Within Europe, there are three main airline groups: International Airlines Group, made up of British Airways, Iberia, and Aer Lingus, Lufthansa Group, made up of Lufthansa, Swiss, Austrian and Brussels Airlines, and Air France-KLM. In addition, there are many low-cost carriers dominating the European airline industry, such as Easyjet and Ryanair — the latter of which happens to be Italy’s largest carrier by passengers carried.
Before 2008, Alitalia had the opportunity to stay at the forefront of aviation in Europe, to be known as a proud flag carrier — a symbol of Italian excellence. Under Prime Minister Romano Prodi’s initiative, Alitalia began negotiations to join the Air France-KLM group, with Alitalia in a prime position given its already strong ties with the group due to their shared membership in Skyteam. However, under Silvio Berlusconi’s government, the Italian government rejected any agreements made with the Air France-KLM group, thinking that the Italian government on its own could maintain the self-sufficiency of the Italian flag carrier.
In Italy, Ryanair has emerged as the prevalent airline for Italian consumers; in fact, low-cost carriers have established new marketplaces throughout Italy through the promotion of small and detached airports that were not considered by Alitalia. For example, on the island of Sicily, Ryanair brings over 1.5 million passengers a year to Trapani Airport, while before Ryanair, there were only 300,000 passengers a year. Meanwhile, at Bergamo Airport outside of Milan, has turned into the third busiest airport in Italy, with 4.7 million passengers a year carried by a number of low-cost airlines, however mostly by Ryanair and Wizzair.
Each modern Alitalia rescue attempt has ended in failure: first a group of Italian businessmen, then by Etihad Airways. Now to avoid a third attempt, the Italian Government has granted the airline 600 million euros to help the flag carrier keep flying until October 31st. This only adds onto the 7.4 billion euros that the Italian Government and other contributors have given the airline. Given recent history, it is more than likely that November 1st and beyond, the airline will have the same old problems. Alitalia’s business model does not work because it is not competitive, and has never been.
Alitalia’s experiments and mistakes began in the 1960s, when Alitalia began to buy a number of different aircraft models, leading to exorbitant maintenance and training costs for the airline. In the middle of the 1960s, Alitalia created a subsidiary to link small airports with Alitalia’s hubs in Rome and Milan, but the airline was too expensive for consumers. Passengers were also dissatisfied with the subsidiary’s punctuality and precision, which led to reduced operations and the airline’s demise.
In the 1970s, the airline acquired a number of Boeing 727 and Douglas DC-10 aircraft to expand its reach. While the Boeing 727s were great for capacity in the airline’s network, the aircraft’s fuel consumption was another burden on the airline’s finances. The Douglas DC-10 aircraft helped Alitalia’s route network reach the Far East, however, routes with the aircraft were not liked by passengers due to a fuel stop in Brindisi, which was needed because of the aircraft’s limited range for Alitalia’s routes.
In the 1990s, Alitalia began to use ATR aircraft on their regional routes. However, Alitalia commonly overbooked the flights, often having to decide between adding passengers and luggage to the aircraft, with unpleasant results regardless. These actions ended up hurting the airline’s image in Italy, however, such decisions did not affect the airline’s finances yet.
Alitalia made a large operation shuffle in 1998 when the airline moved its most important flights to its hub in Milan Malpensa. This was due to the airport’s connections to the rest of the European continent, due to most European flag carriers’ connections between their hubs and Milan. However, the move did not work due to EU courts ruling that the government could not close Milan Linate airport, giving other airlines a competitive edge that Alitalia anticipated being removed. The airline’s move ended up hurting its clientele in the Italian capital, and less than 10 years later, the airline moved all of its operations back to Rome — another financial burden.
Alitalia’s current business model has been criticized by the Luca Cordero Di Montezemolo, ex-President of Alitalia, who considered Etihad Airways guilty of ruining the airline as the Etihad-appointed managers were incapable of understanding that the airline’s real problem laid in its business model, not economic issues. According to Montezemolo, Alitalia’s workers must also share in the guilt due to their votes against a 2 billion euro capital infusion, new management, and help from Etihad Airways earlier this year. It is sad and painful to witness the downfall of Italy’s flag carrier, and even if international passengers have flights to choose from to reach Italy, it is a matter of pride for the Italy’s people and government that they be welcomed on Italian planes first, so they can taste our food, hospitality, and the warmth of our country.
Featured image by Alitalia.