If you’ve ever tried to find your way through crowds to toss a coin in the Trevi Fountain or attempted to stroll along the canals in Venice among large number of tourists, you know that Italy is a wildly popular vacation destination.
Italy hosted a record-breaking 420 million overnight stays from foreign visitors in 2017, marking a 4.4 percent overall increase from the previous year’s numbers.
However, during this actual tourism boom, the country’s own airlines are struggling to stay afloat. The nation’s latest venture, Air Italy, which launched just two years ago, has announced that it would liquidate under increasing financial pressure, and its last flights would be on February 25. Customers who booked after that date will be fully refunded.
Air Italy launched in 2018 after Qatar Airways bought a 49 percent stake in decades-old Italian airline Meridiana, which it overhauled with a new name and business model. Based in Milan, Air Italy focused on regional flights between Italian cities, and also long-haul destinations like Miami, New York, and Toronto, and Natal, Brazil.
Although it had its headquarters in such a popular travel destination like Milan, Air Italy simply couldn’t find its foothold in the saturated Italian market. “It’s a popular market for airlines everywhere including short-haul, low-cost airlines in Europe like Ryanair and EasyJet, which do well and are far more efficient airlines,” said aviation expert Seth Kaplan.
Air Italy started losing money, witnessing a loss of 164 million Euros after its first year of operations, and reportedly even higher losses for 2019, at around 200 million Euros. The losses are also due to bad luck, like the grounding of the Boeing 737 Max plane, of which Air Italy owned 20 and had to spend more resources replacing with leased planes.
Air Italy also mismanaged its long-haul route choices, some of which were canceled shortly after launching, like Milan to Thailand and India. Other flights, like Milan to Chicago, were taken off from schedules before they even started.
International competition has also made it difficult for Italy’s national flag carrier, Alitalia, which has struggled with its financial situation for decades. Thee airline “hasn’t posted a profit in at least 15 years.”
The fact that Alitalia is still in business is largely due to government bailouts in 2008 and 2014 estimated to be worth about 9 billion Euros.
Tags: Italian airlines Alitalia
