International Mergers: Etihad Airlines

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Executive Summary International mergers have been frustrated for years in the airline business where there are in excess of 200 national carriers conveying passengers across the world. Bans on foreign ownership and lingering government control over routes, flights and slots at major airports prevent international mergers and limit the ability of airlines to enter new markets. The incentive for mergers is to grow revenue and reduce costs to become even more competitive by reducing fares. This frustration has to a certain extent been overcome by super-alliances between national carriers operating out of international 'hubs' like Amsterdam, Buenos Aires, Chicago, Copenhagen, Hong Kong, London, Paris, Rome and Tokyo. Major airlines have grouped together with names like One World, Star, Delta and KLM/NW to sell tickets to a wider range of destinations without flying to more. They also draw on the 'spokes' of each member airline's associated companies operating out of other airports in the member's country to the hub. Partners in an alliance sell each other's flights, and even book blocks of seats on each other's aircraft. Etihad Airlines Many airline alliances share codes so that customers do not readily know which member company undertakes the transportation. One such alliance is Opodo, which was created by Aer Lingus, Air France, Alitalia, Austrian Airlines, British Airways, Finnair, Iberia, KLM and Lufthansa. Booking is by the alliance's web site www.opodo.com. It

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