South Korea’s Korean Air is buying its major competitor, troubled Star Alliance member Asiana. While the Asiana brand will initially survive, it’s expected to eventually be folded into SkyTeam member Korean which is partially owned by Delta Air Lines. (This is bad for frequent flyers.)
But that’s not the only consolidation that may happen in the region. Japan is preparing to inject subsidies into its largest carriers, ANA and Japan Airlines, and the Prime Minister’s inner circle believes that the two airlines should be merged in order to promote their survival.
Here is a snippet of an English-language article on the Japan Airlines-ANA merger suggestion coming from an adviser to the Japanese PM. Now go subscribe to a Bloomberg @business… Terminal 🤑🤑🤑 https://t.co/hloJhnhCq4 pic.twitter.com/7KMW3k9ZDb
— G-DLEE AVIATION 2020 (@JournoDannyAero) November 24, 2020
Keeping airlines afloat with government funds and competing with each other is counterproductive. Japan’s long term stagnation has underscored the risk of zombie firms (in their case largely banks). The need for subsidies implies the need for consolidation, otherwise airlines are just burning through the subsidies competing for limited passenger business at a loss.
Now I have to imagine that in the event of a merger between ANA and Japan Airlines – still speculative at this stage, but at the highest levels of government – that the larger brand (ANA) would survive. That would benefit Star Alliance and come at the expense of oneworld. However it’s certainly thnkable that an effectively nationalized air carrier could take the name Japan Airlines (although All Nippon Airways is just as patriotic).
Covid-19 accelerates many of the changes that we could have seen anyway, and creates realignments across industries. It could mean consolidation not just in South Korea but in Japan as well, and elsewhere. And that means shifts in global alliances and joint ventures, with huge implications for airlines around the world. It already looks like Star Alliance will lose Asiana. Will United keep its transpacific joint venture with ANA, or with American keep theirs with JAL?