ABSTRACT
This chapter shows that the changes in the airline industry will be not only be dramatic but they will also be permanent. The alliance between Air France and KLM that includes cross-equity holdings has the potential of not only reshaping the European commercial aviation industry but also the North American aviation industry by being a catalyst to long-overdue reform of an archaic regulatory framework. Consequently, the probability is high that the airlines on both sides of the Atlantic would eventually be operating in an open Trans-Atlantic Common Aviation Area. Two significant differences between the two groups of airlines are the manner and the speed with which each group has reacted to the dramatically changing marketplace, and the difference in their cost structure as they entered the current downturn. All businesses are trying to improve their bottom line including by reducing their travel budgets.
