Alitalia, the national carrier of Italy has been in a tough spot. It has been running perpetually bankrupt for the last few years with a myriad of issues preventing it from rising out of its slump. How can this airline be fixed? Let us explore.
What are the problems with Alitalia?
Currently, Alitalia has a fleet of 93 aircraft and employs around 12,000 staff. They are being ‘funded’ by the government through bailouts. The airline has been looking for a buyer for some time, since Etihad’s decision to stop investing. Since that hasn’t really eventuated (although they got close with the likes of Delta and others showing interest), the Italian government has decided to nationalize the airline.
Some of the problems that the airline suffers from are commonplace with government-managed carriers. Large workforces, heavily unionized (unions themselves are not the problem, but rather strong protections prohibiting the airline from making radical personnel changes) and a bloated budget.
But these pale in comparison to the fact that Alitalia operates in the European sphere of low-cost carriers as a full-service airline. Whilst other airlines have dropped their European products to better compete with low-cost carriers (like British Airways), Alitalia has continued as if nothing changed, up until Etihad got involved in 2017.
The interesting thing for Alitalia is that it technically has unrestricted access to some of the best tourist destinations in the world, such as Rome and Venice. Plus with the news that Air Italy has withdrawn from the market, Alitalia now no longer has any domestic competition.
But even this news doesn’t mean that the carrier has full rein in its marketplace. With foreign carriers all providing subjectively better service to Italian cities, the carrier really struggles to stand on its own two feet without government help.
Steps that airline could take
Looking at the airline fleet, it has a rough mix of narrowbody and widebody aircraft. Most of its planes are not all that old, compared to other struggling airlines like South Africa Airways. However, despite being functional, many of these aircraft are well over 10 years old, with 15 or so nearly over 20 years old.
Alitalia could boost the efficiency of its operations by removing many of these older aircraft. This would not only save on maintenance and leases, but could also make the airline some cash back by selling off the airframes.
This would then allow the carrier to think less about prestigiously operating to as many destinations as possible, but rather focusing on the few destinations that actually make money.
In the future, the airline will be well poised to upgrade its fleet with new aircraft (like the 787 and A350) with modern cabins.
What about its workforce?
Additionally, this air fleet reduction would lead to culling much of the workforce at the airline. Whilst we would never be the first to suggest people be sacked, without such a large fleet the airline could use it as an excuse to modernize and only keep an essential team. This would massively streamline costs allow the airline to rebuild from scratch.
Lastly, this armchair airline critic would suggest that Alitalia do more with its branding and market positioning. The fact that most travelers to Italy don’t start their Italian journey with ‘the’ Italian airline is rather telling how they position themselves. They should look at a total overhaul of their branding internationally and re-market their position as a competitive option against low-cost carriers domestically.
“Alitalia is the perfect ambassador for Italy and all that it represents. As we revitalize the brand, the airline will increasingly embody all that we recognize as quintessentially Italian – the history, culture, food, and fashion. It must be an airline of which Italians can be proud.” – Etihad in 2017.
What do you think? Do you have any other ideas on how this airline can be rebuilt? Let us know in the comments.