Americans pioneered no-frills airlines, but it is Europe where they are flying spectacularly high. Since deregulation in 1992 prices have tumbled, as passengers starting their summer holidays this weekend will appreciate. The cheapest ticket from Milan to Paris would have cost 16 times more in real terms 25 years ago. Tough competition in Europe — along with higher regulatory costs — makes it harder to make money. Airline profits average $7.58 per passenger, less than half the US average. The market is fragmented, with more than 200 airlines flying. That is more than twice as many as in the US, where foreigners cannot operate domestic flights. The economics of the US industry were transformed by mergers. The top six airlines in the US now have 90% of the market. Might the European industry, where the top six carriers have just 43% of the market, follow a similar path? As weak airlines get clobbered by higher fuel costs, takeovers are likely. In May Ryanair boss Michael O’Leary said ...

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