeshare agreements, increased alliance participation, joint service agreements or strategic procurement partnerships.

KPMG global chair for transport Dr Ashley Steel said: “Consolidation in the global airline industry will increase as the pressures on costs and revenues in the present economic climate continue.

“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.”

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