With mergers going on in the industry how will ’ rankings change?  Using OAG data for flight capacity dated January 24 2011, we can see a before and after if the pending and actual mergers were completed now.


The highlighted airlines in the Post Merger group show how relative rankings change overnight, as it were.  A combined United and Continental jump to #2 and is within 1.2% of #1, Delta. With AirTran included, Southwest jumps to #3.  At#12 we see the combination of TAM and LAN.

At #8 we see the combined and Iberia now known as Airline Group (IAG). Clearly if IAG decides to add another airline, such as JAL for example, the group jumps to #6. But if American could join IAG, it would be #1 and ~5% larger than Delta.

Economies of scale are important and we see airlines are following the examples of chemicals, pharma, banking and food.  Bigger is unassailable.

Which is why we think the IAG example should be watched closely. This is the example airline alliances are watching closely. If it works as designed, there are going to be more of the same. Alliances will be downgraded as airline super groups are formed.

Interestingly, Air France and KLM are a group but are reported separately, and they were the first to  combine forces. Together these two airlines would rank at #6.  If IAG works as planned, this group may be next to develop the cornerstone of another airline super group.

You can figure out who loses as airlines merge. It’s not just passengers, there is a whole industry food chain that depends on a plethora of choice.

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