Highlights ► Our literature review confirms that airline management sees M&A as a “game-changer”. ► Our empirical results suggest both economies and diseconomies of scale; big is not always beautiful. ► We show that the optimal airline size is between 34 and 52bn available seat kilometre capacity. ► M&A may however be beneficial beyond that size for strategic rather than efficiency reasons.

    Abstract This paper reviews literature and management perspectives on airline mergers and acquisitions. We find that M&A/consolidation is seen as a “game-changer” and mandatory to survive in aviation markets. We, therefore, apply DEA models to 66 airlines to evaluate whether big is indeed always beautiful. Our results suggest that the optimal airline size is between 34 and 52bn available seat kilometre capacity and that airlines with more than 200bn ASK are definitely too large to operate efficiently. This also applies when revenues are included in the DEA models, which is central as yield management and ancillary revenues are increasingly important.


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    Title :

    Mergers and acquisitions in aviation – Management and economic perspectives on the size of airlines


    Contributors:


    Publication date :

    2012-02-07


    Size :

    10 pages




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English