Air France-KLM and ocean shipping power CMA CGM, citing regulatory challenges in various nations, have agreed to discontinue their air cargo capacity-sharing agreement one year into a 10-year partnership, the companies announced on Tuesday.

Commercial cooperation between the two airline groups will end on March 31, one year after it began. Air France-KLM’s cargo division and CMA CGM Air Cargo will operate independently after that date, but discussions are underway to recast how the parties will cooperate going forward as independent operators, according to a joint news release. Interline agreements are a common way airlines use partner airlines to move shipments to destinations they don’t service.

“The tight regulatory environment in certain important markets has prevented the cooperation from working in an optimal way,” the companies said.

Several news outlets, including the Financial Times and Reuters, said the air cargo alliance appeared unlikely to receive U.S. antitrust approval to operate North American routes. A big albatross around their application is the Dutch government’s recent effort to cut nearly 10% of takeoff and landing slots at Amsterdam Schiphol Airport to reduce pollution and noise. The Netherlands dropped the proposal late last year after strong industry pushback, but the situation may have made U.S. regulators less inclined to help a Dutch airline, according to the news outlets. U.S. officials had expressed concern about the unilateral nature of the decision and reduction in U.S. flights when such matters would normally be negotiated in the context of the existing U.S.-European Union Open Skies agreement. The U.S. warned the Dutch government that flight cuts could open the door for retaliatory cuts to KLM’s frequencies to the U.S.

Reuters said the deal was also undermined by the weak airfreight market that has gripped the industry ever since the Air France-KLM capacity-sharing agreement was inked in May 2022.

Paris-based CMA CGM Air Cargo began operating in 2022 as the parent company used enormous container shipping profits during the pandemic to broaden its logistics capabilities for large customers. It owns and operates four Airbus A330-200 and two Boeing 777 cargo jets. It also has two 777s on order from Boeing and commitments for four Airbus A350 freighters. The startup airline has also had difficulty building a customer base, as demonstrated by on-again, off-again flights from Europe to the U.S., especially under weak market conditions that persisted for nearly 18 months.

The Air France-KLM Group operates six cargo jets (KLM’s three Boeing 747-400 production freighters, Martinair’s one 747-400 converted freighter and Air France’s two 777-200s). It also has an order with Airbus for eight A350 freighters.

The airlines established their alliance so they could jointly market freighter capacity and combine networks and dedicated services to increase scale and competitiveness. The idea was that the combined offerings would give customers greater choice in destinations, improved transit times and flexibility by utilizing the freighter and passenger belly space of the carriers.

CMA CGM took a 9% share in Air France-KLM when the deal was struck and will remain a shareholder. But the lockup period on the subscribed shares has been adjusted to end in February 2025 and will not be partly extendable until 2028, as originally planned. Under the exit agreement, CMA CGM will step down from the Air France board of directors.

Meanwhile, another airline deal was blocked Tuesday in the U.S. over antitrust concerns. A federal judge blocked a proposed $3.8 billion merger between JetBlue and ultra-low cost carrier Spirit Airlines, ruling that the deal reduced competition and hurt consumers.

Click here for more FreightWaves stories by Eric Kulisch.

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