The British Airways-Iberia merger has gone through without a hiccup. Shares in the International Airlines Group are ticking over nicely on the Spanish and London stock exchanges, and Willie Walsh has bagged himself a medal of honour from the Spanish king.
A success, then, but what real changes have we seen? One month in, the business travel industry has seen little development – but perhaps that’s the point, for now.
Peter Dunkin, an independent aviation consultant, tells ABTN: “I don’t see huge change.”
The merger has been driven by the prospect of cost savings, rather than trying to produce major changes in quality, says Dunkin.
“It that happens, it’s a really good thing,” he says. “If they can bring their costs down, they can improve their margins, or pass on that saving in terms of a better product – that will be a benefit.”
Ken McLeod, corporate director at Advantage Travel Centres, says he has not yet seen any teaming up in the sales functions of the airlines.
However, he predicts this is likely to change from April 1. “I think we’ll find that Iberia within the UK will disappear, in terms of sales and markeiting. I think the reverse will happen Spain. What happens elsewhere is probably where the argument is going to be.”
For both airlines, the biggest challenge moving forward is likely to be cultural, says McLeod: “I think the Spanish way of doing things is probably very different in many ways, and if you add American Airlines into that scenario, there are even bigger three-way cultural differences.”
This was a merger born out of necessity rather than desire: “I think it’s a necessary requirement for both airlines to get to this stage,” says McLeod, although he adds: “BA needed this deal more than Iberia did”.
BA’s need to merge comes from a general trend of consolidation in the aviation industry, says Adrian Woodward, HRG’s director group supplier and industry relations.
“The merger has created one of Europe’s largest airline groups, which is important because it now gives BA and Iberia the muscle to compete with two very large carriers in Europe – Air France KLM and the Lufthansa Group.”
Woodward predicts the merger will ultimately benefit travellers: “I think it will allow them to invest and offer the things that corporates are looking for, which is better schedules between the two airlines, better routes and better products.”
Looking into the mirror ball, he predicts more airlines will see the benefits of further consolidation: “I think this is only the start. The IAG will be looking to attract other airlines.”
Dunkin, however, predicts the tie-up between BA and Iberia marks a, perhaps temporary, cessation in the consolidation trend: “All of the major airlines have come together in terms of significant mergers. It doesn’t look as if there will be any of this scale on the horizon.”
Woodward’s view is that the mega-airline is a kind of progression from the airline alliance model: “Alliances won’t be so important moving forward, because you’ll have bigger groupings of airlines working together.
“Obviously if you actually take ownership of airlines, you’re able to drive through much better and much faster cost savings than you would be able to in an alliance.”
The limitations, however, will come from where it isn’t necessarily cost effective, or it’s prohibited under foreign ownership laws, says Woodward.
For McLeod, there is plenty of opportunity for alliances to improve relations with travel management companies, especially Oneworld.
“Of all the alliances, I think Oneworld has been the least successful from a trade point of view. I don’t have any conversations with Oneworld as a group... I think Oneworld, from where I sit, is a very disparate group.”
So not much immediate change, but in 2050 we may look back on 2011 as the year that ushered in the dawn of the profitable airline, and the end of the flag carrier.