It’s on. Etihad tried to remake Alitalia from the Worst Airline Ever into something amazing. That didn’t work. Now, Qatar Airways seems to have said, to borrow an overused meme, “Oh yeah? Hold my beer.” But Qatar isn’t pouring money into the bottomless pit that is Alitalia. Instead, it is giving Meridiana an extreme makeover into the new Air Italy. I wrote about this plan before, but now it seems far more aggressive than I ever could have imagined. Those who thought Qatar’s proclamation that it wouldn’t fly fifth freedom flights was a victory for the US carriers should look again. This is just Qatar under a different paint job, and the goal appears to be to crush Alitalia and take its place.
We all know how the latest Alitalia saga has gone. Etihad’s pie-in-the-sky strategy to create its own airline alliance has been disastrous. Relevant to this post, Alitalia failed to improve financially, and Etihad finally had to pull the plug on its support. The airline went bankrupt, and the government is keeping Alitalia afloat while it debates who it should allow to buy the airline. This process has been drawn out far too long, but now it seems likely we won’t have an answer until after the upcoming Italian elections on March 4.
Seeing this complete and total mess, Qatar said “ooh, I can do better than that.” And sure enough, it found an opportunity in Meridiana. Meridiana is a somewhat-sleepy little airline headquartered down in Sardinia. It has a small fleet of 1 737-700, 7 737-800s, and 3 767-300s. The 737s mostly bum around Italy and Southern Europe with some pushing down into northern Africa, primarily from the airline’s Milan hub. The 767s have a niche flying from Milan down into leisure destinations in Africa/Indian Ocean/Caribbean areas. They also serve leisure markets from New York with flights to both Naples and Palermo.
Meridiana’s niche has generally been that of a lower-cost leisure carrier. Its business class product is ancient but cheap, and it is one of the few airlines in the world to cram 8-abreast in a 767 in coach. It’s a niche model, but it’s worked for a long time. Seeing this, Qatar thought it worthwhile to buy 49 percent and completely and totally change the Meridiana business model.
Step 1 – Make it Pretty
Qatar effectively wants to become the new national carrier of Italy, so of course, it has to start by looking the part. To start, Qatar changed the name Meridiana back to that of a charter airline that Meridiana bought a few years ago… Air Italy. Considering how many of our Cranky Concierge clients already call Alitalia “Air Italia,” I can only assume this will add more confusion to the mix. And what good is a new name if you can’t throw on some new branding and paint, right? Qatar took its burgundy and wove it into the new Air Italy logo. That’s the easy part.
Step 2 – Fly Different Places
The next step was to re-orient the network. Those leisure destinations just aren’t sexy enough. Now Air Italy will focus on Milan and build out the network from there. This is most startlingly seen from the US. Those New York to Palermo and Naples flights are gone, sadly. Now, it’ll just be another fish in the Milan pond with flights from New York and Miami. It’s also adding Milan to Bangkok in the fall with three more long-haul destinations coming by the end of the year. Air Italy will also add domestic connecting flight options from Milan to build this into a hub of sorts, presumably targeting leisure and business travelers alike.
At least the geography is right. If you want to be a business carrier, you should be in the north of the country. But Milan has a problem in that it has two airports at Linate and Malpensa. Linate is generally-preferred for short-haul flights, and Air Italy won’t be there. Of course, that could change if Air Italy successfully pushes Alitalia into its grave.
By 2019, Air Italy will launch long-haul flights from Rome as well as it moves to conquer the entire empire. Alitalia should be concerned.
Step 3 – Get a Ton of Airplanes
While we knew a fair bit of this before the official announcement of the airline’s rebirth, the sheer amount of growth that’s expected wasn’t known. Remember, Air Italy has 8 737s right now, and that’s the entire short-haul fleet. It will get 3 737 MAXs this year and have 20 within 3 years. The current 737s will be retired, so this isn’t pure growth, but this is still more than double what the airline has today. This, however, is nothing compared to long-haul plans.
Those 3 767s will go away this year to be temporarily replaced by 5 A330s from Qatar. In the long run? Oh man, Air Italy will get all 30 of Qatar’s 787-8 aircraft starting in 2019. That’s right, look for a long haul fleet that is 10 TIMES the size of what is operating now. Sure, Qatar won’t fly fifth freedom routes. Instead it’ll just paint the 30 small widebodies it likes least in the colors of another airline and let Air Italy take a swing at success.
To put this growth in perspective, Alitalia only has 26 long-haul aircraft in its fleet today. (And it hasn’t figured out how to make money with them.)
Step 4 – Wait for Alitalia to Die
On the surface, this all sounds like a bad plan. But if Alitalia does indeed go away under all this pressure (as must be part of the plan), then things look brighter. Air Italy isn’t state-owned, so Qatar should have more flexibility with it than Alitalia. At the same time, Qatar has important equity partners like IAG (British Airways, Iberia, etc) that could help to feed the airline. Qatar has also publicly stated it wants to bring Air Italy into oneworld. But even with all that, I still don’t see how this model is going to work.
