Competition regulators in Brussels have approved Air France's takeover of KLM, deciding the consumer comes out of the deal as a net winner. Washington also says it will not oppose the deal.
In a further boost to Air France, Europe's competition commissioner Mario Monti has indicated that Brussels will give its blessing to the alliance between the French flag carrier and its SkyTeam partner Alitalia. The two carriers have already agreed in principle a number of slot concessions on routes between France and Italy with the European Commission (EC), smoothing the way for regulatory approval.
On the Air France-KLM deal, the EC says KLM passengers will have access to 90 new destinations, while their Air France counterparts will be offered 40 new routes. "The combination of the two airlines is also expected to bring benefits to consumers and the economy as a whole from cost savings as well as from service improvements resulting from combined networks," says the EC.
However, the two carriers will have to relinquish 47 slot pairs to alleviate concerns the EC has over reduced competition on 14 routes, mainly between Amsterdam and France, but also on routes between the Dutch capital and Italy, New York and Atlanta. Flights to Lagos, Nigeria from both Paris and Amsterdam, and from Paris to Detroit, are flagged up too. The surrender of slots on the Italian routes may also help smooth the way for a possible link between KLM and Alitalia.
Brussels says that the slot give back will make room for 31 new return flights a day on the affected routes. The surrender of slots is for an unlimited period, compared with the standard six-year period for alliances, and the slots must be returned to the slot pool if they are misused or under used by the new entrant. In past alliance cases, the slots have tended to be returned to the alliance partners if no new entrant comes in.
The two partners have given an undertaking not to increase frequencies on the affected routes to give new entrants a chance to establish themselves. The Dutch and French governments have assured Brussels that they will give traffic rights to carriers that want to stop over in Paris or Amsterdam on third country routes, including the USA.
COLIN BAKER LONDON
Source: Airline Business
