Low interest rates, high fuel prices and globalisation are combining to make the transport industry set for another wave of mergers and acquisitions, according to analysis by KPMG.

The study cites Virgin Atlantic as one of the companies most likely for consolidation, with Deutsche Bank already conducting a strategic review and main shareholder Sir Richard Branson has signalled a willingness to relinquish control.

James Stamp, head of transport transactions at KPMG, expects consolidation to be driven by the need for economies of scale, as well as the competitive advantage gained from offering a wider range of services to customers.

“We saw an upturn in transport M&A last year; we’re expecting more this year. Having survived the downturn, many companies will be focusing externally again,” he said.

Spanish infrastructure group Ferrovial, has plans to sell a 10 per cent stake of BAA.

According to figures from Dealogic, the number of deals in the global transport and logistics sector rose 13 percent to 892 in 2010, compared with 3 percent in the overall market. The value of deals rose 224 percent to $892bn (£553bn) last year.

This rise was bolstered by mega deals in the US including the $3.7bn purchase of Continental Airlines by United Airlines Corporation, and the £36.7bn acquisition of the Burlington Northern Santa Fe railway by Berkshire Hathaway, the investment vehicle of Berkshire Hathaway.

Government spending cutback will also drive privatisation deals. Last year, the British government sold the High Speed 1 railway line, and this year is planning to sell Nats, the air traffic control service.

The Spanish government is selling a 49 percent stake in the airport operator Aena. The cash-strapped Irish government has pledged to raise €2bn (£1.7bn) from state asset sales, which could lead to sale of its 25 per cent stake in Aer Lingus, the national carrier.

Throughout Europe, governments are also liberalising bus and rail services, with cash-strapped local authorities seeking private investors.

The big four British transport groups – Stagecoach, FirstGroup, Go Ahead and National Express – are competing for some of these contracts, as are state-owned transport companies, such as Deutsche Bahn, which are being forced to look further afield.