Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
AZ To Drop Beijing  
User currently offlinedtfg From China, joined Jan 2013, 78 posts, RR: 0
Posted (1 year 8 months 3 weeks 5 hours ago) and read 9257 times:

According to Airlineroute, Alitalia will stop its Beijing service from March 6.

AZ resumed Beijing tow years ago, and now drops again. What do you think is the reason?

34 replies: All unread, showing first 25:
 
User currently offlineammunition From United Kingdom, joined Feb 2002, 1065 posts, RR: 4
Reply 1, posted (1 year 8 months 3 weeks 5 hours ago) and read 9234 times:

Pricing errors resulting in people being able to book a return ticket for less than 2-300 Euro return on much of their long haul network may have been a contributing factor. I suspect also that skyteam would rather route via CDG etc.

http://www.holidaypirates.com/italy/...-tokyo-179-osaka-198-trip-incl-tax

[Edited 2013-02-02 11:17:16]


Saint Augustine- 'The world is a book and those who do not travel, read only 1 page'
User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7212 posts, RR: 57
Reply 2, posted (1 year 8 months 2 weeks 6 days 18 hours ago) and read 8278 times:

Quoting ammunition (Reply 1):
Pricing errors

Simple - lack of yield, lack of connecting passenger base. Watch the LO service being dropped soon also.



The world is really getting smaller these days
User currently offlineCassi From Hungary, joined Apr 2010, 88 posts, RR: 0
Reply 3, posted (1 year 8 months 2 weeks 6 days 16 hours ago) and read 8066 times:

Alitalia has suspended all flights operated by Carpatair to Italy. The 2 other affected destinations are Bologna and Pisa.

http://www.flightglobal.com/airspace...flights-with-carpatair-planes.aspx


User currently offlinegabrielchew From United Kingdom, joined Aug 2005, 3311 posts, RR: 12
Reply 4, posted (1 year 8 months 2 weeks 6 days 14 hours ago) and read 7738 times:

I'm very surpised that AZ can't make PEK work. In the past year, I've flown a few AZ routes to NRT...they're pretty busy, and average fares are high. The Japanese love coming to Italy. And the Chinese? They love it too. Air China has twice daily flight to MXP (not sure about FCO). The demand must be there. I guess AZ just haven't marketed their flights correctly to the local market/travel agents. They've sucessfully shown that they can tailor to a tricky Asian market (Japan), so China really shouldn't be so different.


http://my.flightmemory.com/shefgab Upcoming flights:LCY-ARN-AMS-LGW,STN-OTP-AMS-YUL,YQB-JFK-LAX-DUS-STN,LGW-DXB-BKK-HKG-
User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7212 posts, RR: 57
Reply 5, posted (1 year 8 months 2 weeks 6 days 14 hours ago) and read 7700 times:

Quoting gabrielchew (Reply 4):
I guess AZ just haven't marketed their flights correctly to the local market/travel agents.

The local market ex China either flies the state airline (Air China) on government business, or goes on an inclusive tour package. Neither are high yielding. The tour packages are bargain basement seat filling yield.

I would wager that the vast majority of capacity between China and Europe is loss making at present.

Quoting gabrielchew (Reply 4):
I've flown a few AZ routes to NRT...they're pretty busy, and average fares are high.

NRT and PEK are two very different markets - one is a mature wealthy economy, and one is an immature growing economy.



The world is really getting smaller these days
User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 6, posted (1 year 8 months 2 weeks 6 days 13 hours ago) and read 7551 times:

These are the consequences of hubbing at FCO. Poor connections and low yields and alot of backtracking. AZ should look to Milan to establish a hub.

User currently offlinerutankrd From United Kingdom, joined Sep 2003, 3016 posts, RR: 7
Reply 7, posted (1 year 8 months 2 weeks 6 days 12 hours ago) and read 7530 times:
Support Airliners.net - become a First Class Member!

