Third-Party Services: The Next Growth Opportunity for Airlines
Organic growth is v ery limited in mature air travel markets. In fact, most U.S. airlines faced unit revenue declines in 2016 as capacity outstripped demand in many markets. The largest U.S. airlines have embraced “capacity discipline” to keep unit revenue in check – increasing capacity in 2017 at 1-2% and shrinking in sectors experiencing limited demand growth. Acquisitions are of course, another vehicle for airline growth. The U.S. market has seen tremendous M&A activity over the past decade. In fact, it is now commonly believed that anti-trust officials would block further acquisitions by any of the four carriers that now represent 80% of domestic capacity (American Airlines, United Airlines, Delta Airlines, and Southwest Airlines).