Should AZ Stop All Longhaul Flying?

miaintl · Fri Feb 01, 2013 4:26 pm

I am considering your arguments however they still fall flat. FCO is good as an O&D destination not as a transfer hub. AZ is exapnding in all the wrong places, places it should not expand to if it wants to operate an effecient hub at FCO. Places like CPH, KRW, ZRH are better served from a Milan hub. Plus once AZ gets taken over by new shareholders Monday a move back to MXP will be inevitable. AZ has no other option if it wants to stay afloat. The 777s are all premium configured which is why AZ should sell them.

AR385 · Fri Feb 01, 2013 4:39 pm

Can anybody provide some hard numbers that prove FCO is such low yield? I find this very hard to believe, but I may be wrong.

LAXintl · Fri Feb 01, 2013 5:25 pm

Quoting miaintl (Reply 50):
a move back to MXP will be inevitable.

And huge losses to go along with it.

Lets look at this from maybe an angle you can understand.

Linate is close to your home and for our discussion is Miami Intl - an airport close to the city center so its close to the population and commerce. Instead of multiple runways like MIA, its a single runway facility that see frequent and popular domestic and European flights. But due to size and space it cant support longhauls.

Malpensa however is up in Palm Beach, or somewhere in the Everglades. It has room, ample runways and is where you can operate longhauls from. However its rather unattractive due to distance for the local and visitor coming in on domestic or European services.

So the airline is left running a split operation. Popular European and domestic services remain at the consumer attractive close by LIN, while long-hauls are stuck at distant MXP. However Milan is not a very big market to support so much longhauls on its own so it needs feed. The airline then must add duplicate domestic and European flights to help feed the MXP hub, however it also ends up discounting these flights and compete against its own and competitors LIN service trying to fill them.

So back to the Miami analogy. If you are simply going up to NYC or Atlanta would you not prefer to do it from nearby MIA Intl instead of driving to PBI or somewhere out in the Everglades? Same happens to the millions in Milan which happily choose Linate over Malpensa for their travel needs.

AZ going back to MXP would simply be a repeat of the past disasters.
Atleast with Rome even with its more tourist bent it can run a hub with everything under a single roof at single airport.

miaintl · Fri Feb 01, 2013 5:47 pm

Then they should close LIN and operate everything out of MXP and under a single-roof. MXP will be Milan sole airport, or at the least LIN can be handed over to the LCC and MXP gets AZ completely. FCO is not a profitable hub for AZ it involves too much backtracking to serve as a conveniant connecting point. I would like to see numbers that prove that FCO is profitable, I can assure you AZ's short-haul routes are not.

dc9northwest · Fri Feb 01, 2013 5:54 pm

Quoting miaintl (Reply 53):
Then they should close LIN and operate everything out of MXP and under a single-roof.

Alitalia, out of business.

I guess that's the headline you're looking for with that move.

miaintl · Fri Feb 01, 2013 6:04 pm

Quoting dc9northwest (Reply 54):

They can provide high-speed rail service from MXP so that passengers can reach the city center quicker. Plus we are not talking about O&D but transfer passengers that will make MXP work. AZ is going out of buisness by operating out of FCO which is giving up Italy to the low-cost carriers.

LAXintl · Fri Feb 01, 2013 6:20 pm

Quoting miaintl (Reply 53):
Then they should close LIN and operate everything out of MXP and under a single-roof.

You can try. Maybe except making environmentalist happy, I don't believe there is any viable push to close Linate.

It be like closing LGA or DCA in the US.

Quoting miaintl (Reply 53):
or at the least LIN can be handed over to the LCC and MXP gets AZ completely.

And the consumer will still choose to fly from LIN, whether on competitors like EasyJet, Lufthansa, Air France, Swiss, etc.. at the expense of AZ.

Alitalia would be hurting even more if it losses its popular domestic and European services from LIN.
Its likely if anything is profitable at AZ, its the dense domestic and European markets from LIN where AZ holds the majority of slots at.

Quoting miaintl (Reply 53):
I would like to see numbers that prove that FCO is profitable

AZ is losing reported €630,000 daily.

But one thing is clear. The bleeding since consolidating at FCO has been less.

miaintl · Fri Feb 01, 2013 6:51 pm

MXP can serve all of Italy domestically with AZ. AZ can still offer tons of European and Italian destinations from MXP. The only real alternative to this problem is to expand LIN and turn it into a super hub like another anetter said. I dont know how reasonable expanding LIN is at this point though.

mercure1 · Fri Feb 01, 2013 6:58 pm

Making hub only at MXP is suicide for AZ.

Even Air France does not consolidate at CDG fully and maintains some 200+ flights daily at close in Orly airport, because many people prefer the nearby airport especially on domestic and short regional service. Why spend 1 hour getting to airport when you have one inside the city center almost. Milan is the same.

Also Northern Italy like mention is very fracture market with many many airport choices.
Unlike France where population and economy is much more centralized focus on Paris, Italians in North don't need to look to Milan as their sole gateway. You can fly direct to many places domestic and Europe from local home airports. People also do things like cross border to catch flights.

