(FORTUNE Magazine) – THE ADJOINING TABLE shows the world's 50 biggest passenger airline companies, measured by 1988 revenues. Beneath the numbers lies a new reality: Swift changes are sweeping over -- and shaking up -- this global business. The U.S. megacarriers, turned loose by deregulation a decade ago, are spreading their wings across the oceans and forcing realignments around the world in the long- clubby industry. The Europeans are responding to the challenge, and the Asians are gaining ground rapidly. Not long ago Europe's carriers divided up the routes in the home territory among themselves, set high prices, and split the profits. But the European Community is pushing toward its own deregulation in 1992, and already the game has vastly changed. Old war horses like British Airways have been rejuvenated by privatization, and upstart entrants have joined the battle for customers. European airlines have had to learn how to compete on price and service, and efficiency is at a premium. To enhance efficiency, European carriers -- including British Airways, Lufthansa, and Air France -- have signed up with two new computer reservation systems that provide flight schedules to travel agents. One is linked to UAL's Apollo system, the other to Texas Air's System One. Believing that only the strongest will survive, many lines have placed orders for costly new planes and are planning to increase marketing budgets. Smaller carriers are looking for allies. Belgium's Sabena is planning to sell shares to British Airways and KLM, while Swissair and SAS are forming a partnership and buying each other's shares. Even heavyweights like Air France and Lufthansa are signing agreements to sell their services jointly in Europe and around the world. Along the Pacific Rim, airlines have been surging as business and tourist travel booms in the prospering region. U.S. carriers are fighting to get more of the growing traffic across the Pacific, while Asian airlines are opening new routes to Europe. Air New Zealand has gone private, and Qantas may do so because the Australian government doesn't want to pay for a new fleet of planes. All but two of the companies on this list showed increases in revenue in 1988, measured both in dollars and in their own country's currency. UAL, one of the exceptions, was deconglomerating by selling off some hotel and car rental operations. But the company's airline revenues were up. The world's largest airline in terms of passenger volume, the Soviet Union's Aeroflot, is not on this list because the government does not provide meaningful numbers on revenues and profits. In 1988, Aeroflot, which spans a continent-size country without any competition and also flies to 100 foreign countries, logged 132.5 billion revenue passenger-miles. Its socialist service is such that Aeroflot's passengers often hold it up as an object lesson in the superiority of the free-market system. Even the People's Republic of China was getting ready to allow competition for its monopoly airline, CAAC (15.9 billion revenue passenger-miles annually), before economic reforms came to a halt. But freer -- and stiffer -- competition is clearly in the air for most of the world's airlines.

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