| Summary: | This paper draws upon a range of research and data sources to examine recent developments in the North Atlantic air transport market. Over the last decade, major changes to the industry structure have taken place including mergers between United-Continental, Delta-Northwest, American-US Airways, British Airways-Iberia-bmi-Aer Lingus (IAG). The alliance between British Airways and American has gained anti-trust immunity and acquired the former services of US Airways while Delta has formed a new Joint Venture with Virgin Atlantic. Icelandair and Wow have developed budget hub operations between the two regions via Reykjavik and in the last two years, further disruption has been led by Norwegian’s low-cost transatlantic services, joined now by low-cost offerings from WestJet, Air Canada Rouge and IAG’s Level. The extent to which the network carriers are trying to tap a new market through these offerings versus merely frustrating the efforts of their upstart rivals is discussed. Capacity and frequency data from Innovata and OAG is used to examine the development of air services along with traffic data from ICAO, UK CAA and US DoT. It is shown that the alliances have curbed capacity, increased load factors and reduced the influence of secondary hubs in favour of the major cities and gateways. New non-stop routes have been facilitated by technological developments such as the 787 and 737Max. A case study is made of London and New York (the two largest markets) and the impact of airline consolidation through mergers and alliances on market concentration is assessed using the Herfindahl - Hirschman Index (HHI). This is applied to both frequency (flights/week) and capacity (seats/week). Capacity is shown to be more concentrated as the stronger players are able to utilise larger aircraft. Traffic and load factors on North Atlantic routes from these cities are also analysed in parallel. It is found that concentration in London has increased through the growing dominance of British Airways-American although tempered by the ...
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