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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They do exist, the two biggest in Europe are below:
International Airlines Group own British Airways, Iberia, Vueling, Level, Aer Lingus and a couple of cargo companies. They have also recently acquired Air Europa.
Lufthansa Group own Lufthansa, Austrian Airlines, Swiss International, Brussels Airlines, Air Dolimiti, Eurowings, ITA Airways and a few other airlines.
It is widely believed that both companies are considering buying TAP from the Portuguese government, who want to get rid of it as it has been loosing money for years.
It’s a byproduct of how the airline industry formed. Originally the global airline industry was all small regional companies that flew small routes. There was a worry early on that small companies that were getting ahead would come into markets that they didn’t base out of in order to dump the price. So as a means of protecting the local airline industry governments decided to set minimum fees that had to be charged for passengers…. and they were super high. The cheapest price of a flight from New York City to LA is currently 90% cheaper than what would have been available in 1960. That’s not even adjusting for inflation, just flat dollars.
As another means of subsidizing air travel local municipalities built airports in order to encourage air travel to come to their towns and cities. But this became a bit of a double edged sword in the future because it meant these municipalities would get to control which airlines would get to do business there. That’d mean the rise of monopolies who had the money to pay higher fees to keep these airports profitable.
And then in the 1980s the minimum pricing schemes all around the world began to collapse, first in the US and then throughout the world. Without these minimum pricings pricing out competition they needed something to protect their airlines…. so they just banned foreign competition. International carriers are only permitted to land and take off in international airports and only to connect to a partner network in that country.
And then comes the final nail in the coffin for a “global airline company” private innovation. Making these kinds of one to one agreements with so many different airlines was taxing… especially with airlines forming and closing all the time. You might use Canadian Airlines as your in to get into Canada, only to find them merged into Air Canada and now you’ve lost access to that market.
So in 1997 the “Star Alliance” formed. The founding members United Airlines, Air Canada, Luftshansa, Scandinavian Airlines and Thai Airlines wanted to promote global access. They spent millions of dollars on advertising campaigns so that people would choose Star Alliance members over competitors… which resulted in a large expansion. Today the Star Alliance flies everywhere.
And that’s the reason why we don’t have global airline companies. They’ve all agreed in a monopolistic fashion to not enter each other’s territory and promote each other in exchange for global access.
Countries view aviation resources as national assets, even if those assets are in privately owned companies. Having aircraft, skilled labor, and logistics networks is a national level issue and can be drawn upon for security reasons especially in a time of conflict. Therefore many countries are reluctant to allow foreign companies to have a dominating influence in their domestic aviation enterprise. This is not necessary 100% true across the board for all countries, but that is the general idea.
There are lots of reasons. Mostly it’s because every country likes having their own airlines, and they don’t really trust foreign airlines quite as much as their own. A lot of them do own foreign airlines, or at least part of them, but they keep the names because that’s what people like. Swiss people who fly on Swiss International might not like flying on Lufthansa, for instance, even though Lufthansa owns Swiss International.
Also, there’s a bit of national security in it. In times of war, for instance, the United States could use planes from every American airline to move troops around. If other countries owned big parts of those airlines, that might not be so easy.
Different countries have different regulations, and the countries would rather make things more favorable for their own airlines than a foreign airline.
So another question about airline pilots, I assume that all pilots doing international routes would have to speak English?
There are so many good answers, I can not hope to respond. As I was transiting Changi airport yesterday it made me wonder why.
It makes sense about financing as most large carriers have been bailed out by their government many times.
But it also seems to resonate that the government of each country would want to limit the foreign companies flying over their territory as well.
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