Go-ahead for Air France-KLM merger confirms consolidation of airline sector

The Commission has authorised the Air France to take over Dutch airline company KLM. The merger creates the world’s number one airline group by revenue.

Historically, the European airline industry has been distorted and fragmented because of national interests in state-owned or state-controlled airlines. With the introduction of liberalisation measures since the end of the 80s, the arrival of new cheap airline carriers such as Easyjet, Ryanair and Virgin Express, and the effects of the post-11 September crisis in the sector, big airline companies in Europe have been under pressure to merge in order to slash costs and become more profitable.

The Commission's competition authorities cleared the Air France-KLM merger after the companies agreed to give up 94 take-off and landing slots per day to their rivals. The deal creates the third largest world airline company in passenger traffic (after American Airlines and United Airlines) and the first one in revenue. The merger is expected to get the green light from the American competition authorities within the next few days. In the case of the merger of Alitalia and Air France, the Commission is pushing for more concessions.

The consolidation of the European airline industry has gained momentum as the prospects of a future "single sky" deal between the EU and the United States have brightened.

 

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