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Fransie

Fransie

Member Since 30 Mar 2017
Offline Last Active Nov 10 2020 06:49 PM

In Topic: Alitalia going bust?

05 May 2017 - 07:05 PM

IMO Alitalia deserves to die, especially since a lot of Italians now hate their flag carrier. If you think otherwise, I would suggest Alitalia leave SkyTeam for good, if you're saying its joint venture with Delta and Air France-KLM (the more powerful members of SkyTeam) has prevented it from expanding its long haul operations.

 

I believe it is quite hard do determine if a company should "deserve to die" or not from a social and economic standpoint. If Alitalia bankrupts there are going to be severe consequences for several Italian airports – in particular the small ones and FCO – and it will take them several years to recover or they may even close down. Furthermore, job losses do not only regard the Alitalia staff but also all the businesses related to Alitalia such as cleaning services or catering. Therefore, one has also to take that into account. However, that does not mean that a continuously unprofitable company should be kept alive for ever. 

 

As for the joint venture with Air France-KLM, it has already been ended since January because of its non-beneficial effects on Alitalia. However, that does not mean that is has to leave SkyTeam since a joint venture and an alliance are quite different. 

 

 

Well, you sure have something against Alitalia....

 

Anyways, i think another problem for Alitalia was focusing its operations around FCO instead of MXP, considering that Rome is mainly a tourist attraction, while Milan and most of Northern Italy, is where the main industrial and financial areas are and where perhaps they should of focused their operations, instead of just giving away that market to Lufthansa, Air France and others.

 

Whatever happens, either Alitalia is going to become a shell of its former self or just be let to die and another airline rise to take its place.

You are right in mentioning MXP. However, I think that the issue was not focusing on FCO but rather not deciding whether to keep Milano LIN or enhance MXP. FCO all alone has slightly more traffic than all the three airports (MXP, LIN and Bergamo BGY) that "supply" Milan and part of the Northern regions. Moreover, it is not only a touristic city but also a capital. The issue was that when MXP was built it was too far away from Milan and badly connected to it and LIN was seen as more profitable. Furthermore, several workers – based in FCO – did not want to move to Milan. They should have decided with a clear strategy whether to abandon or better downsize LIN and make a long-term investment on MXP or just focus on LIN. Having two hubs (FCO and MXP) is possible but you need a strong and clear management plan which Alitalia never had. Nonetheless, I agree with your future predictions on Alitalia.


In Topic: Alitalia going bust?

04 May 2017 - 07:56 PM

There are rumors – although I am quite sceptical – that Lufthansa might buy it. However, I do believe that there is a huge probability that other airlines will prefer to buy its assets – mostly its good slots in major airports – even though the Italian government will try to preserve it and to sell it as "one". There are several elements that caused Alitalia's bad performance. First of all, in the ends of the 1990s and beginning of the 2000s it tried – stupidly – to focus on short and medium-haul flights which was a total failure because of the strong LCC – in particular Ryanair – entry and predation in the Italian market. Another major issue is (was) related to labour costs that were extremely high but have been reduced in the past years as long as high leasing and fuel costs. Furthermore, the management was not particularly good – even after Etihad bought 49% of it – since it ended up engaging more on cosmetic changes (livery, seats and so forth) and not strategic. That is, focusing more on the long-haul market. Only few and not particularly new wide-bodies have been add since Etihad's entry. However, one of the reason of its slow long-haul expansion was also caused by the joint venture with Air France-KLM and Delta that eventually was not so beneficial to Alitalia since it was signed when Alitalia was (again) in a difficult financial situation. This meant not being able to add route on the North American market and functioning more as a feeder to Air France-KLM. 

 

The new business plan was not bad since it tried to address most of the issues that I have above mentioned but unfortunately it was rejected by the workers. We will see what will happen since its bankruptcy may have deep negative effects on the aviation sector in Italy.