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The biggest airlines are better able to hedge against higher fuel costs, get lower prices from suppliers such as catering firms and aircraft-makers, and borrow cheaply to buy or lease new fuel-efficient planes.
The five biggest carriers in America control around 70% of the market; the ’s top five barely hold half.
Swan Chief Economist, Boeing Commercial Airplanes Marketing Abstract People commonly perceive that the airline industry is consolidating.
By this they mean there are fewer and fewer airlines.
A common and useful measure of the degree of competition is the “Herfindahl.” The intuitive version of this measure represents the number of competitors of equal size that would produce the same degree of competition as is measured in the market.
Herfindahls for the number of airlines operating in major markets have been flat or rising, not falling.
In March wow, an Icelandic low-cost carrier, entered bankruptcy.
The previous month Flybmi and Germania went bust, following vlm of Belgium, Primera Air, based in Latvia, Cobalt Air of Cyprus, Germany’s Azur Air, Lithuania’s Small Planet Airlines and a Swiss carrier, Sky Work.
In February Thomas Cook, a British travel agent, put its carrier up for sale (see article).
Railways compete against airlines on shorter routes.
The commission’s transport chief, Henrik Hololei, is nonetheless ready to step in to stop Europe’s five biggest airline groups from becoming more dominant.
The biggest airlines are better able to hedge against higher fuel costs, get lower prices from suppliers such as catering firms and aircraft-makers, and borrow cheaply to buy or lease new fuel-efficient planes. Regional airlines and operators of charter flights have suffered most.
The former, which specialise in flying short hops between provincial airports using smaller aircraft, have been knocked by the rapid expansion of low-cost carriers, with larger planes and lower costs per passenger, into their most profitable routes.Concentration has resulted in poorer service: three American operators can be found on the list of the world’s 50 best carriers, as rated by Skytrax, an aviation website, compared with 13 European ones.