Qantas boss predicts global airline industry consolidation
July 22 2008, Sydney, Aus., -
Higher fuel prices and an agreement on
loosening U.S. foreign ownership
regulations could lead to a
consolidation of the global airline
industry into just a few
companies, according to the chief executive of Qantas
July 22 2008, Sydney, Aus., – Higher fuel prices and an agreement on loosening U.S. foreign ownership regulations could lead to a consolidation of the global airline industry into just a few companies, the chief executive of Qantas Airways said Tuesday. “Right now the global aviation industry faces … a permanent transformation,'' Geoff Dixon told a gathering of business leaders.
The United States and the European Union began talks in May on a transatlantic aviation agreement that could end American rules barring foreign control of U.S. airlines and capping foreign ownership of voting stock at 25 per cent. Dixon, who has repeatedly warned that the rising cost of fuel is a very serious problem for airlines worldwide and who announced last week that Qantas will shed 1,500 jobs next year, said such deregulation of the U.S. market would be a “ground breaking development.”
“It would open the way for airlines to engage in meaningful cross-border investments, and sooner or later it will happen,” Dixon said. “We believe strongly at Qantas that over time, consolidation will transform aviation. It will produce a few very large and extremely efficient global airlines with a portfolio of interests and a portfolio of brands."
“No airline would be safe from the possibility of takeover,” he said. “Qantas, itself, was the object of an unsuccessful $9-billion takeover bid early last year by a private equity consortium which included Canada's Onex Corp. “Consolidation, when it starts, will be very erratic and I don't believe any airline, particularly in this part of the world, will be able to avoid consolidation,'' Dixon said. He said Qantas has positioned itself to avoid being swallowed by investing in its business, cutting costs, ordering more fuel-efficient aircraft and developing a strong brand. “The work that Qantas has done to date means that we will avoid any such dark destiny,” he said.