Alitalia, Italy’s flag carrier, has found itself cornered. It faces a future even more uncertain than that of South African Airways, which is also on the verge of bankruptcy. Alitalia declared bankruptcy recently in an effort to maintain its New York slot and try to reorganize itself. Since this happened, Alitalia has found itself in an even more precarious situation.
United Makes Newark-Rome Year Round
United Airlines, the king of Newark, announced earlier that they were planning on taking their Newark-Rome flight from seasonal to year round service. This means that Alitalia will now have to compete year round with United. This came a few weeks after Alitalia decided to declare bankruptcy in New York. It feels like it is United licking salt into the wounds of Alitalia. United will fly the route with a 767-400, which will have 2-2-2 Polaris Business class. Although the airline announced the route change as celebration of its 20 years to Rome, I think it was carefully timed to pull customers from uncertain Alitalia.
Norwegian Comes in for the (Probable) Kill
Norwegian Airlines, the successful European low cost carrier, will also open a long haul base in Rome in 2018. As if things could not get worse for Alitalia, they will be competing with Norwegian on flights to New York (EWR) and Los Angeles. This pushes Alitalia to the metaphorical corner. They will need to compete with a network carrier to Newark, and a low cost carrier. This means that Alitalia’s fares will probably drop as soon as Norwegian launches flights. Lower fares are good for consumers, but in this case, could signal the end of Alitalia.
Will They Survive?
This is the burning question in everyone’s mind. What will happen to Alitalia, can they survive? I don’t think they will be able to survive on their own. In the latest airline spending spree, Skyteam members created a new transAtlantic joint venture. Alitalia is part of the new business, but it is not as intertwined as the rest of the members. I expect to see some Skyteam member will purchase a stake in Alitalia, or at least I hope to see that happen. It is the only way I can see the airline finding secure financial backing, and staying in Skyteam.
Another thing I can see happening, which I had mentioned before, is Alitalia being purchased by another airline conglomerate. Either Lufthansa Group or IAG would be good suitors. One obscure suitor could also be Qatar Airways. They are planning on purchasing 49% of Meridiana, a small Italian leisure airline. If they purchase Alitalia, they could merge the two companies, and make them work together. I don’t know, this seems a plausible scenario, however unlikely.
Alitalia is between a rock and a very very hard place. They will begin to face fierce competition on their most profitable route. This means that the airline will either lower prices, or be out-competed. Either way, it does not bode well for the airline. It will take a few months to see what happens in court, but for now Alitalia’s future seems bleak.
What do you think? Will Alitalia be able to survive? If so, in what form? Who will be its main partner? Let us know!
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All images from Wikipedia.