Speaking at the Capa World Aviation Summit 2015 in Helsinki, Simon McNamara, the director general of the European Regions Airline Association (Era), said currently just five groups control 54% of the market.
The remaining amount is split between 136 airlines, he added, leaving many of them vulnerable to mergers and acquisitions thanks to their size.
McNamara said: “Not all of those airlines are making money but quite a lot of those five are.
“From an industry point of view, consolidation is a great thing until you get to one – a monopoly – and set prices as you want.
“From a consumer point of view that’s not great, that’s why regulators have to take on that role.
“There’s still more (consolidation) to go, of those 136 carriers in Europe, some are extremely small.”
However, LOT acting chief executive Marcin Celejewski warned the current situation had created an imbalance where new airlines faced being snapped up by the major players, simply because of their size.
He added: “You cannot have the same strategy, even if you want to compete it is very difficult to do it.”
European Commission head of unit international aviation markets and airports DG transport Emmanuelle Maire said assisting new airlines was a key concern of the regulatory bodies
She added: “We wanted to create pan-European airlines that would be strong in international competition.
“What is extremely important is to ensure the regulatory boards that are blocking the access of the new entrants are kept at the lowest possible levels.”
Meanwhile, Air China vice president and general manager north America Zhihang Chi said China’s last period of consolidation had occurred about 10 to 15 years ago after it was engineered by the government.
He added regional governments in the country had all wanted the prestige of running provincial airlines, until the central government cracked down on the practice.
“The government sat down and said ‘don’t do that’ and that we need to conduct a round of consolidation,” he said.
However, Chi added with airlines investing in new aircraft with a number of deliveries expected, he did not believe further consolidation was needed in the current market.
Europe’s aviation industry reveals the tension between the free market economy and EU regulation. Can they coexist or will one prove to be the most dominant?
