The New Alitalia Has Low Loads, Big Losses, and New Competition

Alitalia, Labor Relations, Worst Airline Ever

Time flies, doesn’t it? It seems like just yesterday that Alitalia was finally being privatized, but it’s actually been a few months. I thought it was time to check in on the airline to see how it’s doing. Anyone want to make any bets?

09_01_13 Alitalia Still WorstOf course, the airline isn’t doing well at all. It is projected to lose 200 million euros for 2009. That may sound like a big number for an airline that shrunk dramatically after its restructuring, but . . . uh, yeah that is a pretty big number. Granted, it’s far less than what the airline was going to lose in 2008, but really that’s a given. If they couldn’t improve on what the bungling government was doing, then there would have been no hope at all.

So are people flocking back to Alitalia now that it’s under new management? Hardly. The airline was crowing that it had bumped its load factor up to 59%. It had apparently been down around 43% so this is good news. I believe Alitalia will soon be launching its new ad campaign, “Fly Us and Get an Empty Middle Seat.” Catchy, no?

And the news doesn’t get much better. Remember that Lufthansa started up its own Lufthansa Italia subsidiary to fly between Italy and other EU markets? Well they’re heading for the Italian domestic market now as well. In April, Lufthansa will start flying from Milan to Bari, Naples, and most importantly, Rome, the crown jewel domestic market.

But at least labor relations are going well. The unions haven’t struck since, well, yesterday. Ok, maybe that’s not so good either. They had planned a 24 hour strike yesterday to protest their treatment by the new management team. I didn’t hear anything about whether or not that disrupted any flights or not, but maybe that’s just not considered news anymore.

Thanks for continuing to provide me with excellent blog fodder, Alitalia.

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9 comments on “The New Alitalia Has Low Loads, Big Losses, and New Competition

  1. In December last year, a new high-speed train line opened between Milan and Bologna cutting 30 mins off the ride. There is already a high speed line from Rome to Florence. This means that a train from central Rome to central Milan goes every hour and takes under 4 hours.

    OK, not quite the 3-hour barrier at which planes lose the ability to compete, but it probably makes it a bit less lucrative for airlines than it has been.

  2. Follow up to my last comment… the Bologna – Florence high speed line should open in late 2009. This will mean the faster trains from Milan to Rome running in just 2h45m – probably quick enough to attract the premium fare paying traffic.

    It’s beginning to look rather similiar to the Madrid – Barcelona route in Spain

  3. David, I’m a little confused with the high speed train routes you’ve mentioned.

    It seems, from the way you’ve mentioned them, that these are essentially three separate routes (i.e. one train will go Rome-Florence and back, another from Florence-Bologna, etc). I say this because, according to the way you’ve described it, the middle leg of the journey will be the last one running. So at least at this point, it’s being done on separate trains.

    If that’s the case, then you have to factor in to your calculations that you’ve got two changes, and possible wait time. Of course, if these waits are both in the 10-15 minute range, and you’re not traveling with much luggage, it may still make more sense. But, if the waits are too long, then you pass that three hour threshold. Conversely, if the waits are too short, you might not be too keen on the idea of having only 5 minutes or so to get off of one train, go under the platform, then come up on another line in time to catch your next train, if you’ve got any luggage at all (all while keeping your zegna suit in pristene condition, your bruno maglis free of smudges, and possibly stopping for an espresso).

    Of course, if what you’re talking about is actually a single high-speed train from Rome to Milan, with stops in Florence and Bologna, that’s a separate issue.

  4. Rob — high-speed trains can run on regular tracks, they just do it at the speed of regular trains. Currently a train from Rome to Milan takes 3:59 hours with stops in Florence and Bologna, or 3:30 without stops (presumably using the same route). When the tracks between Florence and Bologna are upgraded, the same trains will go faster. Though I don’t see where exactly they can shave off a full 45 minutes, given that the segment between Florence and Bologna currently takes only 1:01 hours.

  5. I actually lived in Florence for 3 months last year and used Bologna’s Guglielmo Marconi Airport to travel back and forth to Portugal. The trip between Florence and Bologna took little over an hour on the ES-type trains, and it travelled through a lot of valleys and tunnels, without many turns or decelerations as it was. I’m not quite sure how they will shave off 45 minutes in this particular segment, although I can imagine the AV trains really cranking it up in the Florence-Rome and Bologna-Milano segments, which consist basically of long straight segments, suitable for high-speed travels.

    I think Alitalia is (even more) screwed now…

  6. The NEW MANAGEMENT is just a wank.
    Rocco has no f…g idea about airline management, he is yesterday’ s man. He gave a friend of mine his private email addy and could not even remember it. Electronic distribution, rostering systems, revenue management – no idea. And he surrounded himself with italian speaking mates – because he does not speak english very well.

    Interesting enough the new shareholders have confidence..until it hurts.

    The airline world laughs at “new alitalia”…

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