Consolidating industry need that
(See Exhibit 2.) Within each strategic move are various collaboration and consolidation options that range on a continuum of complexity from pursuing go-it-alone organic growth at one end to a full merger at the other.
(See Exhibit 3.) In between are such alternatives as contractual arrangements that can boost feeder traffic for big airlines’ networks and code sharing, alliances, and joint ventures that offer airlines big and small many of the advantages of mergers without the challenges and complexities of integrating two organizations.
Meanwhile, LCCs have steadily built profitable businesses, even during the post-2008 downturn, taking significant market share (approximately 30% and growing) and generating $11 billion of profits with no loss-making years.
FSCs remain structurally disadvantaged by their high legacy costs and their lack of flexibility in adjusting supply to shifting levels of demand.
With certain concessions, however, airlines can appeal to national interest—by vowing to preserve brand identities, for example.
In any case, acquisitions should be carefully assessed and synergies analyzed along different realization scenarios, thereby enabling a measured decision.
Norwegian Air Shuttle already operates long-haul flights to Asia and North America.