Are the sands of time running out for Alitalia following Qatar induced Air Italy rebirth?

The need for the Italian Government to find a sustainable and profitable solution for the nation’s flag carrier Alitalia has taken on more importance this week after Qatar Airways revealed plans to provide the country with “an innovative, sophisticated and stylish carrier, offering an enhanced travel experience” after rebranding Meridiana as Air Italy and delivering a fresh corporate identity to the market.

The Blue Swan Daily reported earlier this week on the continued delays securing a new investor for the ailing Alitalia operation. For a long time now it has stood close to the precipice after suffering a downward tailspin as legacy costs and union contracts have made it difficult for the airline to change its business model to adapt to the changing dynamics of the European air transport market. With elections looming at the start of March it is unlikely a solution will be found within the next couple of weeks despite confirmed investor interest.

This all plays beautifully into Qatar Airways’ hands and its ambitions to develop Air Italy into the nation’s number one carrier. The Gulf carrier’s CEO Akbar Al Baker had first revealed plans to resurrect the Air Italy name at the CAPA Asia Aviation Summit in Singapore in Nov-2017 when he revealed plans to grow the business in a “very robust manner”.

While its Gulf rival Etihad Airways failed with its investment in Alitalia, Qatar Airways believes that the smaller Meridiana was the right vehicle to grow in Italy, significantly expanding the operation rather than taking the axe to Alitalia and cutting it down to a sustainably profitable scale.

It finally acquired a 49% stake in the Italian carrier this autumn after establishing a new holding company for the business, AQA Holdings, in partnership with Meridiana’s former owner Alisarda, which holds the remaining 51% share. Talks between the parties have been taking place for over a year after a Contribution and Shareholders’ Agreement was first signed back in July 2016.

Meridiana itself had acquired control of the Air Italy brand following a merger between the airlines at the start of this decade. The two airlines have continued to operate with their own Air Operator’s Certificates (AOCs) with Air Italy flying on behalf of Meridiana, mainly from Milan Malpensa Airport.

The ‘new’ Air Italy will have a main focus on Milan Malpensa, which will account for around 80% of its network, although this will be complemented by a reinforced base at Rome Fiumicino and its heritage of seasonal routes from Olbia’s Costa Smeralda, which remains the headquarters of the airline. Under its initial development plan it expects to grow traffic levels to over ten million passengers per year by 2022 with more than eight million flying in, out and through Milan Malpensa.

Meridiana has been relaunched under the Air Italy name with a brand new brand identity and marketing campaign under the “imagine, experience and see the world differently” slogan

The growth will be supported by an expanded route network both within Italy and Europe and further afield. New long range routes have already been announced from Milan to New York and Miami and more will follow, including Bangkok. They will soon be followed by new short haul routes connecting Milan to Rome, Naples, Palermo, Catania and Lamezia Terme, adding feed to the long haul markets.

Further plans also include strengthening of the short haul network to improve connectivity and launching the first long haul destination from Rome Fiumicino in 2019.

Air Italy aims to operate more than 50 year-round routes by 2022 and these will be flown by a brand new fleet of aircraft. Replacing the old Meridiana fleet of Boeing 737 and 767 aircraft and up until recently the McDonnell Douglas MD-82, Air Italy will introduce 20 brand new 737MAX-8 aircraft over the coming three years. The first are scheduled to arrive in April this year. It will also receive five Airbus A330-200 aircraft this year from the Qatar Airways’ fleet, prior to these being further replaced by Boeing 787-8 Dreamliner aircraft, commencing May 2019.

Mr Al Baker describes Air Italy as “a sustainable airline alternative for the people of Italy and global travellers to and from” the country. “With high quality and an affordable schedule of services in the domestic, regional and intercontinental segments, Air Italy will achieve global scale in both fleet and network expansion, offering high-quality premium class products across all flights on a modern fleet,” he adds.

Details of the Air Italy onboard product were notably absent from the launch literature. The 737MAX-8s, part of an already announced commitment from Qatar Airways for up to 60 aircraft, are expected to be configured with up to 16 Business Class seats and a flexible Economy Class ranging between 160 to 189 seats. The A330-200s switched from Qatar Airways operation will likely retain their current configuration of 260 or 272 seats with a 24 seat Business Class cabin.

It is clear that Air Italy will be a premium airline and will certainly put extra pressure on those investors currently circling around the assets of Alitalia. The national carrier has been wounded by its financial troubles and only time will tell if it will ever recovery, and whether Air Italy will ultimately follow the same path. With the backing of Qatar Airways and its membership of oneworld, Air Italy will certainly have significant support behind it and could add further barriers to Alitalia’s long term profitability goals.