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Italians Demanding BA&LH Raise Fares  
User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Posted (9 years 11 months 4 weeks 1 day ago) and read 5621 times:

Disturbing report in FT that ENAC (the Italian Civil Aviation Authority) had ordered BA & LH to stop offering lower fares than Alitalia on competing long-haul services.

This comes as the Italian Government seeks to prevent AZ from collapsing into bankruptcy by agreeing to provide an emergency state-guaranteed $493M loan to the airline.

BA has protested to the European Commission and that similar problems could arise over the setting of prices on some indirect long-haul services connecting through BA's LHR hub from Poland, Germany, Latvia, Hungary & the Czech Republic.

Is this legal? Can governments demand what an independent, privately owned carrier charge for its fares? Seems strange to me!



73 replies: All unread, showing first 25:
 
User currently offlineFlyboy36y From United States of America, joined Mar 2000, 3039 posts, RR: 7
Reply 1, posted (9 years 11 months 4 weeks 23 hours ago) and read 5584 times:

Is this legal? Can governments demand what an independent, privately owned carrier charge for its fares? Seems strange to me!

We did it in this country untill deregulation in the 70s



User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 2, posted (9 years 11 months 4 weeks 23 hours ago) and read 5572 times:

Agreed....and the one of the great acts of government abolishing the CAB! But I thought that here in the "Europen Union" all trade was unregulated. Guess I'm thinking wrong.

User currently offlineBjg231 From United States of America, joined May 2004, 163 posts, RR: 0
Reply 3, posted (9 years 11 months 4 weeks 23 hours ago) and read 5554 times:

It's probably only a matter of time before the EU reaches a settlement or the WTO takes some sort of action against Italy. However, I honestly doubt that the dispute will get as far as the WTO, most likely BA and LH will reach a reasonable compromise with the government allowing some sort of fair competition.


If at first you don't succeed, then skydiving is not for you.
User currently offlineBill142 From Australia, joined Aug 2004, 8440 posts, RR: 8
Reply 4, posted (9 years 11 months 4 weeks 22 hours ago) and read 5499 times:

Maybe the Italian government should look at changes to Alitalia management. Perhaps employing management which is competent. Selling it to tha KLM-AF group probably won't be a bad idea.

Forcing BA/LH to reduce fares in order to protect its own entity isn't the way to go.


User currently offlineRabenschlag From Germany, joined Oct 2000, 1007 posts, RR: 0
Reply 5, posted (9 years 11 months 4 weeks 22 hours ago) and read 5484 times:

this is ridiculous. the ENAC has no power on a european level. if anything, such orders would come from brussles. who would enforce such orders? maybe its wishful thinking by the italian authorities.

if it is not profitable, let it die! there are too many long-haul carriers within central europe.


User currently offlineJGPH1A From , joined Dec 1969, posts, RR:
Reply 6, posted (9 years 11 months 4 weeks 21 hours ago) and read 5440 times:

BA and LH can tell Italy to go suck an egg - the EU aviation market is fully liberalised now, no national government can override the EU where this market is concerned. AZ must live or die on its own merits, the Italian governments pathetic attempts to keep this monster alive are bordering on the ridiculous.

Instead of insisting AZ's competitors voluntarily give up their market advantage because AZ can't compete, they should be dealing with AZ's unions head on, telling them that if they don't pull finger and get some major efficiency concessions out of AZ's staff, the whole things going down the tubes. The Italian travelling public is voting with their feet (and their wallets) - if AZ can't take the competition, they have no place in the market.


User currently offlineCedarjet From United Kingdom, joined May 1999, 8061 posts, RR: 54
Reply 7, posted (9 years 11 months 4 weeks 20 hours ago) and read 5384 times:

Ho ho. Alitalia seem to think it's still the 70s (their appalling service is further proof of this). The idea of BA and LH putting their fares up to protect a useless airline in Italy at the expense of millions of air travellers is repellent. No wonder KLM backed off. Me too. Goodbye Alitalia.


fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
User currently offlineFlyLondon From United Kingdom, joined Feb 2004, 377 posts, RR: 0
Reply 8, posted (9 years 11 months 4 weeks 19 hours ago) and read 5304 times:

Nice to see Italy moving into the 21st century and embracing capitalism!
Such a pathetic display of attempted protectionism simply proves that on a level playing field Alitalia is unable to complete. Hopefully either the EU or WTO will do something against them.


User currently offline777ER From New Zealand, joined Dec 2003, 12082 posts, RR: 18
Reply 9, posted (9 years 11 months 4 weeks 19 hours ago) and read 5282 times:
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Does the Italian governement want its population to suffer with high fares? Competition is good as it provides the consumer with greater choices. Not every Italian will want to fly the National carrier.

