One of Europe's last bastions of regulation is starting to crumble as the French market embraces liberalisation.

Under the third package, which came into force in 1993, all member states had to open up their home markets (excluding ninth freedoms) by January 1996, at the latest. France, like Italy (see p10), is doing so at the last moment, although Paris had allowed some competition on trunk routes.

In the hope of strengthening his airline's position, Air Liberté's president Lofti Belhassine has declared interest in buying up rival AOM, a subsidiary of the troubled state bank Credit Lyonnais. Belhassine has formed Air Invest, an investment group which includes ILFC, but its owners say AOM is not for sale.

The combination of the two carriers could have been a competitive threat to Air Inter's dominance at home, says one French consultant. But he adds that Credit Lyonnais would be looking to recoup most of the FFr1.2 billion it has invested in AOM.

Meanwhile, Air France and Air Inter are confirming joint branding for the European product which will come into effect in 1997. The first signs of the integration are on the thinner regional and domestic routes, where Air France Group has brought previously separate operations under one brand, called Air France-Air Inter Express. This increases utilisation and cuts costs, says European project manager Alain Goutel.

Air Littoral, Brit Air and Eurowings operate the routes as wetleases. The strategy is to replace turboprops like the ATR42 with jets such as Fokker 70s, he says.

Sara Guild

Source: Airline Business