The Italian airline industry: in a state of flux

Who wants to invest in Alitalia?

A couple of years ago we titled one of our posts "The Spanish airline industry, in a state of flux"...well, now it seems to be Italy that is in turmoil and anything can happen...

On one hand we have Alitalia's chronical financial problems. The Italian flag carrier is desperately short of cash, its Skyteam partners of Air France/KLM won't be giving a hand this time (and rightly so, in my opinion). Alitalia needs €300M immediately in order to keep flying, but even after the intervention of government-owned Poste Italiane, the Italian postal service, only €173M have been secured. No wonder there are serious doubts about Alitalia's survival. 

The best solution for the Italian flag carrier (and for the Italian government) would be to find a deep-pocketed investor to sustain the airline in the longer term, but it is unclear who would want to invest in a company that is a loss-leader in an already not too profitable industry. Russian airline Aeroflot has been mentioned in repeated occasions as a potential investor, but, according to the latest reports, this is not to be.

What seems clear is that whatever happens to Alitalia, Italian travelers are not going to be left without options.

Vueling has announced a new base at Rome's Fiumicino airport. Vueling is not a new comer to the Italian market, but this time the scale is unprecedented, with 8 aircraft based at Fiumicino and 24 routes, it aims to be an important player in Italy.

Pretty much at the same time as Vueling, Ryanair announced its own base at Rome's Fiumicino airport with 6 new aircraft (Ryanair also has had a historical presence at nearby Rome's Ciampino airport). This expanded presence in Rome will make it possible for Ryanair to operate many frequencies a day between Rome and several domestic destinations, mainly in Southern Italy.

Somehow it looks as if Vueling and Ryanair have already discounted Alitalia (even if Ryanair's Michael O'Leary apparently surprised everyone by offering his cooperation to Alitalia) and now have decided to go head to head against each other.

And, in the meantime, and far from the spotlight and the major capital airports, Volotea keeps building its network out of its Italian bases, in line with its strategy of connecting second-tier cities.

So maybe time to get some popcorn and watch the show...how is the Italian air travel market going to look like one year from now?