Cliff Secord,
In terms of the topic that you pose, it was going to ultimately come to this juncture where we have fewer airlines and a few dominant players.
The decision to deregulate the market and allow airlines to grow and expand in Europe (and in the UK as a consequence) with few restrictions has brought benefits. Namely mass air travel on an affordable basis. It has benefitted largely the low cost airlines, who were certainly pioneering in terms of expanding outside of their home markets unlike the incumbents, who largely didnt pursue this prior to deregulation as they were not permitted to do so. But even in the advent of deregulation there are limited examples of any airlines outside of low cost airlines opening hubs outside of their home markets.
The US is a case in point. We've seen the impact of deregulation. There are now essentially a few big players and no new start ups will challenge their position. That said Virgin America is a brand that has challenged the status quo, and at massive cost in terms of losses. The big players are responding offering improved product on competing routes to Virgin America, with such luxuries as cabins on 321s.
Nonetheless, the US carriers like in Europe need to move to a sustainable operation. Losses were historically huge and this was clearly not sustainable. Europe is going the same way a few large airlines flying in a sustainable operation. The smaller ones unless they offer a real point of difference to remain strong opposite large rivals will not be around.
The cost of fuel is making the profit equation more challenging while the low costs airlines like Ryanair have been changing the rules of the game. This has driven prices down, wages down, costs down and all that this impacts, it is truly transformational.
Despite all of this transformation where does it all go. Ryanair has plans to be a bigger, the order book shows that. As business travellers will be wooed, how many more casualities will we see. Alitalia has been saved by the bell, others wont be so lucky. For now the larger airlines who operate in the long haul space have a different market to play in away from the low cost airlines, but will that be enough as their domestic and short markets are eroded? Aer Lingus is one that can play to its strenghts, being a small carrier, with good transatlantic feed via Dublin. However, they will need to keep growing that business to maintain a long term sustainable operation...
A bit long winded but my take on the matter. Besides all of that, globalisation is centre stage nowadays. Supermarket multiples are the same, few truly big players and we will see how that plays out as they are in decline. Buying your glasses, specsavers is enormous, hence fewer local opticians. The list goes on.
Aviation is a little different as the cost of entry is so high....