There are global players in many industries and to get to be global often they acquire large national companies in countries to expand to those markets.
Why is it with Airlines that there are no global companies owning airlines across multiple nations?
Virgin is the closest I can think of and even they do not actually own the airlines, just the name in some places (Australia).
My only thought is that airlines are not exactly huge profit centres?
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>Why is it with Airlines that there are no global companies owning airlines across multiple nations?
You mean like The Big Three (Star Alliance, Skyteam, oneworld)? Yeah, they exist.
They don’t put their branding forward and they act like all their airlines are separate entities. But that’s all for show.
Some flights might have up to three, sometimes (rarely) four flight numbers because they are sold by two companies, operated by a third that charters a flight from a fourth.
That’s one of the most common sign. If a flight is cancelled/late, you might also be rebooked on another company in the same consortium.
You will rarely be booked to another consortium. They usually prefer booking you with an upgraded seat in the same consortium than a same cost seat in another. Because they have to pay the other consortium. But within the consortium, it’s all kept internally.
They’re just kept hidden most of the time, not even that well if you know what you’re looking for. But they’re definitely there.
https://simpleflying.com/the-3-major-airline-alliances-star-alliance-oneworld-and-skyteam-why-are-they-good/#:~:text=Airline%20alliances%20have%20grown%20over,%2C%20Star%20Alliance%2C%20and%20SkyTeam.
It’s illegal.
Lots of the other comments here are true but they’re not the fundamental reason.
Unlike virtually all other industries, aviation *already* wrote up international treaties to cover international activity for most of the globe, long before basically anyone else except shipping, because aviation is inherently international. It’s called the Chicago Convention. It lays out, among other things, the “five freedoms of the air”.
We don’t need to get into the weeds here unless you want to, but those freedoms basically tie where you can pick and up drop off passengers to the country the airline is registered in. With extremely few exceptions, at least one of where you pick up or drop off has to be in your “home” country. That prevents a single airline from being global.
You can try to end run this by having a holding company own a local airline in each country. Enter ownership laws…most countries require that an airline be majority owned by people in the country. So you can’t get a majority holding company either.
The “freedoms of flight” generally don’t apply to cargo…which is why we have global air freight companies.
Edit:typo
International Consolidated Airlines Group (IAG) own airlines in the UK, Ireland and Spain.
Air France-KLM own airlines in France and the Netherlands as well as a multitude of shareholdings in smaller airlines in other countries (and even Dutch high speed railways).
Lufthansa Group own airlines across Germany, Austria, Switzerland, Belgium (and shortly the Italian flag carrier).
Most of these mergers came about because of the open skies agreements that the EU practices, which is also what allowed EasyJet to flourish as a pan European airline from its UK base (though it and IAG have had to alter their structures slightly to account for the UK being outside the EU these days).
But because outside those markets, national governments tend to be very protective of their airlines, it has been easier for alliances to form, which allow the airlines to operate as one without the complications of ownership rules. Even before organisations like Oneworld existed, airlines like British Airways and American Airlines already operated very deeply allied networks and had linked ticketing systems.
Basically it all comes down to money.
Airlines don’t make much money, so when a government helps one out, that one usually takes over that market.
So when a second one comes in, it’s usually smaller, and has to piggy back on the original airline routes ( which are not that profitable), airports and so on.
Once those routes become profitable, the original, bigger, airline moves in, so the small one has a hard time to grow.
When shit hits the fan like the pandemic did, the government usually picks one airline and helps it out ( usually they get shares in it and so on, so it becomes half government owned)
When it comes to international traffic, the prices are kind of fixed, so the big players end up with the same routes, same prices and so on.
But they get contracts with local airports, and small local airlines, so that last leg will make a difference in price.
Basically, there’s no point for an airline to have offices all over the planet, deal with the different rules and taxes of each country, when they can do it all from a centralized place where they get money from.
Something not mentioned so far is that airlines are not a particularly profitable business. In many countries they are govt subsidized in some form, almost like a form of public transportation. Nobody wants to buy a money losing business.
In the US, the airlines have been bailed out multiple times. Some people have argued that if you look at the big picture and take into account the bailouts, the US airlines industry has never been profitable.
The short answer is that it’s illegal.
Back in the 1940s, a lot of countries were worried that airlines from the United States would dominate their nascent aviation industries, so they got together (with the U.S.) to negotiate a treaty setting out what foreign airlines could do in their counties and their airspace. These are called the freedoms of the air and they’re overseen by the International Civil Aviation Organization.
