John Strickland says that, rather than being a harbinger of doom, a few airline closures may leave the industry stronger.

Consolidation is one of the industry’s watchwords. Air transport has reached a point in the US where the five leading airlines account for the vast majority of capacity in the market; the OAG put it as high as 90 per cent. These five airlines include legacy operators American Airlines, Delta Air Lines and United, who all offer connecting services via their powerful hubs, plus the country’s two biggest low-cost carriers (LCCs), which are Southwest Airlines and Jetblue.

In Europe there are also five leading airlines – Ryanair, Lufthansa, IAG (including BA and Iberia), Air France-KLM and Easyjet – but these big five account for a “mere” 50 per cent of the total market capacity (according to OAG data). Consolidation may have moved more slowly in Europe but it’s increasing; three high-profile European airlines have either just disappeared, or are potentially in the process of doing so.

UK leisure carrier Monarch Airlines ceased trading in October, with its Gatwick landing and take-off slots being bought by other airlines, and not necessarily being used for the same holiday destinations.

In Germany, Air Berlin declared bankruptcy in August, with the majority of the sudden gap left in capacity likely to be filled by Lufthansa, and a smaller amount by Easyjet. Air Berlin had incurred heavy losses for years. Its disappearance may lead to a reduction in competition in the German market, and greater financial stability for the remaining companies operating there. Having said that, there’s no guarantee that Ryanair, thwarted in putting forward its own bid for Air Berlin, won’t now increase its share of the German market, which could benefit consumers by also putting downward pressure on overall pricing.

A more protracted case is Alitalia, which has been financially close to the edge for many years but has always risen phoenix-like from the ashes; in recent years, it was only saved by a bailout from Etihad. This time around it’s not clear what will happen next, but quite probably its short-haul seats will largely disappear, as low-cost airlines already dominate in Italy. Alitalia’s lucrative long-haul routes are likely to be taken over by other airlines.

In each of these three European cases, there will be impact on competitors, and a certain amount of capacity will disappear. What remains will be in the hands of fewer operators. So is this a good thing or a bad thing for travellers?

The airline industry is not known for its high levels of profitability or stability, and only a few airlines are showing the sustainable financial performance that will cover their capital expenditure in the long term. The list includes the aforementioned US legacy and low-cost airlines. In Europe, IAG is big enough to survive. So are the three largest European LCCs (Ryanair, Easyjet and Wizz).

It’s easy to bemoan the loss of choice for customers as airlines fail but I’d argue it’s better to have longer-term stability led by well-managed airlines than to experience volatility and shocks in the market as airlines grow, retrench and frequently fail. It’s possible to have the benefits of competition, yet still achieve consolidation in the European market.

In the US, where consolidation is much greater, there is a bigger concentration around the major hubs, and air services to some communities have been lost entirely. But the upside is that the solid financial performance of the remaining airlines is being reinvested in new aircraft, and much improved onboard service on long-haul flights – two areas where the North American carriers have been lagging for many years.

In Europe, IAG airlines are able to work together more efficiently than they could as standalone entities. Aer Lingus, for example – as part of IAG since 2015 – is now able to order new aircraft on better terms, and expand its North Atlantic route network, to the advantage of consumers.

Europe needs to continue down the road of airline consolidation, and it will do so. There needs to be a hard-nosed look at routes operated, prices listed and the types of service offered but it doesn’t mean an end to competition, and it isn’t about reaching a position of monopoly or oligopoly.