Airline Alliances and Mergers in Europe: An Analysis with special focus on the merger of Air France and KLM*

Alliances2 have proven to be one of the driving factors of air transport development in the past decade. Since the late 1990s, oneworld, SkyTeam and StarAlliance have emerged as the dominating airline alliances, operating combined about two-thirds of the total IATA traffic. The following paper gives a comprehensive overview on the existing literature on airline alliances, their driving forces as well as benefits and problems, for passengers, the industry itself and competition policy. We also discuss the question, whether airline alliances act as a substitute for mergers, which are impeded due to a potential loss of traffic rights as a consequence of cross-border mergers. A considerable part of the analysis will be given to the exemplary cases of the blocked British Airways – American Airlines alliance and Air France’s takeover of KLM, which is in many respects interesting, from the managerial, as well as competition policy point of view. The paper closes with a summary and an agenda for future research. 1The paper is based on a master thesis at the University of Hamburg supervised by Wilhelm Pfähle