Evaluation
In any other industry, the financial hardships and surplus capacity faced by airlines would trigger consolidation, but the airline industry is beset with complex state-ownership rules. For example, aviation regulations make big cross-border mergers impossible. Under the 1944 Chicago convention, airlines operating under licence from a particular country must be majority owned by shareholders from that country. This effectively blocks cross border mergers. Leading airlines including BA, Virgin Atlantic, BMI and Ryanair believe relaxation of ownership is the only way that the industry can move forward. Deregulation is thought to be the only way that the airline industry will lose the excess competition and start working more efficiently.
If the regulations were not in place then there is a good chance that some of the airlines would have merged or been taken over because they are finding it almost in possible to survive in the industry otherwise, especially without government subsidies. This has enabled the budget airlines to really increase their market position, as a lot of the traditional airlines are no longer competing.
…