Quoting BestWestern (Reply 5):
The local market ex China either flies the state airline (Air China) on government business, or goes on an inclusive tour package. Neither are high yielding. The tour packages are bargain basement seat filling yield.

I would wager that the vast majority of capacity between China and Europe is loss making at present.

The Chinese airline "industry” is smoke and mirrors !


User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7212 posts, RR: 57
Reply 8, posted (1 year 8 months 2 weeks 6 days 12 hours ago) and read 7283 times:

Quoting rutankrd (Reply 7):
The Chinese airline "industry” is smoke and mirrors !

I disagree - All I am saying is that International flights from China to Europe are yet to demonstrate long term profitability. For example I understand that KL is still loss making to CTU, yet 2013 will see new services to FRA, CDG and LHR on top. I would wager that the vast majority of secondary hub routes are loss making - LH dropping CAN for example.

Secondary carriers, such as AZ, LO and HU will find it difficult to make money to Europe also.



The world is really getting smaller these days
User currently offlineAussieItaliano From United Kingdom, joined Jan 2005, 442 posts, RR: 0
Reply 9, posted (1 year 8 months 2 weeks 6 days 10 hours ago) and read 6692 times:

Quoting miaintl (Reply 6):
AZ should look to Milan to establish a hub.

That's been tried before, and failed. It can't work as long as LIN remains open. LIN is much closer to Milan's city centre than MXP, but it can't handle long haul flights. In order to remain competitive, AZ has to offer flights to Italian and European destinations from LIN, otherwise LH, AF, LX, BA and KL will take all of the European traffic.

Part of MXP's problem is that it's so far away from the city centre, so everyone going to/from Milan would much rather use LIN. In Rome, FCO is more easily accessible than CIA, so carriers fly to FCO. Since FCO is also the long-haul airport for Rome, this makes it easier for AZ to build a hub there.

To build a hub, you need both local and connecting traffic. If the local traffic has a more convenient airport to use for short-haul, but not long haul, this kills the possibility of a comprehensive hub in that city, because the long haul traffic has to be at a different airport than the short haul traffic. This is why DEN and MUC were success stories (because Stapleton and Riem were closed), whereas MXP and YMX were not (since LIN and YUL remained open for short-haul traffic).

This is entirely relevant to this topic, because the reason for the failure of many of AZ's long-haul routes is that while Rome is a good structural place to build a hub, the demand for business traffic is predominantly from Milan. The only way that AZ will be able to build a sustainable long-haul network will be if either:
1) Rome becomes Italy's business centre instead of Milan (highly unlikely), or
2) LIN is closed, and all Milan traffic is forced to relocate to MXP.

However, AZ makes a good amount of money on their short-haul from LIN, so it's unlikely that they'll push for it's closure. Perhaps, now that AZ is being forced to hand over slots to U2 to compete on the LIN-FCO route, AZ might see a dent in the revenue from this route and at that point, having LIN closed might not be as bad for them.

Until then, we'll probably all be commenting on topics like this one about AZ's long-haul network. Many of their FCO long-haul routes are in jeopardy because the business traffic from Rome is not as huge as that from Milan.



LHR - The Capital of the World
User currently offlinerutankrd From United Kingdom, joined Sep 2003, 3016 posts, RR: 7
Reply 10, posted (1 year 8 months 2 weeks 6 days 10 hours ago) and read 6361 times:
Support Airliners.net - become a First Class Member!

Quoting BestWestern (Reply 8):
I disagree - All I am saying is that International flights from China to Europe are yet to demonstrate long term profitability

When I say smoke and mirrors I was specifically referring to the Chinese operators (All remain tools of the state) and effectively regional divisions of the CAAC.

I am not doubting that there is money to be made just a more cautionary approach - Its not a gold mine for tapping SLFs.

As others have said the East- West traffic flows remains very controlled.


