Alitalia has been bailed out numerous times already
Alitalia has been bailed out numerous times already

Alitalia news: Why the national airline is too Italian to fail

The Man Who Pays His Way: 'Extraordinary administration' equates to 'business as usual'

Simon Calder
Travel Correspondent
Thursday 04 May 2017 16:28

Once upon a time, the natural way to reach Italy was on Alitalia. In the 1990s, I flew fairly frequently on the Italian flag carrier from London to Venice, Pisa and Rome.

As no-frills airlines spread their wings and fares fell, Alitalia reacted with one hare-brained strategy after another. I bought a flight to Sicily through the airline’s shiny new hub of Milan Malpensa, only to discover that, a) the connections rarely worked as advertised, and b) the transit lounge cafeteria served the worst pizza in Italy. The hub at “MXP” was soon ditched.

Since then, many prize airport slots have been sold off to stem the losses of this dysfunctional airline.

How dysfunctional? An official in the US Embassy in Rome put it crisply in a blistering diplomatic cable sent in 2008 and later revealed on Wikileaks: “The Alitalia saga is a sad reminder of how things work in Italy.

“A group of wealthy Berlusconi cronies was enticed into taking over the healthy portions of Alitalia, leaving its debts to the Italian taxpayers.

“The rules of bankruptcy were changed in the middle of the game to meet the government's needs. Berlusconi pulled this one off, but his involvement probably cost the Italian taxpayers a lot of money.”

The writer called Alitalia a “dying airline” – but it has limped on, with life support provided by Poste Italiane (a thin disguise for the Italian government) and Etihad, the Gulf-based airline with the misfortune to own 49 per cent of a business that is haemorrhaging cash.

After staff voted to reject the plan, the airline applied for amministrazione straordinaria (“extraordinary administration”) but added: “Alitalia’s flight schedule will continue to operate as planned.”

From the UK, the schedule these days is unimpressive: reduced to just three flights a day from Heathrow to Rome, and a couple more to Milan’s Linate airport. Alitalia’s CityLiner subsidiary connects London City with the two Italian airports. But of the 22 daily flights between the UK and Italian capitals, only four are on Alitalia – while Ryanair, an Irish airline, has five.

Both Ryanair and easyJet have done Italian travellers a favour by establishing domestic routes that offer choice and reliability as well as low fares – but not on every route. On the nation’s key link, between Milan Linate and Rome Fiumicino, you can fly on any airline you like so long as it’s Alitalia.

With disdain for European competition law, the government in Rome allocated slots for the Linate-Fiumicino route by such complex conditions that they might as well have said: “Open only to airlines whose names are comprised of three As, two Is, two Ls and a T”.

There are cheap fares to be had while Alitalia struggles for survival

But Alitalia’s ability to extract premium fares on the link has been damaged by the excellent high-speed rail line between Rome and Milan, with trains every half hour taking under three hours. The intercity vacca in denaro (”cash cow“) is drying up.

Will the vote against reform prove terminal? I don’t think so. History tells us that, in a mockery of economic and legal reality, Alitalia will not be allowed to fail. Which presents you and me with an opportunity. As some prospective passengers fret about the risk of failure, fares are being cut to fill seats.

Don’t expect anything as extreme as the £352 London-Sydney return which Alitalia briefly offered before it pulled out of Australia. But if you fancy flying down to Rio from Heathrow for Christmas and New Year, the Italian airline is the cheapest in the market – with fares so low that you can take the long transatlantic haul back in Premium Economy for the same price as British Airways’ basic economy on the non-stop run.

Pay by credit card or buy the flight as part of a package to protect yourself against “extraordinary administration”. But everything I have seen tells me the flights will go ahead: Alitalia is too Italian to fail.

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