Though it’s true that the transaction hasn’t officially closed just yet — and may not until the new year — the acquisition by Lufthansa of 41 percent of ITA is all but done now that the European Commission has given its final sign-off. It wasn’t certain this would actually get done, and not just because ITA is the worst airline ever.
See, Lufthansa Group decided to try to haggle at the last minute and knock the price down, something that the Italians did not appreciate. I’m sure they all sat down and discussed it in a calm and rational manner… but it did eventually get settled. And with that settled, it was just a matter of the European Commission agreeing with the remedies that Lufthansa proposed to make them comfortable that this wasn’t too anti-competitive. The EC has now accepted the plan, and it approved distribution of slots to Air France-KLM, IAG, and easyJet.
These divestitures will have an impact on the makeup of flying in the country, but it won’t be all that significant. Here’s how it looked this summer.
Domestic and International Scheduled Seat Share Departing Italy – July 2024
Data via Cirium
Ryanair remains the largest airline in the country while easyJet will now put a little more distance between itself and Wizz for third. But ITA and the Lufthansa Group joint venture will now make up 21 percent of the total market. Still, the EC was very concerned about anti-competitive behavior and wanted concessions in Rome and Milan specifically.
On short-haul flights, Lufthansa had to make enough slots available to “start non-stop flights between Rome or Milan and certain airports in Central Europe.” The EC also required Lufthansa to give access to ITA’s domestic network via interline to connect to these Central European cities from around Italy. On top of this, Lufthansa had to transfer slots at Milan’s close-in Linate — which is hugely important, as we all remember….
EasyJet is getting those Linate slots, so let’s take a look at easyJet’s Rome and Milan networks thanks to Cirium data.
So far, easyJet has a very minor presence at Rome/Fiumicino and Milan/Linate with flights primarily to major business centers. The map below is from July 2024:
Maps generated by the Great Circle Mapper – copyright © Karl L. Swartz., Data via Cirium
But that small presence is because those airports are somewhat constrained, especially Linate. Just take a look at Malpensa where it’s easy to get in, and you’ll see where easyJet excels within Continental Europe plus the British Isles.
Maps generated by the Great Circle Mapper – copyright © Karl L. Swartz., Data via Cirium
At Linate, ITA and its new overlords had nearly 70 percent of departures this past July. The next largest was Aeroitalia with 6.5 percent. ITA’s new friends at easyJet came in third with 5.9 percent. I haven’t seen exact slots numbers for this, but I believe it’ll allow around 15 departures. That would effectively triple the airline’s size at Linate.
But these remedies aren’t just about short-haul flying. They’re about ITA’s general share in long-haul as well. Specifically, Lufthansa has to “enter into agreements with rivals to improve their competitiveness on the long-haul routes of concern between Italy and North America, for instance through interlining agreements or slot swaps.”
Interlining is, well, it’s fine. That is a thing already, and Lufthansa will have to continue it. But slots are a bigger deal. The numbers I’ve seen — which I have not confirmed — are 5 daily departures for British Airways’s parent IAG and 2 daily departures for Air France-KLM.
What will they do with these? Neither of these airline groups have subsidiaries that consider Italy a home market, especially for long-haul, so it will be an uphill battle. Remember when Air France tried to fly from the US to London? Yeah, that didn’t go well.
I figure IAG may try to have LEVEL run these flights. It would make sense from a configuration perspective where there’s a ton of demand but probably not much on the premium side that IAG can tap into. But for Air France-KLM, I honestly have no idea. It’s entirely possible that they just ask Delta where they want the airplanes to go, and they’ll point ’em there. I don’t know if they could just have Delta fly the airplanes themselves or not, but that would be the best option.
Now, we just wait and watch this unfold. Over the next year, Lufthansa Group will see what it has gotten itself into. It plans on integrating it into the group’s framework and the joint ventures pretty quickly, it says. Then it’ll have to think about that option that’s out there to buy the remaining 59 percent of ITA. I wish them luck… a lot of it.
18 comments on “Lufthansa and ITA Finally Come Together”
How would the long-haul slot remedy work? Does FCO have differentiated slots for short- vs long-haul? Or would ITA simply have to relinquish appropriately timed slots that are most suitable for long-haul (morning arrival and late morning/early afternoon departure)?