User currently offlineTrident2e From , joined Dec 1969, posts, RR:
Reply 10, posted (9 years 11 months 4 weeks 18 hours ago) and read 5245 times:

As Italy is a member of the EU it has no power to dictate what airfares are charged by Community carriers.

User currently offlineBicoastal From , joined Dec 1969, posts, RR:
Reply 11, posted (9 years 11 months 4 weeks 18 hours ago) and read 5212 times:

Bill142, I agree but it's not only the management. It's the employee unions which are resisting job cuts, wage cuts and productivity increases. The whole of Alitalia is a mess and should be left alone by the Italian government so that it can fade away, much like Sabena, TWA, etc. There are more than enough airlines in Europe to fill the void when and if Alitalia goes under.

User currently offlineCedarjet From United Kingdom, joined May 1999, 8061 posts, RR: 54
Reply 12, posted (9 years 11 months 4 weeks 18 hours ago) and read 5178 times:

777ER: "Does the Italian governement want its population to suffer with high fares?" Not only its population, it wants to punish the British and German populations as well. Sorry to come back to this, but I really think this is disgusting.

(Bicoastal, I think you're being unfair comparing TWA to Sabena.)



fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
User currently offlineKim777fan From United States of America, joined Aug 2004, 510 posts, RR: 1
Reply 13, posted (9 years 11 months 4 weeks 16 hours ago) and read 5065 times:

Good to see a thread here where the Europeans and Americans are actually in full agreement. I fully concur with the group here and agree that the Italian government is out of line on this one. Lows fares and competition are good for ALL Europeans, including the Italians regardless of how it may affect Alitalia.

User currently offlineStarlionblue From Greenland, joined Feb 2004, 17003 posts, RR: 67
Reply 14, posted (9 years 11 months 4 weeks 16 hours ago) and read 5034 times:

But I thought that here in the "Europen Union" all trade was unregulated. Guess I'm thinking wrong.

In principle yes. The movement of labor and capital is completely unrestricted (since 1992 IIRC), just like between US States.

Also by law a government tender can be bid on by companies in all EU countries, and preference cannot be given to bidders from any country.




"There are no stupid questions, but there are a lot of inquisitive idiots."
User currently offlineBicoastal From , joined Dec 1969, posts, RR:
Reply 15, posted (9 years 11 months 4 weeks 15 hours ago) and read 4974 times:

This concerns me....the Italian government may get its way:

"Restricting prices ... is against the spirit of the internal market," said Stefaan de Rynck, spokesman at the EU's executive commission. But because the move is apparently covered by an old bilateral treaty, "there isn't actually any European basis which allows us to act."

Consumers should vote with their wallets and boycott Alitalia.


User currently offlineFlyLondon From United Kingdom, joined Feb 2004, 377 posts, RR: 0
Reply 16, posted (9 years 11 months 4 weeks 11 hours ago) and read 4865 times:

As an update British Airways have lodged a complaint with the European commison and also with the British Government who have in turn taken it up with the Italians. It seems the spat centres specifically around the Rome-New York route.

http://edition.cnn.com/2004/TRAVEL/08/09/bt.alitalia.eu.fares.reut/

Lufthansa are not complaining to the German government or EU but instead are hoping to resolve it with direct talks.

I get a whiff of tit-for-tat following BA's objection to Alitalia's loan!


User currently offlineEconoBoy From United Kingdom, joined Mar 2004, 157 posts, RR: 0
Reply 17, posted (9 years 11 months 4 weeks 10 hours ago) and read 4831 times:

Ha! Pragmatism takes second place to national pride. There must be a few other European airlines that are flabby, inefficient and hobbled by out of touch unions. They only survive thanks to handouts of tax payer's money doled out by their benign governments.
Its the survival of the fittest; time for some to fall by the way side.


User currently offlineUshermittwoch From Germany, joined Jan 2004, 2965 posts, RR: 16
Reply 18, posted (9 years 11 months 4 weeks 10 hours ago) and read 4813 times:

I am glad that I finished my milk before reading this post. I had to laugh so hard that it surely would have shot out of my nose otherwise.
Anyway, this shows again how pathetic Alitalia and the Italian Government are.
The biggest cry babies in Europe. Even worse than French farmers!
 Big grin

There is NO WAY that eith LH or BA will back off.
And why should they?
I am sure that A LOT of Italians would still prefer those airlines to AZ even if the price was the same or even slightly higher.
I could go on for ages, but I have some studying to do.
 Sad



Where have all the tri-jets gone...
User currently offlineSarrebal From United States of America, joined Oct 2003, 67 posts, RR: 0
Reply 19, posted (9 years 11 months 4 weeks 10 hours ago) and read 4778 times:

I really think it would be a great idea to get to know real facts before posting the usual inappropriate (if not stupid...no hard feelings!) comments.

