Article ID Journal Published Year Pages File Type
1023597 Transportation Research Part E: Logistics and Transportation Review 2012 10 Pages PDF
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 52 bn available seat kilometre capacity and that airlines with more than 200 bn 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.

► 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 52 bn available seat kilometre capacity. ► M&A may however be beneficial beyond that size for strategic rather than efficiency reasons.

Related Topics
Social Sciences and Humanities Business, Management and Accounting Business and International Management
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