So maybe Rome is not perfect location for Italian hub, but it is the largest single airport in Italy in passengers, capital of country, and worldwide popular destination.

LAXintl · Fri Feb 01, 2013 7:07 pm

Quoting miaintl (Reply 55):
Plus we are not talking about O&D but transfer passengers that will make MXP work.

First hubs require some local O&D which helps increases your yield.

But to have an effective hub, you need lots of flights, to lots of cities. Since the nature of connection flow can be fickle and vary greatly from flight to flight, you need to sell the remaining seats with O&D traffic. However trying to sell O&D seats to Rome, Paris or London from Malpensa is harder (read you must discount heavier) versus Linate.

Its no coincidence the largest airline at Malpensa today is EasyJet - it has the ability to sell low enough fares to attract people out and to MXP over LIN.

For AZ to do so it would be a repeat of the past disasters. It would have this huge capacity at MXP that it must discount heavily to fill.

Heavierthanair · Fri Feb 01, 2013 7:19 pm

G'day

Quoting miaintl (Reply 55):
They can provide high-speed rail service from MXP so that passengers can reach the city center quicker

The Malpensa Express train connects Malpensa with the city center in 30 minutes, about the time required to get to Linate using public transportation. Not everyone can or wants to use public transport though, you need to get to the closest subway/tram/bus station carrying or dragging your luggage in rain, snow or sunshine, plan to make your connection to the train and see you are not returning Fridays which is the day public transport strikes take place.

Much easier to just drop your bags in the trunk of your car, then Linate has definite advantages in being closer

Cheers

Peter

mercure1 · Fri Feb 01, 2013 9:23 pm

Quoting Heavierthanair (Reply 60):
Much easier to just drop your bags in the trunk of your car, then Linate has definite advantages in being closer

And for taxi also. Last time in Milan taxi from Linate to destination was about €18 and took about 15min.

Same trip from Malpensa would be a whopping €90-100 as the taxis charge all inclusive flat fares from MXP to Milan city and take maybe 50-60 minutes depending on traffic.

miaintl · Sat Feb 02, 2013 11:12 am

But if AZ comes under AF management I dont see it being transformed into a major global carrier like KL. It will must likely become a feeder airline to CDG. However a hub move to MXP can transform AZ into a major carrier which can give star alliance and LH serious competition. By the way was it not AF's decision to move AZ's hub to FCO back in 2007? If that is the case then we can imagine what they plan to do with AZ.

jfk777 · Sat Feb 02, 2013 12:45 pm

How much of Alitalia's loses are from flying to Tokyo ?

justinlee · Sat Feb 02, 2013 1:08 pm

They have already stopped FCO-PEK. What a pity!

LJ · Sat Feb 02, 2013 1:33 pm

Quoting flyyul (Reply 1):
How is CSA/Malev/Olympic doing without Longhaul?

Well, CSA will have a long haul flight as of S13...

Quoting miaintl (Reply 47):
If AZ was smart they would sell all their 777 and 330 aircraft and let AF/KL operate the long-haul traffic.

Which already happens, though it doesn't work out well (AZ/KL just closed AMS-TRN and AMS-FLR is temporarily downgauged to an ERJ175/190 till S13).

Quoting LAXintl (Reply 59):

Its no coincidence the largest airline at Malpensa today is EasyJet - it has the ability to sell low enough fares to attract people out and to MXP over LIN.

And even easyJet wanted (and now gets) 5 daily FCO-LIN slots. As you correctly mention, domestic and intra-European traffic traffic prefers LIN above MXP.

Quoting dc9northwest (Reply 54):
Quoting miaintl (Reply 53):
Then they should close LIN and operate everything out of MXP and under a single-roof.

Alitalia, out of business.

And the political party which proposes this will loose a lot of votes next election.

miaintl · Sat Feb 02, 2013 2:51 pm

As long as FCO is the hub AZ will bleed cash. They need another alternative because the termination of FCO-PEK is proof that long-haul is not profitable from AZ apart from O&D which is already served by Air China. AZ was depending on connections to make the flight work but it offers little connectivity from FCO so the flight got axed. A MXP-PEK is more prone to succes than FCO since a MXP hub can offer better connections to the rest of Europe.

delta2ual · Sat Feb 02, 2013 5:53 pm

Quoting miaintl (Reply 66):
As long as FCO is the hub AZ will bleed cash.

