AIR FRANCE DEAL POSSIBLE WITH SNCF TRAIN SERVICES

France’s state-owned SNCF rail operator offered to set up a passengertrain partnership with Air France-KLM Group, seeking to head off a proposed venture between Europe’s largest airline and Veolia.

The SNCF initiative came just days after Air France-KLM confirmed it was in talks with Veolia’s transportation unit over a passenger rail service that could replace some short-haul air services when Europe opens cross-border passenger trains to competition on January 1st, 2010. The move falls in line with a European Commission proposal to force airlines to offer train tickets as an alternative for shorter routes. This trend was already observed at Air France-KLM, when it abandoned Paris-Brussels flights in 2001 and negotiated a code-sharing agreement allowing it to book passengers onto Thalys trains linking Paris Charles de Gaulle airport with the Belgian capital.