User currently offlineb2319 From China, joined Jan 2013, 147 posts, RR: 0
Reply 11, posted (1 year 8 months 2 weeks 6 days 10 hours ago) and read 6309 times:

All,

I can't really comment so much about the Italy end, however pairs of airports, one close to the city, and one further out, do work in other places- SHA/PVG, HND/NRT, TSA/TPE etc. I think the difference to LIN is that all of these city centre airports can handle the 'big boys'.....?

Whilst a little reticent to disagree with BestWestern, whose views I respect greatly, I think airlines would be reluctant to publish individual revenue or profit details for individual routes. First, I'm hearing that cargo from CTU is an important factor. Next, within China, I see a large difference between PVG demographics (mainly commerce and manufacturing) and PEK (mainly politics).

Travelling in China, I am constantly educated with the sheer 'numbers game' here. I go to a new city, and my colleagues state it is a 'small city'. This 'small city' turns out to have a population greater than some European countries, for instance. Independent of the province I travel in, the Chinese middle classes are on the rise and aspire to travel.

I'm too lazy to retrieve the quotes, however there are many people here who simply refer to AZ as a 'basket case'. Maybe that's the real reason they are pulling out of PEK? If you've a high cost structure, prominent unions, interference from government, etc, etc, etc.....all simple questions, NOT allegations, maybe this motivates you to market your fares at relatively high cost.....?

In summary, whilst PEK and FCO may be outliers in that neither are capital cities closely connected to business and manufacturing, overall, China should be an opportunity for well-run airlines. I don't doubt KL, LH & BA know what they are doing regarding direct routes to the secondary and tertiary cities in China.

Just my views, that is all, and time will tell, I am sure.

Regards

B-2319


User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7212 posts, RR: 57
Reply 12, posted (1 year 8 months 2 weeks 6 days 8 hours ago) and read 5400 times:

Quoting rutankrd (Reply 10):
When I say smoke and mirrors I was specifically referring to the Chinese operators (All remain tools of the state) and effectively regional divisions of the CAAC.

That is an over simplistic view of things - the airlines do compete, albeit in a semi-controlled fashion.

You see carriers like CZ really getting their act together in terms of quality, and the positive effect this is having on yield - although they miss the Shanghai market yield - their RASK is now higher than MU, whose service really is poorer. Although we may criticize skytrax - at least the Chinese carriers are aiming towards service quality, and getting there. CZ safety record is also excellent.

The fantastic (and cheaper) Hainan air is mostly independent of the state and has the potential to rival the Qatar's of this world in terms of service quality - their hard product is already better.



The world is really getting smaller these days
User currently offline777way From Pakistan, joined Dec 2005, 5845 posts, RR: 4
Reply 13, posted (1 year 8 months 2 weeks 5 days 6 hours ago) and read 3795 times:

Why was the word Dumping removed from topic title, was it insulting? the title was AZ or Alitalia dumping Beijing.

User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 14, posted (1 year 8 months 2 weeks 4 days 8 hours ago) and read 3379 times:

Does anyone know if AZ will eventually drop ORD, EWR, and LAX? I know their yields are pretty bad out of FCO which is why they can only operate seasonally instead of year-round. AZ has to either ditch the Rome hub idea or reconfigure their cabins and seats to make it high-density so the Rome hub can have at least some chance of working

User currently offlinedelta2ual From United States of America, joined Dec 2007, 622 posts, RR: 1
Reply 15, posted (1 year 8 months 2 weeks 4 days 7 hours ago) and read 3301 times:

Quoting miaintl (Reply 14):
Does anyone know if AZ will eventually drop ORD, EWR, and LAX?

ORD is seasonal and they already dropped EWR.



From the world's largest airline-to the world's largest airline. Delta2ual
User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 16, posted (1 year 8 months 2 weeks 4 days 6 hours ago) and read 3192 times:

Quoting delta2ual (Reply 15):

But why are all these long-haul routes failing? Its because of FCO and poor yields and connections. AZ desperatly needs to change their strategy and become a different airline if it is to survive and remain competative in the long run. Joining AF will help them out.