OMG, you sound like a broken record! We all agree with you-something needs to be done, but unless Alitalia can convince the government to close Linate, there is no way they can compete at MXP. A transfer hub is only as good as its O&D; without that, you can't make money.
In a perfect world, Alitalia would fly direct from FCO to top major markets either year round or seasonally (i.e., NYC/MIA/YYX/LAX/ORD/NRT/PEK/LHR/CDG/FRA etc.); Linate would be closed to all but general aviation; everyone would be forced to use MXP and Alitalia would use MXP as its major connection complex serving unique destinations to connect Europe to the Middle East, Africa, and N & S America. They would upgrade their aircraft and offer a competitive product and add seats to Y class to decrease costs.
We can armchair here all day long, but unless things clearly change, that's probably not going to happen. Maybe AF can turn things around, but I'm not holding my breath.

miaintl · Sat Feb 02, 2013 7:02 pm

AF will most likely make AZ a smaller carrier which feeds AF's long haul routes. I don't see AZ becoming like KL or FCO like AMS.

dtfg · Sat Feb 02, 2013 7:26 pm

Quoting miaintl (Reply 66):
As long as FCO is the hub AZ will bleed cash. They need another alternative because the termination of FCO-PEK is proof that long-haul is not profitable from AZ apart from O&D which is already served by Air China. AZ was depending on connections to make the flight work but it offers little connectivity from FCO so the flight got axed. A MXP-PEK is more prone to succes than FCO since a MXP hub can offer better connections to the rest of Europe.

Air China also serves PEK-MXP and PVG-MXP, plus PEK-FCO and MU's PVG-FCO. After AZ quits Beijing the market is completely served by Chinese carriers. AFAIK, CA and MU will increase frequencies of PVG-MXP and PVG-FCO to daily. So I guess it is AZ itself that has problems...

Flighty · Sat Feb 02, 2013 7:37 pm

Quoting miaintl (Reply 47):
I think there is a reason Olympic could not make a ATH hub work, because like FCO Athens is a low-yielding poorly located destination.

Exactly. I vote Italy does not have a city that can work as a hub.

MXP has potential, but Rome does not. And MXP's potential could be best explored by entities other than AZ.

[Edited 2013-02-02 11:39:33]

miaintl · Sun Feb 03, 2013 11:28 am

MXP should be explored by AZ. Other entities like LH have already tried to operate a hub at MXP but it did not work. In an ideal world MXP would be AZ's sole hub and would be skyteams third major hub in Europe after AMS and CDG.

flyyul · Sun Feb 03, 2013 3:30 pm

miaintl- you don't listen to anybody on this forum. Truth of the matter is there's a lot of qualified and smart people that work at Alitalia who simply know better than us. If you feel you know better, I recommend you apply for a job at La Magliana where AZ's HQ is.

FCO is going to stay the hub e basta.

delta2ual · Sun Feb 03, 2013 5:20 pm

Quoting miaintl (Reply 71):
Other entities like LH have already tried to operate a hub at MXP but it did not work.

This makes no sense; LH could not make MXP work, but you are sure that AZ could?

mandala499 · Sun Feb 03, 2013 6:10 pm

Quoting miaintl (Reply 71):
MXP should be explored by AZ.

Sure, by the same argument, maybe Edinburgh/Glasgow should be explored by BA and Nice by AF?

AZ's problem is the politics of FCO, LIN and MXP. Want to make MXP work? Well, U also got BGY with LCCs on it... Milan is literally split into 3 airports.

So if you want MXP to work, go and close LIN from all but general aviation... then your MXP obsession can have half a chance!

MXP hub would only work by building it's O&D. Force the connections out of it, well, you're asking for trouble. Sorry, that airport is not ideal for a large connecting hub... (but a large O&D hub is a different story and sets of requirements altogether).

Comparative yield of AZ and it's competitors out of FCO is better than MXP... it simply cannot compete with its competitors out of MXP.

The problem with AZ is not FCO vs MXP... it's AZ itself, the politics of AZ, etc... Fix AZ within, and then it doesn't matter if it's at FCO or MXP...

miaintl · Sun Feb 03, 2013 10:14 pm

AZ also faces plenty of competition in FCO. But FCO is not an ideal connecting hub either. The truth is that Italy does not have a viable hub anywhere so AZ should stop being a hub carrier and just focus on becoming a feeder carrier to AF. AZ long-haul is no longer viable especially with poor yields and bad connections.

flyyul · Mon Feb 04, 2013 2:22 am

If AZ has poor yields as you say MIAINTL - then AZ has to focus on getting more seats on their airplanes to offset lower yields.

miaintl · Mon Feb 04, 2013 6:31 pm

Was AZ going to have a 200-million dollar fund injected into it today? How about its frequent flying program be sold and liquidated?

northstardc4m · Tue Feb 05, 2013 4:33 pm

Just to throw a wrench into these operations discussions...

The reason AZ can't compete with LH, AF, BA, etc or make money is less to do with tourist vs business travel or the economy and far more to do with the horrid reputation of AZ and travel through Italy. Everybody has horror stories about being stuck in Italy due to XYZ going on strike (or X, Y AND Z) and having to practically assault someone to get even a food voucher, being yelled at, etc etc... True or not, many many MANY long haul flyers will avoid AZ and flying through Italy because of the perceived risks of delays due to labor action and reputation for poor service. Connecting traffic on AZ is badly affected as a result. Therefore AZ has to fly as a nearly 100% O/D carrier which will never do as well in today's market.

miaintl · Tue Feb 05, 2013 10:40 pm

AZ may now link-up with SU. I wonder what consequences that will have? How do these two carriers even compliment each other?

Should AZ Stop All Longhaul Flying?

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