Europe 1992: Obstacles to Integration Within the Automobile and Airline Industries
O'Reilly, Kelly L.
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Although some believe that the EC has a long way to go and a tough road ahead in trying to liberalize the European Airline Industry, there is little doubt that deregulation is on its way. Already, bilateral agreements are being phased out in favor of a common policy run by the EC from Brussels. And gradual programs that will allow even more freedom for airlines to do such things as set discount fares have begun as well. Clearly, the wheels have been set in motion. In anticipating the coming deregulation of the market, many of the European airlines have begun to form alliances, both among themselves and with airlines around the world. As this behavior continues, the European Commission must decide to what extent it should be allowed. The Commission is being closely watched as it rules on cases before it already, such as the Air France and Sabena cases. The tone it sets now will have a great impact on the future of the airline industry in Europe. It seems that the EC would do better to take a strong stand for now. It is the opinion of some that the credibility of Sir Leon Britton is at stake if he allows the quick pace of mergers among airlines to continue. The EC needs to slow things down before it loses control. If the situation is not watched closely, the mergers may begin to hinder free competition in the newly opened industry, and the cartelism that was the case before deregulation will continue afterward. Although these mergers and alliances seem to happen quickly, it is unlikely that they will change the entire face of the European industry in the near future. The large flag carriers of each country, such as KLM and Iberia, have been around for a long time and are seen as a source of pride for each nation. They are not likely to give these up quickly and easily. Along with the pride, each has a different culture and way of operating. It seems unlikely that any of the member states will be very willing to give up control of the flagship of their nation and source of national pride to another country within the EC.