User currently offlineflyyul From Italy, joined Jun 2000, 4994 posts, RR: 51
Reply 17, posted (1 year 8 months 2 weeks 4 days 5 hours ago) and read 3153 times:

Quoting miaintl (Reply 16):
But why are all these long-haul routes failing? Its because of FCO and poor yields and connections. AZ desperatly needs to change their strategy and become a different airline if it is to survive and remain competative in the long run. Joining AF will help them out.

Why did Shanghai Delhi San Francisco Dubai Bombay Dakar all fail out of MXP?


User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 18, posted (1 year 8 months 2 weeks 4 days 4 hours ago) and read 3083 times:

Because MXP was dehubbed in 2008, due to pressure of AF. Plus alot of people in Italy oppose an AF takeover because AF plans to make AZ a feeder carrier. So Silvio Berlusconni is correct to oppose such a takeover. Dont forget that the idea to move AZ's hub to Rome was Air France's, and the reason was to weaken AZ.

User currently offlineflyyul From Italy, joined Jun 2000, 4994 posts, RR: 51
Reply 19, posted (1 year 8 months 2 weeks 4 days 4 hours ago) and read 3028 times:

No - Alitalia had publicly mentioned they wanted to pull out of these markets due to unprofitably. They wanted to redeploy assets to Rio, Los Angeles, and Montreal at the time.

AF has no involvement in the AZ planning process - not even sure they have antitrust.


User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 20, posted (1 year 8 months 2 weeks 4 days 3 hours ago) and read 2944 times:

But the idea to shift hubs was AF. AF made it clear that it would take over AZ o the condition that it shifts its hub to FCO. This was all back in 2007/8.

User currently offlinemozart From Luxembourg, joined Aug 2003, 2189 posts, RR: 13
Reply 21, posted (1 year 8 months 2 weeks 3 days 12 hours ago) and read 2761 times:

Quoting miaintl (Reply 18):

Plus alot of people in Italy oppose an AF takeover because AF plans to make AZ a feeder carrier. So Silvio Berlusconni is correct to oppose such a takeover.

Why is he "correct" to oppose such a takeover? The result was that indeed AZ did not become an AF feeder, but the other result was also that AZ is still a company that finds it difficult to perform well financially. As a matter of fact the "consortium of Italian investors" want to sell their stake as soon as possible, hence also the renewed discussion about AFKL now buying a share.

Quoting miaintl (Reply 18):

Dont forget that the idea to move AZ's hub to Rome was Air France's, and the reason was to weaken AZ.

That doesn't sound very convincing... If indeed AF had that influence that would have been purely because it was going to be the next big shareholder. But as a next big shareholder they wouldn't have any interest to weaken the airline they were just buying. Alternatively they were not the next big shareholder, in which case they wouldn't have had any influence on AZ's discussion to move the hub to FCO.

So what you say doesn't make much sense.


User currently offlineleftyboarder From Turkey, joined Apr 2008, 693 posts, RR: 1
Reply 22, posted (1 year 8 months 2 weeks 3 days 12 hours ago) and read 2752 times:

In any case, I hope AZ finds a way to work long haul. I can't imagine a country of 60m people left without their own long haul airline. Hungary I can understand, but Italy?

User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 23, posted (1 year 8 months 2 weeks 3 days 8 hours ago) and read 2638 times:

Quoting leftyboarder (Reply 22):

That way is to focus their long-haul operations in Milan and only have a focus city in Rome. There is a reason AZ dehubbed FCO back in 1998 in favor of MXP:


User currently offlineflyyul From Italy, joined Jun 2000, 4994 posts, RR: 51
Reply 24, posted (1 year 8 months 2 weeks 3 days 8 hours ago) and read 2636 times:

And there's a reason why MXP was dehubbed 10 years later to go to Rome. Now we're just going around in circles

User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 25, posted (1 year 8 months 2 weeks 3 days 6 hours ago) and read 2607 times:

I think MXP as a hub could work in priciple but there where too many things AZ did wrong at the time which hindered MXP becoming a success. For example AZ had its training and logistic center based at FCO while most of its flights where based in MXP. Also it insisted on keeping LIN open which took away O&D traffic from MXP. Too many things where done wrong at the time and still being done now. AZ's management never learns.

