Home Airlines Could A Merger Save These Two Struggling Airlines?

Could A Merger Save These Two Struggling Airlines?

by SharonKurheg

It’s no secret that lots and lots of airlines are in financial trouble due to COVID-19 and people being hesitant to fly. 2020 has become the year of the road trip for many travelers, at least for those who traveled at all. And it’s definitely taken a toll on the airline industry.

Just as U.S.-based airlines have received trillions of dollars in funding to keep them afloat, airlines from other countries have received, or at least have asked their respective counties for money to keep them in business until travel becomes more normalized. Other airlines instead decide to merge as a way to cut costs.

Case in point, Korean Air and Asiana Air recently announced merger plans, with Korean Air acquiring a majority share in Asiana. The deal will give Korean Air about 60% of international routes in South Korea.

Not long afterward, a Japanese government advisor suggested that a merger between Japan Airlines (JAL) and All Nippon Airways (ANA) might be in the best interest of both the Japanese government and the two airlines.

Bloomberg wrote that the idea was suggested by Heizo Takenaka, a former minister and advisor to Prime Minister Yoshihide Suga, in response to both airlines seeking government bailouts due to the COVID-19 crisis.

“ANA and JAL should come together at this time. Now would be an opportunity for such a bold mechanism,” Takenaka said in an interview.

“It is natural to stop bleeding by financing with the Development Bank of Japan or using the existing system, but I feel that the time will come when we will have to do it within a larger system.”

The concept of JAL and ANA merging isn’t new. It’s come up during the 2008/2009 global financial crisis and in the post-9/11 years. Both times the ideas were rejected, not only by those in positions who wanted to avoid their airlines becoming a monopoly but also by both carriers themselves.

Due to Japan’s anti-competition rules, the chances of a merger appear to be just as unlikely this time around.

As an advisor, Mr. Takenaka’s opinion admittedly doesn’t hold much water. The Japanese government hasn’t officially commented on the idea.

Feature Image: Pixabay

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This post first appeared on Your Mileage May Vary

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