The air transport market in which Air France operates has become fiercely competitive, due to various factors:
- U.S. deregulation triggered by the Airline Deregulation Act in 1978,
- EU liberalization as from 1993,
- globalization with the alliances coming into play,
- fast-developing new technologies.
Consequently, economic market conditions have radically changed, forcing the air transport industry to restructure, continually generate productivity gains, and contain capacity increases in the face of demand fuelled by the world's economic growth, in order to attain financial stability.
Today Air France has to cope with a new competitive environment.
In addition to competition from traditional carriers, airlines now have to face competition from low-cost operators on the medium-haul network and from carriers in the Gulf and emerging Asian countries on the long-haul network.
In addition, on short-haul domestic routes, Air France also has to compete with the TGV high-speed train in France. Forthcoming projects to develop and introduce the high-speed train on trans-European routes will naturally mean that Air France will be competing with the TGV on short-haul routes.
To cope with competition from various modes of transport, Air France together with KLM, is constantly innovating, offering a vast network built around two powerful hubs, products that meet customers' needs by targeting service excellence, within the strict framework of cost-saving plans and respect for the environment.
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Stages Leading To the Liberalization of European Air Transport
Hand in hand with the setting up of the European single market and against a backdrop of the liberalization of air transport that began in the United States, the three stages planned for the liberalization of European air transport started in 1987 and were completed in 1997.
- 1st stage, 1987
The liberalization process started with a series of measures, including the limitation of rights of national governments to oppose the introduction of new fares.
- 2nd stage, 1992
National constraints on ownership and control existed until 1993 when the concept of "Community Carrier" was introduced. From then on an airline holding an operating license issued by an EU Member State could obtain traffic rights on practically all routes in the European Union while at the same time being allowed to set its own fares.
- 3rd stage, 1997
Domestic markets were opened up to competition. All carriers registered in the European Union can now operate flights on these markets with complete freedom on matters such as fares and capacity.
