Consolidating miles in airline mergers

Simply put, with the obvious exceptions of global group carriers such as Lufthansa, IAG, and Air France-KLM and profitable low-cost airlines like Ryanair, many European carriers lack the wherewithal to compete in the 21st-century technology landscape; even for bigger, more profitable ones with access to capital, it can be a strain.Greater consolidation would give European airlines the resources and strategic flexibility to thrive in increasingly unpredictable, challenging times.Even so, the prospect of consolidation looms as a necessary, if not inevitable, next step for European aviation.The problem is not imminent collapse, but rather the inability for many European carriers to invest, innovate, and grow at a level that would allow them to keep up with international rivals – or even forge ahead.Key corporate, commercial, and administrative functions are centralized in Bogota, Colombia, while El Salvador remains a major hub where the operations control center is housed.

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A few carrier groups are already working toward realizing these synergies, but most still have a long way to go.The European airline industry today is nowhere near that kind of crisis.Despite the failure of three carriers in the past 18 months – Alitalia, Air Berlin, and Monarch – most remain profitable, although in some cases barely.Although European industry profit margins were more than four percentage points behind those of the US industry in 2017, European airlines overall achieved a 6.8 percent margin that helped maintain market value. While the European Union may function as a single market, differences in culture and language cannot be ignored, even in business.For Europe, most consolidation efforts will require multiple air operator certificates (AOC), in contrast to what happened across the Atlantic.

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