User currently offlineSolnabo From Sweden, joined Jan 2008, 851 posts, RR: 2
Reply 20, posted (9 years 11 months 4 weeks 9 hours ago) and read 4758 times:

IMO AlItalia´s CEO can go suck an APU!

Big fistfight in the italian parlament a week ago.....puuhhleezee  Insane

Micke



Airbus SAS - Love them both
User currently offlineBa319-131 From United Kingdom, joined Jan 2001, 8509 posts, RR: 55
Reply 21, posted (9 years 11 months 4 weeks 9 hours ago) and read 4750 times:
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If AZ cannot compete,let them die.

SN and SR both went under,if need be AZ can too.

AZ have been in big trouble for ages,yet they seem to act as if everything is ok,the start a fleet renewal process by adding 319/320/E170 and 772 at a time when they should be looking ways to reduce cost and improve their day to day operations,but no,totally the opposite.



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User currently offlineSarrebal From United States of America, joined Oct 2003, 67 posts, RR: 0
Reply 22, posted (9 years 11 months 4 weeks 9 hours ago) and read 4706 times:

We all know that Alitalia is not a study case you would put on your "How to perfectly manage an airline" new best seller book.

But that doesn't have anything to do with this particular situation.

Some real facts:

- There are bilateral agreements between most of the EU members that regulate the fares in the long-haul routes. Fares should not be lower than the ones applied by the third and fourth freedom-allowed carriers (The ones allowed to fly nonstop between the two countries). It's also called anti-dumping.

- It was just last February when Alitalia has been forced to increase its fares on some long-haul routes between two countries other than Italy (even though via Milan or Rome).

- The Italian civil aviation authorities asked about 40 airlines to increase certain fares, just to respect the bilateral agreements, which are still valid.

- All the 40 airlines but BA (yes, even LH) agreed to do so.

Now, we can discuss whether those bilateral agreements cause a damage or a distorsion to a free market or not. I personally think they do. IMO they should be lifted.
However, while they are still in effect, they must be observed.



User currently offlineMatt777 From Cayman Islands, joined Oct 2001, 503 posts, RR: 6
Reply 23, posted (9 years 11 months 4 weeks 5 hours ago) and read 4337 times:

Ciao Sarre!
Esatto, they DID sign those treaties and the HAVE TO comply with them. If it's not good for their accounts, tough luck.


"IMO AlItalia´s CEO can go suck an APU!"
It's a lack of respect to talk bad on someone when he is unable to respond to you.

"Anyway, this shows again how pathetic Alitalia and the Italian Government are."
Well, well, well... is enforcing the law pathetic? Is, by any chance, FAIR, that AZA had to comply with bilateral agreements and then when the others have to respect them they shove it up their $&#? Well, i think that making a complaint to the EU comission makes BA is pathetic because they don't know the RULES of the game.

"As Italy is a member of the EU it has no power to dictate what airfares are charged by Community carriers."
And the British are members of the EU and they do not respect bilateral agreements.


"Does the Italian governement want its population to suffer with high fares?" Not only its population, it wants to punish the British and German populations as well. Sorry to come back to this, but I really think this is disgusting."
Dumping is unfair competition. BA and LH selling indirect flights lower than Alitalia's direct flights is an uneficient macroeconomic way (those two carriers have more costs than the direct flight, nevertheless they sell at a lower price)

"Nice to see Italy moving into the 21st century and embracing capitalism!
Such a pathetic display of attempted protectionism simply proves that on a level playing field Alitalia is unable to complete. Hopefully either the EU or WTO will do something against them."

I repeat, it is just "compling with the rules". And by the way, the "most capitalist nation" (which I love so much) has applied protectionism against Argentina by downgrading her to CAT II, when we all know it was for political reasons. Argentine carriers can't increase frequencies to the USA, while AA introduced a daily DTW-EZE, Delta starts in October from ATL and AA again wan't to introduce the third EZE-MIA daily.

"BA and LH can tell Italy to go suck an egg - the EU aviation market is fully liberalised now, no national government can override the EU where this market is concerned. AZ must live or die on its own merits, the Italian governments pathetic attempts to keep this monster alive are bordering on the ridiculous.

