Cleared for Take-Off

In Paris last week, the idea of an "Air Union" of four of Western Europe's biggest airlines was finally cleared for takeoff. At the urging of West German Chancellor Konrad Adenauer, a reluctant Charles de Gaulle gave Air France the green light to begin negotiating final terms with its proposed partners: Germany's Lufthansa, Belgium's Sabena and Italy's Alitalia. When Air Union at last comes into existence, it will boast more aircraft (322) than Pan Am (123) and TWA (160) combined and will fly an estimated 350,000 route miles, v. 93,000 for the two U.S. overseas giants.

Though Air Union will not be airborne earlier than next spring, its basic flight plan has already been plotted. The four member airlines will retain their own names, their separate flight operations and maintenance facilities. But they will pool their finances, dividing up all earnings according to a formula that reflects both present shares of traffic and growth records. Initially Air France will get 34% of the take, Lufthansa 30%, Alitalia 26% and Sabena 10%. Sales organizations will be combined, and each Air Union line will pass on to one of its partners any business it cannot handle itself. An executive committee will coordinate routes and timetables to eliminate costly overlapping service. Eventually the Air Union members expect to buy new planes jointly, which should increase their bargaining power when the time comes to switch to costly supersonic transports.

Air Union may never become a true Common Market airline. Britain's BOAC and BEA have announced that they will not join even if Britain enters the Com mon Market. The Netherlands' KLM, which walked out of the negotiations three years ago in disgust over its allotted share of the revenues, now seems anxious to jump back in--but on its own terms. But even if only the present four lines join Air Union, their reduced costs will give them an advantage in competition with U.S. overseas airlines. This argument is sure to be made when Pan Am and TWA press the Kennedy Administration and CAB for the right to merge.

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