17 January 2014
PwC US said it has released “Aviation Perspectives: The Impact of Mega-Mergers, A New Foundation for the US Airline Industry,” a report that reveals how merger-driven consolidation will continue to have a significant and positive effect on the domestic airline industry.
The report, which also highlights the expansion of low cost carriers into major domestic routes and the improvement of airline operations and customer experience, is an updated analysis of PwC´s original Aviation Perspectives, which found that the average US domestic airfares had not increased significantly due to consolidation.
“Average increases in US domestic airfares continue to lag behind major cost drivers, as fare increases since 2004 have been quite modest, rising at approximately two percent on an annual basis, and actually decreasing when adjusted for inflation,” said Jonathan Kletzel, US transportation and logistics leader, PwC. “The fourth and likely last airline mega-merger in the US was recently approved, and while this certainly is a historic level of consolidation, there remain other sizeable airlines serving the US domestic market, pushing companies to look for new ways to remain competitive.”
As airlines have merged, the report says, overall efficiency in operations have improved, as carriers removed capacity from the system and streamlined their networks, resulting in fewer takeoffs and landings, said PwC. Between 2008 and 2013, the number of domestic flights decreased more than the number of domestic passengers, as evidenced by increasing load factors. This reduced flying has created a better balance between runway and airspace supply and demand, reducing congestion delays and allowing airlines to recover from disruptions more quickly.
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PwC US report posits mergers help spur airlines improvements
17 January 2014