U.S. Airlines Ready to Attack After Combining, IATA Says
U.S. airlines are poised to go on an international offensive following mergers and job cuts that have delivered leaner companies better able to compete with rivals from Asia and the Middle East, industry group IATA predicts.
Carriers based in the world’s biggest travel market are ready to grab market share and make up for lost time in ordering more fuel-efficient aircraft to trim costs, International Air Transport Association Chief Executive Officer Tony Tyler said.
“We’re going to see more competition now internationally as the U.S. carriers operate from a stronger base,” Tyler said in an interview in Cape Town, where IATA is holding its annual general meeting. “It’s been very, very tough and there really isn’t anything that they haven’t learned about how to operate efficiently and how to add value to their product.”
U.S. carriers have seen their ranks thinned by a decade of deals. In 2010, United Airlines (UAL) and Continental Airlines formed United Continental Holdings Inc. and captured global No. 1 status from Delta Air Lines Inc. (DAL), which had acquired Northwest Airlines in 2008. American Airlines may vault to the top when parent AMR Corp. (AAMRQ) combines with US Airways Group Inc. (LCC) this year.
While embroiled in domestic consolidation, U.S. operators were able to do little to stem the rise of Gulf carriers such as Dubai-based Emirates, the world’s No. 1 carrier by international traffic, or further advances at Asian carriers such as Singapore Airlines Ltd. (SIA), Tyler said. They have also fallen behind in ordering new jetliners, he said.
“They’ve punched below their weight internationally, and other carriers have been able to take advantage of that and grow perhaps more easily than they would otherwise,” Tyler said. “One of the big steps for them will be as they introduce more modern aircraft because they have fallen a bit behind in the fleet replacement race.”
Though the U.S. aviation market is reaping the benefits of consolidation, “significant obstacles” remain to any trans-Atlantic or intercontinental mergers, the executive said. In the face of government opposition to such deals, airlines within global alliances such as Skyteam and Oneworld are using joint-ventures to create “virtual mergers,” Tyler said.
While air passenger traffic continued its recovery from the global economic slump by growing 5.3 percent last year, boosted by the expansion of Middle Eastern carriers and demand from markets in Latin America and Africa, it is likely to face more crises going forward, Tyler said.
“The natural condition of this industry sometimes seems to be crisis,” he said. “Volcanoes and earthquakes, famine and disease, it’s almost been biblical, but we’ve come through.”
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