User currently offlineflyyul From Italy, joined Jun 2000, 4994 posts, RR: 51
Reply 26, posted (1 year 8 months 2 weeks 3 days 4 hours ago) and read 2543 times:

Right - its AZ management that decided to build MXP and not close LIN.

Give AZ management some credit, they work in a highly charged political environment.

May I ask how much experience you have in the airline industry to criticize airline industry experienced staff?


User currently offlineAussieItaliano From United Kingdom, joined Jan 2005, 442 posts, RR: 0
Reply 27, posted (1 year 8 months 2 weeks 3 days 3 hours ago) and read 2518 times:

flyyul, I agree with you 100%. If anything, I think that keeping LIN open in Milan enabled AZ to dominate the Italian domestic and European market from Milan, which I think was their first priority regarding business traffic from Italy's business centre.

However, I do think that this prevented them from being able to build a successful hub in Milan which would include long-haul, simply because the business traffic would be concentrated at LIN and AZ can't fly long-haul from there.

In no way do I think that the management decisions of AZ were wrong. They had several priorities, and had to try to accommodate as many of them as possible. I frequently fly AZ when I go back to Italy, and often fly LHR-LIN and then connect there. For onward connections to Italy, it works well.

The fact that LH Italia failed shows that Milan is not an easy market that a "well-managed" carrier can just come into and make a profit. I think AZ deserves a lot of credit for being able to make Milan profitable, but in doing so, is not able to establish a profitable long-haul hub from Milan, and that is, unfortunately for AZ, where the majority of Italy's long-haul business traffic flies from.

There is no easy solution, but I give AZ management a lot more credit than most do.



LHR - The Capital of the World
User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 28, posted (1 year 8 months 2 weeks 3 days 2 hours ago) and read 2487 times:

Closing LIN to mainline carriers is one option. Let Easyjet fly out of LIN and let the legacy carriers all fly out of MXP. The distance between MXP and the city center is about the same as the distance between central Rome and FCO.

User currently offlineAussieItaliano From United Kingdom, joined Jan 2005, 442 posts, RR: 0
Reply 29, posted (1 year 8 months 2 weeks 3 days 1 hour ago) and read 2438 times:

Quoting miaintl (Reply 28):

Closing LIN to mainline carriers is one option. Let Easyjet fly out of LIN and let the legacy carriers all fly out of MXP. The distance between MXP and the city center is about the same as the distance between central Rome and FCO.

Italian politics would never allow for this. AZ is partially state-owned. There's no way that the government would allow U2 to have the best access to the business travellers over a state-owned carrier.

Also, the difference with Milan and Rome is that Milan has another airport which is more convenient for access from the city centre. Rome does not. CIA is not nearly as convenient to central Rome as LIN is to central Milan. That is why CIA is a base for Budget carriers while LIN is where mainline carriers prefer to fly into.

And that's also why Rome is the only Italian city that could develop the traffic for a long-haul hub, because the airport deemed most convenient for central Rome as well as most Romans handles long-haul traffic, Linate Airport, the more convenient airport for most Milanese, and that most convenient to central Milan, cannot handle long-haul flights.

The problem for AZ is that the only city that has the theoretical structure for a long-haul hub (Rome) is not where most of the business traffic goes (Milan).

Imagine what would happen to Heathrow if long-haul flights couldn't operate from there. BA would have serious issues building a hub. They would want to keep their European routes from LHR because business travellers would still want to fly from there. But they would have no feed for their long-haul flights, which would all be from LGW, STN or LTN. And that's in London, which has much more business traffic than Milan.