Let’s say we have three countries: country A, B and C.
The treaty (which has been updated a few times and has now been signed by pretty much every country in the world) allows airlines from country A to fly over country B while heading to country C. An airline from country A can bring people to country B from country A, and pick people up from country B to take them back to it’s home country, country A.
But very few countries let airlines from another country pick people up in their country to take them to a third country, so an airline from country A can’t fly between country B and country C.
Some countries have allowed exceptions to this over the years, and the EU allows airlines from other EU countries to fly anywhere in the EU, but basically there’s no way for an airline to fly a route that doesn’t involve going to its home country.
It’s why many airlines fly intercontinental routes that involve going to their home country. So when I flew KLM from Canada to Johannesburg, I had to change planes in the Netherlands. When I flew China Southern to Cambodia, I had to change planes in China.
The other factor is that many countries limit foreign ownership of airlines headquartered in their country, effectively limiting the ability of the owners of an airline to get around these rules by operating multiple airlines in different countries.
While some people have pointed out that there are global airline alliances, the airlines in these alliances are independent companies, with different owners, that just have agreements to work together. Airlines can leave the alliances if they want, and sometimes switch alliances, so it’s not the same as a global company that owns airlines in multiple countries.
Generally airlines can’t be global. There are the “Freedoms of the air” (https://en.wikipedia.org/wiki/Freedoms_of_the_air) and most countries only allow the first 5. This means generally an airline from country A can’t fly between country B and C. Every flight must start or end in A. (There are exceptions, like in EU, airlines can fly between any countries).
Why? There is a lot of national pride in a country having airlines, so the governments tend to protect the national airlines.
The airline industry is indeed unique in this respect. While there are many reasons why you don’t see global companies owning airlines across multiple nations, some of the key ones are:
National Regulation and Ownership Rules: Many countries have strict rules and regulations around foreign ownership of airlines. These often include a stipulation that a majority of the airline must be owned and controlled by nationals of that country. The US, for instance, caps foreign ownership at 25%.
National Security Concerns: Airlines are often seen as a strategic industry linked to national security. As a result, many governments are hesitant to allow foreign control of these assets.
Bilateral Air Service Agreements: International air travel is governed by bilateral air service agreements between countries, which often include a clause requiring that airlines be owned and controlled by nationals of the respective countries. This is to ensure fair competition and equal opportunity for airlines from both countries.
Profitability Concerns: The airline industry is capital-intensive and subject to high operational costs (such as fuel and maintenance), regulatory burdens, and market fluctuations. The high-risk, low-margin nature of the industry may deter global companies from investing across multiple nations.
National Pride and Branding: Airlines are often seen as national symbols and carriers of national identity. Hence, local ownership and control can be a matter of national pride.
That said, there are ways around these barriers. Many airlines enter into strategic alliances, such as Star Alliance, Oneworld, and SkyTeam. These alliances offer benefits similar to what you’d see from global companies, such as coordinated scheduling, shared frequent flyer programs, and mutual recognition of elite status among member airlines.
Another model is the equity alliance, where an airline invests in foreign airlines but doesn’t necessarily seek majority ownership or control. Examples include the Etihad Equity Alliance and the Delta/Air France-KLM/Virgin Atlantic partnership.
Lastly, some airlines operate under a single brand but are separately owned and controlled entities, like Virgin and Air France-KLM. This allows them to reap some of the benefits of a global brand while complying with national regulations.
Is that right? I can think of a couple flight routs off the top of my head that don’t touch their ‘home country’. I know United has quite a few Asian tours originating in Tokyo and ending in places like Singapore, Bangkok, Hong Kong. Emerites runs some flight routs between Australia and south East Asia. I believe Singapore airlines also runs a couple from Europe to the Middle East and a few from east asia to the United as well. But maybe those are the exceptions you are talking about.
Simply put: Airlines are ‘National’. Also known as a “Flag Carrier”.
Airlines are transport companies. Historically a transport company, such as an airline or shipping company, is locally registered in a given sovereign state and enjoys preferential rights or privileges accorded by the government for international operations.
Both Aircraft and Ships are required by international law to display the state flag of the country of their registry. And aircrafts registration numbers will include a prefix that indicates the country it is registered in. All US registration numbers start with **N**. The United Kingdom numbers start with **G**.
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