Since it’s a holiday here in the US, I thought I’d post something from abroad since I have a backlog of posts. And what market is more fun than the Italian market? So, let’s talk about Air Italy.
When Qatar poured money into Meridiana, rebranded it as Air Italy, and decided to completely shake up the network, you would have thought it would have been striving for stability for awhile to help build its customer base. If so, then you thought wrong. Air Italy has been all over the map, adding cities and killing others with abandon. I can’t quite figure out what the plan is here.
The old Meridiana was a sleepy hodge podge of an airline with short-haul flights centering on Milan and its Sardinian home. It also had a limited long-haul effort with tired 767s flying niche routes like Naples to New York. Then Qatar bought 49 percent and decided to out-Alitalia Alitalia.
It started with a fleet renewal that brought in 737s (soon to be MAX aircraft) and A330s (soon to be 787s), all thanks to Qatar’s order book. The network then went through a dramatic shift. The niche markets were all gone, and Air Italy focused on building a strong Milan hub instead.
From Milan, it grew short-haul flying to Rome, Naples, Palermo, Lamezia Terme, and Catania. It wanted to use those markets to feed people into a newly-turbocharged long-haul strategy. Just look at all these new long-haul routes that were launched in the last year.
- New York/JFK (June 2018)
- Miami (June 2018)
- Bangkok (September 2018)
- Mumbai (October 2018, delayed to December 2018)
- Delhi (October 2018, delayed to December 2018 )
- Los Angeles (April 2019)
- San Francisco (April 2019)
- Toronto (May 2019)
- Chicago/O’Hare (May 2019)
That’s an incredible number of new cities, and it was bound to take a fair amount of time for these markets to mature. You can’t just stand up 9 new cities on far away continents and assume it’ll work right away. But that appears to be just what Air Italy has done.
Air Italy looked bullish here. It added frequencies in many of these markets after the initial launch. It seemed like things must have been working across the board or we wouldn’t have seen such a quick expansion. That has proven to not be true. Things have changed rapidly and often since then.
Chicago service was killed months before it even started flying. Instead it appears Air Italy will bulk up frequencies in Miami and Toronto this summer. But that’s nothing compared to the decision to scrap all Asia operations with little notice. That means flying to Delhi, Mumbai, and Bangkok will end in the next month.
India service was already challenged when initial launch was delayed from October to December of last year. But this is a very quick about-face. What on Earth would make them pull back so quickly? Well, ch-aviation heard this from a spokesperson:
To manage this growth, we will continue to decrease our charter focus, build up and consolidate our scheduled network, open new destinations, and reduce, cease or make seasonal those routes which require modification for the overall maximum profitability of the business.
I have no idea what that means. I guess they’ll just tweak like crazy and at will to see if they can manufacture profitability without waiting to see if there is a ramp up? It sounds like pure chaos to me.
As if the airline needed any more help, in steps the Italian government. Air Italy lost its bid for government funding for the routes from Sardinia, its home base, to Milan and Rome. Alitalia won all six of those routes, so presumably Air Italy either has to pull out or suffer losses on the routes it flies today. Everything is in flux.
A strategy of going in and out of markets rapidly works for a low-cost carrier that has a lot of options. It doesn’t work for a full-service airline that’s trying to build brand loyalty in a very competitive market. Without reliability, an airline has nothing. And indeed, it appears Air Italy doesn’t have much going for it right now.
Alitalia remains in a state of confusion as its reorganization continues, so that’s the perfect opportunity for Air Italy to win customers. But the constant route changes are going to make that much more difficult. Meanwhile, Delta and easyJet are closing in on an Alitalia deal. If that happens, then Air Italy may find it has less time than it thought to win the battle for Italy. It might want to start fighting properly.