IATA boss: airlines need more mergers

CONSOLIDATION in the airline industry is essential to cut costs and improve competitiveness, according to Giovanni Bisignani, the director-general of the International Air Transport Association (IATA).

During a trip to Japan, Bisignani said: “Mergers and consolidation is a must ... I strongly support consolidation.”

He also urged the Japanese government to “continue to push for liberalisation and join IATA’s agenda for a freedom initiative to free up antiquated restrictions on market access and ownership”.
His comments come a week after the airline industry saw one of its largest tie-ups in history, as British Airways (BA) and Spanish carrier Iberia signed an agreement to merge.

The merger agreement will see the two launch a new company towards the end of the year called International Airlines, which is expected to generate €400m (£353m) in savings.

Meanwhile, US carriers United Airlines and US Airways are also said to have started merger discussions last week as the two struggle financially.

The news comes as former BA executives started the first day of criminal court proceedings yesterday over charges of price-fixing by the Office of Fair Trading (OFT). The four are charged with conspiring with Virgin Atlantic to fix fuel surcharges on long haul flights.

It is expected that a number of witnesses from Virgin Atlantic are will give evidence, although it is doubtful that Sir Richard Branson, the founder of the airline, will be one of them.