The cost side scale economies and demand and scope provide greater airline networks a viable advantage on lesser carriers. Airline alliances and mergers can permits airlines to lesser costs and improve demand with rationalizing the joined networks and growing the seamless services scope. Commonly, the benefit of mergers and alliances is reviewed as follows.
• Scale economies, density or scope
• Market demand
• Network Reliability
• Partner’s center access
• Technology access and other source
• Distributing resource
• Operational flexibility
• Competition reduction
• Diversification of Product/service
The effect level varies broadly between city-pair markets and involving various consumers’ classes in any case, this segment can balance the normal benefits and drawbacks of mergers and alliances.
The virtual compare of the advantages in provisions of effectiveness and the results on contest depends on a several factors, as well as the overlap level in the airlines’ earlier networks to the merger of two networks.
Further than the airline ownership system has several other barriers of regulatory to mergers and airline acquisitions. These occur mostly from attempts through governments to prevent anti competitive activities or the neglect of a leading market position.
• A merger must not effect in either the removal of successful competition or an extreme market distribute for the existing firm.
• A merger must not effect in excessive concentration in the air transporter industry.
• A merger must not be probable to show the way to broad reactions and protective merger offers by competitive carriers.
• A merger must not cause in significant competition foreclosure for exchange traffic.
• A merger must carry the extensive operational, organizational advantages or service for the existing firm.
• In merger case comparatively efficient carrier which is marginal, or in the two marginal cases, the ensuing advantages of the existing firm must be corrective complexity of the fragile merger partner.
• In the merging firms the security given to the labor force must be in accordance by the current CAB policies.