For the past few years there has been a lot of talk about how the ME3 are unfair competition. Weather the are or not depends on if they are making money and not surviving off money from there states. So I was wondering if Alitalia would be unfair competition then. Alitalia in its 72 year history has only made a profit once. It has received at least €3 billion in the last 20 years from the Italian government. So shouldn't Alitalia be the next target in the unfair completion fight?

Per ICAO nearly 60 percent of global airlines have state participation.

I see no required mandate for profit, and airlines serve as a variety of national roles from being a form of infrastructure, means to help develop nations, foster tourism and commerce, providing employment and know how to being a flying embassy for a nation.

EU rules prohibit state subsidies as evidenced in Lot's situation.

If states want to financially support airlines so be it. I see no issue.

Anyhow for AZ specifically its tiny in the grand scheme of things. If you oppose state support of airlines then look at large markets like China, India, etc.

To answer the question, YES. In a single market all Players must stick to the rules, what AZ never did. This is not about some regional carriers who may fly a lifeline route in an under developed Country. There is not reason why AZ should not Play according to the rules. I hope that the EU3 enforce that.

Well if the Italians wanna go bankrupt over their national airline let them..

Alitalia has indeed received a lot of subsidies over the past years. Especially when Berlusconi was in power. The EU should play by the same rules for all.

Estonian and MALEV both went bankrupt because they were forced to pay back money they had gotten from their respective states and that the EU had deemed to be subsidies.

On the one side, AZ should just go bankrupt as it is a poorly run airline with a lot of union problems. All attempts previously to cut expenses has been met with opposition. AZ has also been protected by the state. LH tried to set up a branch "Lufthansa Italia" but were forced to give up.

On the other hand, costs for the Italian government will be huge if the airline goes bankrupt (unemployment benefits, knock on effects to other industries/subsidiaries)

So what to do?

Might end up like Air Berlin. A combination of another large carrier / LCC could take over routes.

Cathay777300ER wrote:

For the past few years there has been a lot of talk about how the ME3 are unfair competition. Weather the are or not depends on if they are making money and not surviving off money from there states. So I was wondering if Alitalia would be unfair competition then. Alitalia in its 72 year history has only made a profit once. It has received at least €3 billion in the last 20 years from the Italian government. So shouldn't Alitalia be the next target in the unfair completion fight?

AZ is such a fiasco that despite the subsidies, they still don’t really threaten anybody. That’s why nobody complains.

My take on this is that the Italian government are just better at playing the system than the governments of other countries mentioned such as Estonia and Hungary.

The Italian government seems to have the knack of framing their financial support packages for AZ in such as way as they meet EU criteria not to be subsidies but commercially based loans/equity injections.

I am sure the fact that they are the 4th largest EU state in terms of GDP whilst the GDP of Hungary and Estonia are roughly only 7% and 1% respectively of that of Italy play no part in how the EU administrators deal with these issues.

OSL777FLYER wrote:

Alitalia has indeed received a lot of subsidies over the past years. Especially when Berlusconi was in power. The EU should play by the same rules for all.

Estonian and MALEV both went bankrupt because they were forced to pay back money they had gotten from their respective states and that the EU had deemed to be subsidies.

On the one side, AZ should just go bankrupt as it is a poorly run airline with a lot of union problems. All attempts previously to cut expenses has been met with opposition. AZ has also been protected by the state. LH tried to set up a branch "Lufthansa Italia" but were forced to give up.

On the other hand, costs for the Italian government will be huge if the airline goes bankrupt (unemployment benefits, knock on effects to other industries/subsidiaries)

So what to do?

Might end up like Air Berlin. A combination of another large carrier / LCC could take over routes.

So why do the Italians need a state airline. It should go bankrupt, so its carcass can be picked clean. Then there will be space in the market for new airlines to come into the market. It's like Air India but worse. No one wanted to buy Air India, because the new buyer would be required to retain all the employees. New airlines like Air Italy aren't burdened with all the existing bloated payrolls.

I have no issues with state funded airlines.

There really is no difference is airline belongs to a billionaire, a big holding group or the government. Its just one of many ownership structures.

