What's Hot
By Brian Milligan, News and Transportation Editor -- Purchasing, 2/8/2001 2:00:00 AM
All of the consolidation in the airline industry may just be good news for shippers.
Mergers in this industry are nothing new. There were mergers aplenty here in 2000, and the trend carried over dramatically in January when American Airlines bought the beleaguered Trans World Airlines and some US Airways assets. Meanwhile, Northwest Airlines and American Airlines executives have talked about a bid to buy American by Northwest. These are huge developments.
But the need for efficiencies are driving these mergers. One combined entity can gain the resources needed to deliver services at lower costs than two individual ones.
The optimism here comes from the impact this could have on air cargo rates. Mergers like this could actually reduce the fragmentation in the industry, leading to fewer players trying to control an erratically priced market.
The surviving players, if they are smart, will seek long-term stability, exert more control over industry pricing, and provide less volatile rate changes.
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