Belly dance around the Italian market

Italian air transport is still coveted, but all attempts to control it have so far failed. In fact, this mainly concerns international traffic because domestic transport has passed into the hands of “low cost” companies, first and foremost Ryanair followed by EasyJet. All this because the national company has not been able to defend its positions, eaten away by successive. plagued by successive flip-flops linked to the numerous government changes.

It is striking, however, that most Italian government officials have sought to get rid of a burden they could no longer bear without deciding to go through with their efforts. This is how, from the not-so-distant time of the late Alitalia, mergers were attempted with KLM and Air France in 2001, Aeroflot in 2007, then Air France again in 2007, then in 2011 a trial merger with Air France/KLM before letting Etihad Airways take up to 49% of the company in 2014. And I pass on other failed attempts from the beginning of the discussions, such as with Lufthansa.

All the equity investments did not save a company that was very successful during the 1970s. At the time, it was one of the major European players in international transport, operating up to 186 aircraft. So it was necessary to face the evidence under the pressure of the European authorities tired of seeing the Italian state replenish the coffers still empty by loans never repaid. And this is how ITA (Italia Trasporto Aereo Spa) was created in 2020 and took over the assets and operations of Alitalia in October 2021 by operating a fleet of sixty aircraft.

And since then, belly dancing has started again. The Italian government, which owns ITA, has made no secret of its intention to sell the company. And the candidates were not long in coming. As early as 14 January 2022, Lufthansa and the Swiss cruise line MSC made a first full takeover offer, which was refused by the Italian state, which wanted to keep an eye on its national carrier. Less than two months later, on March 10, 2022, a  consortium composed of  Air France, Delta Air Lines, and the Certares fund proposed to take a strong minority stake, only Air France was blocked by European rules that first oblige the company to repay loans granted by the state during the Covid crossing. Lufthansa then returned on August 31 with a minority proposal that was rejected by the new government. And finally, on January 19, 2023, the German carrier came back with a new, more minority proposal but with the possibility of buying the entire ITA. It would seem that the transalpine authorities are inclined to accept such an offer, especially since Lufthansa has indicated that if it is not accepted, it will focus its interest on TAP, the Portuguese carrier, or even on SAS, the Nordic company in great difficulty.

That is where we are. And I wonder why it would be so relentless to take control of ITA because it is certainly not in the interest of ITA, but only with the idea of capturing the Italian international market to transit it through foreign airports. This is also why the government is so reluctant to complete an operation from which the country will certainly not come out as a winner. Two previous attempts at reconciling with foreign carriers have failed. Air France which had taken every precaution to preserve Italian self-esteem was never able to organise Alitalia’s operations in coordination with its own. It has never been possible, for example, to unify reservation and check-in systems. Etihad Airways, for its part, has ruined itself by injecting money to make ends meet without getting anything, except at the margin, from the Italian market to Asia or Africa.

It must be recognized that the very strong Italian culture has great difficulty marrying another, even if it is close to it like the French. Let us acknowledge that Lufthansa has succeeded perfectly in taking over Swiss after the disaster of Swissair and Austrian Airlines. But these two carriers are of Germanic culture, which greatly simplifies exchanges. Relations are much more difficult with the Belgians of SN Brussels.

Basically, we still wonder why with a fleet of 60 aircraft that will quickly grow to a hundred and a very dynamic international market, ITA could not cope on its own. After all, many carriers make a profit without having the same strengths.