For Italy specifically, its an incredibly competitive market with tons of players, so I don't think AZ being state-funded distorts competition at all.

flyingclrs727 wrote:

So why do the Italians need a state airline. It should go bankrupt, so its carcass can be picked clean. Then there will be space in the market for new airlines to come into the market. It's like Air India but worse. No one wanted to buy Air India, because the new buyer would be required to retain all the employees. New airlines like Air Italy aren't burdened with all the existing bloated payrolls.

National airlines serve a bigger cause than the inevitable invasion of LCCs would. You can't count on Ryanair to provide year-round service to far-flung regions of Italy, or connecting flights from those airports to the rest of Europe.

IMHO, I'm not a fan of state subsidized airlines in a market where private forces can take over, but the above needs to be addressed. The free market will only care about the parts of the country where the money is centered. This prevents lessor regions from developing. How would a business traveller go from, say, Alghero to Germany outside the tourist season?

Cathay777300ER wrote:

For the past few years there has been a lot of talk about how the ME3 are unfair competition. Weather the are or not depends on if they are making money and not surviving off money from there states. So I was wondering if Alitalia would be unfair competition then. Alitalia in its 72 year history has only made a profit once. It has received at least €3 billion in the last 20 years from the Italian government. So shouldn't Alitalia be the next target in the unfair completion fight?

On a moral level yes. In practical terms Alitalia is such a joke it's of no consequence to the US3.

Truthfully most carriers don't care about ME3 subsidies as a general issue. However, AZ doesn't enter a market (this is an exaggeration) and dump 3 daily A380's on a route and drive prices down.

VSMUT wrote:

National airlines serve a bigger cause than the inevitable invasion of LCCs would. You can't count on Ryanair to provide year-round service to far-flung regions of Italy, or connecting flights from those airports to the rest of Europe.

Well, the state subsidised airline is one way to do that. The other is to put the routes required out for tender as PSO routes, and accept bids to operate them - a common procedure for far flung islands and mountainous regions, for example, from one side of Europe to the other. Ryanair has bid for and operated PSO routes in the past. Italy hasn't gone in for this much, but in any case they do have a state-subsidised passenger rail system,and state-subsidised ferries, that also get to places where there aren't even airports. And the LCC driven free market means that there are at least some non-stop flights from Italian regional airports to cities elsewhere in Europe year round. The state-subsidised alternative involves compulsory connections in Rome or sometimes Milan.

Andy33 wrote:

And the LCC driven free market means that there are at least some non-stop flights from Italian regional airports to cities elsewhere in Europe year round. The state-subsidised alternative involves compulsory connections in Rome or sometimes Milan.

Some. If you are not going to and from a place not served directly by the LCCs, you are screwed, because the LCCs don't do connections. If Ryanair messes up on a PSO route and you miss your next flight, Ryanair won't care the slightest, and you will have to fork out for a new ticket. Inevitably, travelers are going to stay away.

High speed rail is catching up in Northern Italy, but it is still woefully inadequate in Southern Italy, Sardinia and along the eastern coast. Those are also the places that need economic development the most.

[/quote]
High speed rail is catching up in Northern Italy, but it is still woefully inadequate in Southern Italy, Sardinia and along the eastern coast. Those are also the places that need economic development the most.[/quote]
HSR in Northern Italy is fine- although it would be nice if the trains actually operated on time (I know, it's Italy...)
As for Southern Italy, there's a book, "Christ Stopped at Eboli". However, in Trenitalia's case, the fast trains stop at Salerno...

Cathay777300ER wrote:

For the past few years there has been a lot of talk about how the ME3 are unfair competition. Weather the are or not depends on if they are making money and not surviving off money from there states. So I was wondering if Alitalia would be unfair competition then. Alitalia in its 72 year history has only made a profit once. It has received at least €3 billion in the last 20 years from the Italian government. So shouldn't Alitalia be the next target in the unfair completion fight?

I'll be a lottery winner by the time Alitalia is unfair competition. That poor thing is a shambles.

Alitalia is too small to damage companies outside italy, but they are big enough to destroy other italian companies. It is not by accident that italian civil aviation is a cemetery, airitaly for once will suffer a lot if alitalia continues to be subsidized by the government

Alitalia is a basketcase. Always has been. Government subsidies are in violation of EU rules, and AZ isn't too big to fail. The fault lies with its greedy employees who have milked the company dry decades ago and abuse it further for pensions and other subsidies. Absolutely no airline company wants to touch it in its present form, and would only take it over in pieces.