I’m not entirely clear on how this will all work. I assume it will be an offer sort of like how Heathrow has had in the past where there are specific slots that can be handed out based upon them being used to a certain destination.
We may not actually see an increase in the number of long haul flights, but rather changes to slot timings.
For example, Delta may shift up it’s JFK-MXP flight to arrive one or two hours earlier, which is much better for business travelers.
That very much improves competitiveness.
As intercountry high-speed trains become more numerous, the need for short hall flying within & between adjacent countries will shrink drastically. For example… Germany & the Netherlands, but you can pick any two adjoining countries with high-speed train networks to see how this will effect the aviation system.
Paris to London is 2h30 by high-speed train and there is still quite the number of flights between the 2 countries …
Paris to Amsterdam is 3h30 by high-speed train and there is still quite the number of flights between the 2 countries …
Ok, I took airlines hubs here but high speed connections have resulted more in an increase in traffic between the 2 cities than in a reduction of the airlines offer.
The time you sight is city center to city center. This doesn’t account for travel to the airport (2-hours before departure time,) going through security, boarding the aircraft, flying to the destination, waiting for baggage & then getting to the city center or final location. That makes the train a better value in dollars & time.
I very much agree with the value of trains, but still, somehow, it hasn’t made planes neither disappear nor reduce frequency between those city pairs !
1. LHG should own all airlines in Europe.
2. IAG should be declared illegal by the EU Parliament and be forcibly closed.
3. AF/KL should die in the most hideous way possible and be erased from history.
This is the only satisfactory outcome.
At what point do the parent companies eliminate the flag carrier brands and just rebrand as a singular entity?
Maybe 10-20 years ago the flag carrier brand carried some weight. Fast forward to today, and many European countries #1 carrier (in terms of passenger traffic) is no longer the flag carrier.
Eric – In Europe it won’t happen anytime soon. There is value in the brand so the countries can wave their national pride around, but also, not every country has an air services agreement with the EU. Some countries have individual agreements, so there is a messy web that requires keeping separate entities, as I understand it.
I hate to be that guy, but… Wait, no I don’t–I’m totally going to be that guy.
Chef Boyardee was real. Ettore Boiardi was raised in Piacenza, and worked in a kitchen there for a bit before immigrating to the US as a teenager. But Piacenza is south of Milan, so he wouldn’t actually get in the way of a safe commute from either airport.
Be that guy… I dare you! LOL
grichard – I actually noted that the first time I used this image, but then again, accuracy isn’t really the point here!
Now I want to see a flight from Linate to Narita switch to Malpensa to Haneda, so that you can create a combined image of Godzilla and Chef Boyardee… :-)
Map is missing Bergamo, which isn’t that far away and has become a beast of an airport, with 16mm passengers, third largest in Italy. It’s become so big the Italians are building it its own railroad station.
Per the LHG October 2024 Investor Presentation details:
1. Per page 25, we will not see ITA in LHG Financials….until LHG executes their Option Mechanism
2. Per page 38 Q3 2024 the LHG Adjusted EBIT Margin were:
a. Lufthansa Airlines – 8.5%
b. SWISS – 16.3%
c. Austrian Airlines – 17.8%
d. Brussels Airlines – 16.0%
e. Eurowings – 25.1%
f. All Passenger Airlines – 13.1%
3. Per page 10, nice details on Lufthansa Airlines vs Non-Lufthansa Airlines performance.
Looking forward to when LHG owns >50.1% of ITA and has to consolidate their financial performance.
I’m sure CF will continue to cover this story as it develops……until/if he declares ITA a new nickname!
For some reason, Chef Boyardee doesn’t strike the same kind of fear into one’s heart as Godzilla does. However, it might affect one’s stomach. It’s been a looooooooong time since I ate his ravioli. As I remember, it wasn’t awful – but it was a bit like airline food.
I would love to see the drama in the tabloids and late-night comedy shows if an airline were caught serving Chef Boyardee to pax on a flight to Italy (how to do you say “Sacre bleu!” in Italian?).
Feeding Chef Boyardee to Basic Economy pax (or comparing other airline food to Chef Boyardee) for a flight to/from Italy sounds like a joke straight from the Cranky Weekly Review. To be fair, though, It would probably be better than Spaghetti-Os, and definitely better than some airline food I’ve had.