Global airline consolidation and Africa

Airline industry consolidation is quickly gathering pace across the world, with carriers in North America, Europe and Asia clearly taking the lead. The trend is evidently towards the formation of a few (perhaps just two or three) powerful, global airline ‘blocs’ each consisting of a group of strategically-chosen carriers from diverse geographical regions.

Once established, each of these mega-alliances between international airlines is likely to gradually shed the remaining vestiges of its members’ national identities in favour of a global brand name. The ‘Star Alliance’ formed last year by Lufthansa German Airlines, United Airlines of the USA, Scandinavian Airlines System (SAS), Air Canada, Thai Airways and Varig of Brazil, seems to confirm this point. The next logical step would be for members of each global alliance to adopt a common aircraft livery, staff uniform, frequent-flyer programme and in-flight service; some of which is already happening. 

British Airways’ new aircraft livery, which seeks to downplay the carrier’s national identity and flag, created controversy at home. But it could be a tactical move by BA as a precursor to assuming an ‘international’ identity as part of a global alliance with American Airlines and their numerous airline partners. International air transport would then be dominated by two mega, transnational airlines – the Star Alliance, headed by Lufthansa and United Airlines; and, say, the ‘Global Alliance’ headed by American Airlines and BA.

At present, only a few African airlines have the necessary critical mass of business or strategic positioning to attract the attention of these aspiring mega-airlines. For example, Kenya Airways and its valuable regional hub airport in Nairobi, have already been virtually secured by a prescient KLM Royal Dutch Airlines. Meanwhile, Lufthansa and BA, which belong to rival airline blocs, are this year expected to vie for an equity stake in South African Airways. The outcome of this contest is likely to have significant implications for both SAA and the African airline industry.