Alitalia, Italy’s flagship airline, has a new plan to stay in business—or maybe two businesses. It plans to operate as a domestic low-cost carrier with low fares and lots of fees, while continuing to operate a full-service international business.
The airline, which has lurched from one near-collapse to another for several years, plans to lay off about 20% of its staff, add more seats to its narrow-body planes (mostly A320s) and to shed about 20 planes. There will be charges for seat selection, priority boarding, baggage, food, etc.
Discount airlines, such as Ryanair and EasyJet have captured half of Italy’s domestic market and Alitalia now believes it can only compete with them on their own terms.
The airline is largely controlled by Etihad Airways, which owns 49%; most of the rest is held by a group of Italian banks, who will install a new executive chairman as part of the renewal plan. It is likely that the plan will meet strong opposition from the line’s employees and may have to be modified to avoid a long string of strikes.
Alitalia has had financial difficulties for a number of years. Formerly state-owned, it was slated to become part of the merger between Air France and KLM, but the Berlusconi government at that time backed out, saying it wanted the line to be Italian-owned. Alitalia continued close code-share relationships with the merged AF/KLM, but is in the process of ending those ties, although both lines continue as members of the Sky Team alliance.
