Airline Consolidation in 2030; hub/spoke; low cost carriers; virtual carriers; global alliances and Commercial Space Flight

‍Commercial Spaceflight

Commercial spaceflight has more recently become a reality Russian Soyuz vehicles launching tourists to the space station (Webber, 2010). The vacationer remains in orbit 1-2 weeks and pays $20-$35 million per trip. Currently, there are a few U.S. based companies that are developing vehicles to transport passengers and cargo to space stations, however none have demonstrated the capability yet (Webber, 2010).
Virgin Galactic, a private company, has developed a vehicle that performs sub-orbital flight, attaining 100 km. These flights depart and return to the same spaceport, essentially performing a lob into space where there horizontal velocity at the peak is near zero. The proposed price for the 5 minutes of space experience ranges between $100-$200 thousand per trip (Webber, 2010).
Sub-orbital transportation between two points is an entirely different and new market. It has not been determined whether the demand for this type of flight is for passengers or cargo. Sub-orbital point-to-point flight has more in common with orbital flight or ICBM trajectories than the lob that space tourism performs (Webber, 2010). The customer and demand for this type of flight must be identified before this type of vehicle is designed and manufactured (Webber, 2010). If the launch vehicle is designed for passengers, is it business travelers or tourists and how many? If for business travel or cargo, it must be an on-demand service, otherwise the timesavings is defeated by waiting at the airport for departure. Once arriving at a spaceport the infrastructure must be in place to transport the passenger or cargo immediately onto the next form of transportation (Webber, 2010). Any delays on either end of the trip erase time saved during the flight. In the beginning of this type of operation, there will be relatively few spaceports to operate from, requiring transportation to and from spaceports to complete the trip. Any delays during connections could make transportation in current corporate aircraft faster and more economical. In determining a price for sub-orbital transportation, Webber (2010) states it will cost, at a minimum, the price of today’s space tourism lobs.
Another key issue regarding commercial space flight is the number of spaceports and locations. Eventually, a global network of spaceports must exist to operate a scheduled service. An unassigned but very necessary topic to address is who will develop the standards for the spaceport and how will flight operations including sonic booms be accepted by the populous (Webber, 2010).
This new type of sub-orbital operation will require a new vehicle then what is currently available. The vehicle used by Virgin Galactic, can only travel 200 miles horizontally. Intercontinental travel will require a hypersonic transport, capable of at least Mach 7 while passengers or cargo withstand high g-loadings (Webber, 2010). The size of the vehicle required for operations is unknown because the market has not been identified. Before commercial spaceflight becomes more of a reality, the customer must be identified. Space tourism is an initial step to commercial space travel. Passenger and cargo transport is a realistic proposal but large challenges remain to be overcome before commercial space flight becomes a reality.

‍Airline Consolidation by 2030?

While it is impossible to predict how the airline industry will appear in the year 2030; to gain an idea, it is useful to identify forces behind airline mergers and the current trend in the United States. For a more in-depth discussion of international alliances, see the Global Wiki.
The airline industry is well described by Michael Porter’s Five Forces model (2008):
  • Established rivals fiercely compete for price
  • Customers are very fickle at treat airline travel as a commodity, search only for the best deal
  • Suppliers of travel and aircraft are heavily unionized and bargain away most of the profit
  • New players continue to enter the “glamorous” industry
  • Substitutes for travel exist in abundance, train or car
In an attempt to become more profitable, airlines view mergers as a strategy to improve the forces in the industry. Mergers can drive increased revenue and lower unit costs. The increase in revenue is a result of less competitors and greater load factors on aircraft. Less competition can also lead to opportunities for increased fares. Mergers also drive lower unit costs as greater passenger density or aircraft using existing infrastructure increases asset efficiency.
Recently, the Chief Executive Officer of Alaska Airlines eluded that Alaska Airlines has no desire for an airline merger (Kaminski, 2012). In this environment where Alaska Airlines provides transportation with a local touch for customers along the west coast of the United States the business model maybe sound. However, the industry continues to consolidate leaving carriers such as Alaska Airlines as viable targets. Delta and Northwest merged in 2008, United and Continental Airlines merged in 2010 along with Southwest and AirTran. As the number of airlines continues to decrease, the factor of anti-trust laws will eventually prevent further merging. In the year 2030, the U.S. airline industry may consist of 3 or 4 larger companies with strong international alliances (see Global Wiki).

Kaminski, Matthew (2012). An airline that makes money. Really. Wall Street Journal. Retrieved February 18, 2012 at

Porter, M. E. (2008). The five competitive forces that shape strategy. If You Read Nothing Else on Strategy, Read Thesebest-Selling Articles., , 25. Retrieved February 18, 2012 at
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Webber, D. (2010). Point-to-point sub-orbital space tourism: Some initial considerations. Acta Astronautica, 66 (11-12), 1645-1651.