Introduction p 3

I. Overview of the sector p 4

II. Sectorial policies p 6

A. Airlines Industry Regulations p 6

B. European Airline Industry Regulations Issues p 7

III. Deregulation and Air France-KLM Case p 12

A. European Union Competition Law p12

B. Air France-KLM Case p 13

Conclusion p 15

Sources p 16

Appendix p 17
INTRODUCTION

In order to understand the impact of European policies on local companies, the Airline industry is a very interesting example.

Indeed, this sector has been highly impacted by legislation from the European Union.

Regulation of air transport is one of the most fundamental issues of this industry and affects the volume and character of air transport services.
The European Community, the economic and social pillar of EU law, deals with cartels and restrictive agreements among the companies.

For instance, in the case of Air France-KLM, this legislation led to a €340 million fine for the company.

How does the European Union’s legislation impact on the Airline industry in Europe? What are the consequences on Air France-KLM?

In order to give an answer to these problematics, we are going, first, to focus on an overview of the European Airline industry, then we will emphasize the European legislation, and then we will see the impact on Air France-KLM.

I. Overview of the sector

According to a study of the European Commission named ''European Union Air Transport Policy" in 2008, figures in 2006 were the following:

- A €140bn business
- Carrying over 730 million of passengers in 2006 (480 million within EU)
- EU air passenger traffic represented around 35% of world traffic
- More than 160 airlines
- More than 400 airports

First of all it seems important to introduce an overview of competition in European airline industry. We tried to find a classification of competitors in the sector to well understand the strategy of Air France - KLM.

ICF Consulting, in a study named "Overview