To build a successful hub, the O&D traffic and the connecting traffic need to be at the same airport. Milan's problem is that as long as LIN remains open, but can't handle long-haul traffic, the O&D preferred airport will be different that the airport that could serve as a long-haul hub. Rome does not have this problem since most Romans do not consider CIA to be more convenient than FCO.



LHR - The Capital of the World
User currently offlineLipeGIG From Brazil, joined May 2005, 11442 posts, RR: 58
Reply 30, posted (1 year 8 months 2 weeks 2 days 22 hours ago) and read 2335 times:
AIRLINERS.NET CREW
FORUM MODERATOR

I see as main reason the competition from Gulf carriers together with the small level (compared to UK and Germany for example) of business ties between Italy and China.
AZ need to focus before in key markets where they have true advantage such as Latin America and Africa.



New York + Rio de Janeiro = One of the best combinations !
User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 31, posted (1 year 8 months 2 weeks 2 days 17 hours ago) and read 2258 times:

Quoting LipeGIG (Reply 30):

Exactly but we dont see AZ expanding to those places. Rather they prefer expanding to cities like CPH, WAW, and PRG. AZ is not expanding smartly in order to make an FCO hub truly profitable.


User currently offlinedtfg From China, joined Jan 2013, 78 posts, RR: 0
Reply 32, posted (1 year 8 months 2 weeks 2 hours ago) and read 1959 times:

Quoting LipeGIG (Reply 30):
I see as main reason the competition from Gulf carriers together with the small level (compared to UK and Germany for example) of business ties between Italy and China.


If you look at the prices offered by AZ,CA,EK,EY,QR and SU, for Beijing-Rome, AZ still have the advantage. So I do not see the Gulf carriers as a major threat to AZ. In addition, AFAIK, CA and Mu have been increasing frequencies from PEk/PVG-FCO/MXP. The market is there but the problem is AZ never seized the profitable part.


User currently offlinealitalia610 From Italy, joined Aug 2005, 31 posts, RR: 0
Reply 33, posted (1 year 8 months 1 week 6 days 11 hours ago) and read 1711 times:

Quoting miaintl (Reply 6):

Absolutely false. Remember that AZ decline started right after moving its hub from FCO to MXP.


User currently offlinemiaintl From United States of America, joined Jun 2010, 1052 posts, RR: 0
Reply 34, posted (1 year 8 months 1 week 6 days 4 hours ago) and read 1491 times:

Quoting alitalia610 (Reply 33):

I highly doubt that is the case. What evidence do you have of that? AZ is bleeding tons of money right now whilst it is based in FCO. So FCO does not equal profit. AZ's problems are deeper than MXP or FCO. It is a corrupt government owned entity that has terrible leadership who are easily manipulated by politicians and lobby groups which are the main reason of AZ's problems. Sadly, in Italy politics and buisness do not know how to remain separate.


Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
PK Flight Diverted By Pilot To Drop-off Daughter? posted Wed Jan 30 2013 03:44:53 by leftyboarder
Is OneWorld Preparing To Drop Royal Jordanian? posted Sat Jan 12 2013 02:20:53 by liftsifter
How Come AZ / KL Drop TRN - AMS? posted Tue Dec 18 2012 14:05:24 by Alsatian
BA To Drop MAN - LGW From 31/3/13. posted Tue Oct 30 2012 08:18:23 by TC957
AF Business Class Fares To Drop By 30% posted Wed Sep 19 2012 04:19:03 by LY777
DL To Drop SWF From ATL posted Wed Jul 11 2012 18:59:27 by PVDFlier
VS To Drop NBO posted Wed May 16 2012 05:23:59 by AAMDanny
SIA To Drop Athens, Abu Dhabi posted Wed May 16 2012 03:12:51 by LIPZ
Sri Lankan To Drop ZRH, MXP, FCO posted Tue Apr 3 2012 06:56:02 by LIPZ
AR To Drop AKL, Start EZE-SYD Nonstop posted Thu Mar 29 2012 08:01:17 by yeogeo