Instead of insisting AZ's competitors voluntarily give up their market advantage because AZ can't compete, they should be dealing with AZ's unions head on, telling them that if they don't pull finger and get some major efficiency concessions out of AZ's staff, the whole things going down the tubes. The Italian travelling public is voting with their feet (and their wallets) - if AZ can't take the competition, they have no place in the market."


You are completely WRONG. Go back and study.

Oh, and by the way guys, Alitalia will be privatized (Italian Treasury ownership will go below 50%) in no less than 12 months. Complying with EU rules. Instead AF has still no privatization date.

Regards.


User currently offlineBoo25 From United Kingdom, joined Dec 2003, 294 posts, RR: 0
Reply 24, posted (9 years 11 months 4 weeks 5 hours ago) and read 4286 times:

This is no big surprise  Insane

Alitalia are living in world of denial and still run the airline as if it was 1995 when the good times rolled.

It seems strange that they pick on BA ,as in terms of their reactions to world events they are worlds apart.
BA has taken on a severe costcutting programme , originally started in 97 and of course cutback even more drastically since 2001.
Almost 20,000 jobs have gone , approx £1.5 billion has been saved and huge sacrifices have been made in working agreements.

Supposedly , Alitalia has done nothing, despite huge handouts in the past and expecting more again now... they refuse to let any staff go and will not change their working agreements...

Well THAT is the reason they are struggling, not due to unfair competition - it is like Swissair all over again...
They need to restructure or start from fresh - you can't expect to have huge costs when your customer is looking around for low prices

Its about time they all stopped throwing their toys out of the pram and started a long overdue head reduction / cost cutting programme, otherwise none of them will have a job to go to.


