Manufacturing Industry

US low-cost carriers unconcerned by merger reports - Brief Article

Airline Industry Information, June 9, 2000

While low-cost British carriers are furious about a potential merger of British Airways and KLM Royal Dutch Airlines, low-cost carriers in the USA appear unconcerned about similar merger proposals there.

In fact some of the smaller carriers can even see potential gain from mergers between such big carriers as United Airlines and US Airways, or American Airlines and Northwest Airlines according to the Wall Street Journal (WSJ).

The CEO of JetBlue Airways for instance has apparently stated that the mergers could 'bode well' for his airline since they may result in 'chaos and distraction' for the carriers involved.

Pan American Airways also appears unconcerned, saying that its services should continue to do well since its strategy is to fly to airports that other carriers don't fly to, such as Gary, Indiana and Sanford, Florida. A spokesperson for the carrier told WSJ 'We're focusing on public perceptions of what we're doing, not what other airlines are doing.'

Despite the lack of panic evident, the smaller carriers are aware that there are some downsides to the proposals, with Sun Country Airlines stating that regulators will have to be responsible about opening up airports to low-cost airlines, particularly those that are slot-controlled.

In related news, The Metropolitan Airports Commission in Minneapolis has hired Global Aviation Associates to examine the implications of a merger or acquisition of Northwest Airlines Corp by American Airlines.

Northwest Airlines is the largest carrier operating out of the Minneapolis-St. Paul International Airport, which is currently in the middle of a USD2.5bn expansion project according to Reuters.

A preliminary report from the consultancy is due in July and is expected to advise about whether the airport should proceed with a USD100m-USD150m project to add gates.

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