Airline industry needs to consolidate, warns U.S Airways' Chief Executive
Tuesday, 11 December 2007：In a report by Reuters, U.S Airways’ Chief Executive Doug Parker stated at Washington’s Reuters Aerospace and Defence Summit last Wednesday that the airline industry is overcrowded and needs to be consolidated.
Last year, Parker attempted to merge U.S Airways with its competitor Delta Airlines but was unsuccessful. Delta rejected the bid early this year, stating that it was more worth as a single company.
However, Parker says the Delta could be the key to sparking a chain of mergers between airlines which will reduce costs such as rising fuel prices and the threat of low- priced fares.
Last year, the airline industry was forced to sell less seats and increasing fare prices to compensate for increasing expenses. The airline industry is also reeling from the escalating jet fuel prices and weak U.S economy, which could affect the demand for business travel.
The U.S Airways Chief Executive believes that consolidation is imminent however if they do not take place before early next year, they will have to put on hiatus due to changes in the U.S Department of Justice with a new presidential administration.
Last Wednesday, U.S Airways announced that its passenger revenue per available seat mile had grown by 2-4% last month, which may be an indication of demand weakness.
“I do think 2008 is going to be a difficult year," said Parker who also mentioned that current airlines were better equipped to deal with downturns in the economy than in previous years.