Italy is ultimately a highly-seasonal destination. It’s not as bad in Milan where there is important business traffic, but summer is always great while the rest of the year is rocky. I remain highly skeptical that Qatar can make this a profitable, year-round operation with 30 787s. Even with the small 787-8, that’s still a ton of capacity. It may have a better shot than Etihad ever did with Alitalia, but that’s about as low of a bar as you can possibly get.
Qatar has generally been fairly smart about its equity investments, but this one… this is questionable at best. Sure, Qatar has a lot of airplanes on order and it needs to put them somewhere, but I would hope this isn’t the best opportunity the airline has. Its success must be based on the eventual death of Alitalia, and that will be a truly sad day for this blog if it comes to fruition. But even with that, Air Italy is going to have a very rough go of it.
20 comments on “Qatar Plans to Kill Alitalia With Aggressive Growth at the Newly-Christened Air Italy”
I must be one of the few people on earth who thinks AZ long haul service is very good, at least in Business and Premium Economy. I have flown Rome – JFK and return numerous times in the past few years both in Business and PE. Both are high quality products. PE is often exceptional value. Will be a shame if the airline really goes belly up.
Agreed. One of the better business class products out there, at least on the legacy European airlines.
The “worst airline” schtick refers more to the business than the customer experience.
Except in the case of Air India. Air India fails on all metrics.
Yep, as grichard said, I’m referring to the business. It’s easy to make a good customer experience. It’s hard to actually make on that’s profitable, and that’s where Alitalia has failed miserably every single time.
dy ??????? ????? ??????? ? bb? ASent from my Bell Samsung device over Canada’s largest network.
As a Cranky Concierge client who flew Meridiana from JFK to Naples, 8-across seating in the 767 was a killer. Getting comfortable with such tight hip room was a challenge, if not downright impossible. Even my brother (34 inch waist) and SIL (skinny thing with a ~24 inch waist) couldn’t sleep during the flights, despite sleeping pills.
I can be a cheap masochist when it comes to travel, and I’ll gladly fly economy and some cheaper airlines to save a buck, especially on long haul flights, but the only way that I’d be willing to endure that again would be if I could save ~$400+ roundtrip and 1+ stop per direction. I’ll definitely be paying close attention to hip room when booking flights > 3 hours in the future.
At least the 8 abreast seating on a 787 will be slightly better than on the 767
8-abreast is what the 787 was designed for, but other than a handful of JAL and ANA examples, 9-abreast is the norm on the 787. Still probably better than an 8-abreast 767 though.
Italy is the 4th largest economy in the Eurozone. I don’t see any reason why they can’t keep an airline afloat without over reliance on leisure travel. I’m less skeptical of Cranky here and think Air Italy has legs if it’s well run and managed. Not sure about all those long haul aircraft though. I’d build up the short haul around Europe first but then again, I don’t run an airline.
Except that the economy is 4th largest due in no small part to incoming tourists who fly Ryanair or Easyjet, or if coming “full service” they are more likely to use their own countries national carrier.
Then for longhaul traffic, as a connecting point for rest of Europe, Rome or Milan only have geographic advantage heading to Africa – not a lucrative market, and for Italians leaving Italy there aren’t enough of them to have enough traffic to run enough destinations to compete with Paris, Schipol, Frankfurt, London.. etc
Crank,
maybeI am missing something from your previous posts about Alitalia but like what Harry and Chris have said, they have a very good product. Yet, I never see any comparative advertising from them. I would rather fly them that BA any day.
Airlines like Qatar & Norwegian ordering airplanes first, then figuring out how to deploy them….ready, fire, aim! Fast forward 4 years and make a wild prediction about widebody sales and secondary market prices.
I think you meant ‘conquer’ and not ‘concur’. :)
Matt – Ha! Fixed, thanks.
There’s a decent chance that at some point, the two (after each failing badly) merge. See Air One. It’s the theory that two drunks can prop each other up…
Step 1 – Make it Pretty: Teal and burgundy.
Already failed at Step 1. Can’t wait for QR’s expectations to meet Italian labor law.
Man that livery is… interesting. I can imagine the airline might not catch on with Italians since the colors don’t exactly scream “Italy”. I don’t mind the blatantly QR burgundy, but couldn’t they have at least added some green somewhere there? I mean, the original Air Italy already a fairly decent “Italian” livery, they could have gone with a revised version of that.
… welcome to the world of halal …
… and with a bottomless wallet … the trend, started with Emirates, to swamp with cash and grab a market is disturbing … Emirates is long overdue a check by the EU and other states on whom it preys with state subsidy …