25 QIguy24 : Esatto, they DID sign those treaties and the HAVE TO comply with them. If it's not good for their accounts, tough luck. Why the heck should other airl
26 Turin_airport : Hi all, I report what a Lufthansa speaker said about this affair: " This kind of laws (that prevent foreigner airlines to have lower prices than the n
27 Airblue : I always love these airlines like BA who always claims about free market and deregulation.... So when we start to talk about Bermuda II??
28 QIguy24 : I report what a Lufthansa speaker said about this affair: What lufthansa speaker said that? So far the only hting I've heard is LH and BA rejecting it
29 GuyBetsy1 : I know some people who would avoid flying with Alitalia at any cost no matter what their fares are. Seems that Alitalia have a bad habit of losing peo
30 Turin_airport : QIguy24, this is the news (in Italian) by the Italian news agency ANSA: "Lufthansa chooses the soft way. Let's negotiate with Enac" (in bold what I tr
31 Post contains images QIguy24 : I believe you Turin, But I just find it funny that they say something else in the news. But then again it's the media. Who should you trust? But hones
32 Airblue : Seems that Alitalia have a bad habit of losing people's luggage.. Here the statistics of June 2004 (and not what a friend of a friend told to a friend
33 Turin_airport : But honestly, don't you think it's wrong that other airlines have to raise their prices just to satisfy and save Alitalia? Only the strongest airline
34 Matt777 : Grazie Airblue! "Seems that Alitalia have a bad habit of losing people's luggage" Just shows how under-rated Alitalia is. Qlguy: You think that it is
35 F.pier : I think that this rule, if exist, is really bad and must be canceled. I wanna be free to choose. I know that the "bridge loan" will never be given bac
36 Matt777 : You think any american carrier will return the loan? Anyway, taxpayers don't have to forget, that the continuation of Alitalia's operations mean incom
37 F.pier : I don't care about what americans will do. I only know that "I" have already given AZ too much money and AZ given me nothing back but more taxes to pa
38 Donder10 : Dumping is unfair competition. BA and LH selling indirect flights lower than Alitalia's direct flights is an uneficient macroeconomic way (those two c
39 Matt777 : " I think it should have a negative price" It shows how bad you know how the stock market works. No share has a negative price. Oh, 3 things. - Who wi
40 F.pier : Maybe you haven't realized that I was thinking "in theory". I know that shares cannot have negative price (maybe you don't remember that I have an uni
41 Sarrebal : The point is: - There is a rule (in this case, those bilateral agreements). - No matter how bad the rule is, it MUST be observed. - Should the EU or t
42 Matt777 : Well, BA is operating at a loss on those routes, trying to take pax away from AZ in an unfair way, in order to make that last "finish it" kick so then
43 F.pier : OK, but if they kick AZ out of the business, they'll still have LH, LX, AF... I think they'll "dump" for a long time to kick these airlines out of ita
44 Post contains images Matt777 : The point is: - There is a rule (in this case, those bilateral agreements). - No matter how bad the rule is, it MUST be observed. - Should the EU or t
45 Lufthansa : Hang on Matt If BA somehow manage to make AZ go bust, what about the Likes of UA who offer non-stop USA-Italy flights, or AF, LH, KL etc. Fares aren't
46 Sarrebal : italy would need to withdraw from the European Union. THAT WOULD BE A BLESSING FOR EVERY ITALIAN!
47 Matt777 : "what about the Likes of UA who offer non-stop USA-Italy flights" Haha, well, actually UA operated daily IAD-MXP, but then they went out, and now Alit
48 F.pier : It would be a tragedy. I DIDN'T VOTE FOR BERLUSCONI THE EUROPEAN UNION: MY COUNTRY[Edited 2004-08-10 18:27:19]
49 FlyCaledonian : Hell, so when I've flown MAN-AMS-JFK, LHR-FRA-KIX, LHR-FRA-NRT, etc because its is cheaper than flying direct, KL and LH have been breaking the law by
50 Post contains images Matt777 : Well, F.pier, nobody started talking about Silvio, so why do you come out with that? Also, If you like so much your country, why don't you put "From t
51 Post contains images Ushermittwoch : "italy would need to withdraw from the European Union. THAT WOULD BE A BLESSING FOR EVERY ITALIAN!" Yeah, especially those in the Mezzogiorno...
52 Lj : Well, BA is operating at a loss on those routes, trying to take pax away from AZ in an unfair way I assume you're either working for BA or have some v
53 Matt777 : "means offering a fare below cost price (fixed costs excluded thus only variable costs)" Incorrect, try again.
54 777ER : Airblue So as you can see AF, KL, BA, LH they are performing worst than AZ.... You neen to remember that BA, AF, KL, LH and a a few others airlines on
55 Elwood64151 : They only survive thanks to handouts of tax payer's money doled out by their benign governments. I think benign is the wrong word for these government
56 Donder10 : How would you define dumping,Matt777?
57 Turin_airport : Free market is a good thing, but must work both ways. What are you talking about? Those laws are totally anti-free market!! elwood64151, other people
58 Lutfi : The laws exist in Germany - but I have seen no evidence that LH asks the government to enforce them. E.g. MH and KLM often sell cheaper to JKT than LH
59 Turin_airport : Doesn't Italy have enough economic problems without asking people there to pay more for tickets than they have to? That's for sure Lutfi, but I suspec
60 Hz747300 : If Alitalia cannot compete, then it should not be allowed to exist. Plain and simple. Forcing a business to offer its products and services at set pri
61 Post contains images Flying Belgian : One word come to my mind: SHAME ! I hope Alitalia will fall soon, certainly not for the employees but for the fuss it would create to Berlusconi. Very
62 Post contains links Matt777 : "How would you define dumping,Matt777?" "Last I checked, it was based upon the variable costs of operations, or the cost of materials (fuel, landing f
63 Sarrebal : Sarrebal: Excellent post in all respects. Yes, the bilatteral agreements are still in effect, but like treaties between the various United States befo
64 Stall : What about the costumers ? I don't agree, they shouldn't pay more for the same service. Alitalia (management and labor) should react by improving them
65 Iowa744fan : Quite frankly, I just started laughing when I read this article and the Italian government. As has been stated, you signed an agreement to join the EU
66 Sarrebal : Iowa744fan Besides stating fictious points (especially point #1), you completely missed the real point, which has been explained in the previous posts
67 Iowa744fan : Sarrebal, Hmmm...talk about EU rules, Italy's government unfairly making rules or commands that are outside of its power, Alitalia being unable to ada
68 Iowa744fan : My apologies as I was a little incorrect in the statement about Linate. The Italian government did not try to kick out everyone else, but they gave th
69 Sarrebal : 1. It makes me think about back in the late 90s/early 00s (when exactly?) that Malpensa was modernized and made into the dominant international gatewa
70 Post contains links and images Matt777 : "The Italian government has been stupid enough to not having enforced those rules before." by Sarrebal Yes, and now we are trying to enfore it, and lo
71 Leskova : Matt777, Any answer to that? As it seems, at least LH didn't go through with that, because until this day, AZ still regularly undercuts them on fares
72 Elwood64151 : So, before doing such statements we should know if in this game all the players are following the same rules. As I said before, if in Germany (or in o
73 Post contains links and images MarcoB2 : Hey guys, apparently many of you don't even know 100% of the story, so before pointing the finger against Alitalia and the Italian government, you sho
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