ITA Airways, the right of circulation and the protection of the Country System
By ASLA – Associazione degli Studi Legali Associatidi Maurizio Corain
Rome – In these days (or rather, in fact, in these years, in these decades, in this era), the race is reopening (slower than a city marathon, in which beginners already tired at the start seem to participate) for what remains of the Company once called "flag". The names change (not much), the questions remain; unsolvable, apparently.
The first of all, that of protecting the country system and our effective production capacity. But not only. Also present is the need, connected to the first, to be able to have an air transport service available such as to be considered worthy not only of the profitable support to systemic protection but also of the right expectations of quality and adequacy that characterize, for some time now, the demand coming from the reference market; therefore, by the passengers who turn to this service, as well as by the economic operators who choose, in a way that is perhaps not yet fully sustainable (since, at the moment, pending the full achievement of the objective envisaged by the Paris Agreement with the Net Zero 2050, air transport remains – despite the high efforts and important investments made in this regard by the airlines – characterized by a not exactly small level of CO2 emissions capacity to transport goods in this way. Protection of the country system, protection of market expectations, protection, therefore, of the rights connected to this: first of all, freedom of movement, the right to mobility, even sustainable, as well as the right to be able, therefore, to obtain (moreover and rightly against payment) satisfaction of interests – no longer just collective, but also personal – in freedom of movement and the right to free enterprise, freedom of economic initiative (despite the current telematic era which, in principle and later also in in fact, as has recently happened in the life of all of us, it also generates the possibility of non-displacement but with operational profiles which, likewise, we have always recently learned are not fully comparable to the interpersonal presence of the interlocutors). Protection of the right to free enterprise which should, therefore, also grant individuals the possibility of choosing how to move and to be able to do so freely: if I do not have a direct flight available (except those belonging to the network of other foreign companies, whose decision to operate or not to operate that flight is certainly based on very different principles from the protection of our country system) I need to take more time to reach my destination (due to the relative stopover times in the hub from which the flight will take off long haul) and, perhaps, more money for the purchase of the related ticket.
Among the many voices that have been raised, there are those who have indicated - finally in a lucid way - that the management of air transport is, therefore, an industrial policy measure: also the freedom, the possibility, the opportunity to move by air (not only applied to the cargo sector but also to the passenger sector) makes it possible to grow or (at least) maintain the level of output of a country; more than ever of a country like ours which - like many others - is trying to recover, to finally and finally arrive where it has full title and full suitability to actually reach (not only, therefore, "in words", affirmed, from time to time in turn, by whoever assumes the role of collective motivator).
Once the selection of the best bidder for the purchase of Ita Airways has reopened, preferences have therefore been expressed - for the now countless times - by the insiders to the advantage of one or the other "group" of the bidder: Lufthansa is better because it is structurally and operationally open synergistic management of the various reference markets; better Air France-Klm (and Delta, with their financial partner Centares) because they are strategically closer to a sharing relationship or even just on the basis of a benevolent consideration of the so many times in which this group, already previously, has attempted to take control of Alitalia, without ever succeeding however; the Indigo Partners fund, owner of the low-cost carrier Wizz Air, is better, because it would represent (alas, we observe, if it were still, at present, possible to think of the presentation of an offer also by these) an inclusion of the national carrier in an infrastructure of air transport, already dedicated to medium range, with the possibility of a future expansion of the network itself towards destinations with a wider range.
The tendency to examine the different proposals and the consequent approval, revealed by more than one expert commentator, a favor of one or the other of the two "groups" in the race remains, however, always far away and substantially without the consideration of an essential coefficient: the most significant revenue in air transport (passengers) is obtained with long haul traffic (therefore , with transoceanic flights); this in such an evident way given that very significant percentages of the revenue of an airline (obviously capable of operating such long-haul connections) derive precisely from the sales of the relative ticket office.
This is so true that even the low-cost air transport model had finally come to want to try to represent an emerging offer also for long-haul flights, consequently raising the question of economic sustainability and the future of carriers traditional for which, at this point, continuing to win the open long-haul battle is essential to be able to compete in the current era of the so-called "hyper-consolidation" of the air transport offer. But here it should be noted that these attempts have not had great success, many have quickly stalled. Therefore, thinking about the possibility of being included in a low-cost network in order to be able to operate long-haul routes does not appear likely, not only due to the transport capacity that the current Ita Airways fleet has the possibility of having, but also due to the substantial changes that this network would need to be able to think (in a perhaps ridiculous way) that the hub of this network could once become a national airport (it is worth thinking in this regard that the attempts to make Milan- Malpensa a secondary hub, even set up by Lufthansa about a decade ago, were quickly archived).
On closer inspection, then, in contrast to what has been observed by some, the presence of several German hubs (in addition to Frankfurt, one thinks of Munich and also of Düsseldorf airport which is the main decentralized hub of Lufthansa in Germany, in which such the carrier managed, tooth and nail, to defend its positioning, also and above all against the attacks of low cost airlines or no-frills, if you prefer, even arriving, as happened with Eurowings, to partially control them, contrary to what instead it happened in the Italian market, in which the low-cost carriers immediately activated and still continue to activate a direct and tight competition against our national carrier, whatever it was) does nothing but increase Lufthansa's propensity to take possession of a company (in this case Ita Airways) that operates "feeder" flights to those hubs; from these hubs it will then be the "owner" airline, in the substantial majority of cases, that will continue the flights with the highest profit margin, also filled with the passengers transported there by the subsidiary flights (coming, in our case, from the Italian market ) and viceversa.
This is a policy – which has necessarily become a survival policy in the air transport market – applied by all so-called carriers. major/full service, not only German but, therefore, also French and Dutch.
Furthermore, the consideration that the German market can be defined as predominantly outbound and therefore synergistic with ours, which is more markedly inbound, basically does not make a difference with what, however, appears to be identical characteristics of the French and Dutch markets; from these markets, moreover and perhaps more so, even in the periods immediately following the intense phase of the pandemic, the traffic data then in the recovery phase showed, in fact, a frequency of air travel higher than the average of other European countries. In other words, that even from France and the Netherlands people leave to travel abroad (this is outbound traffic) is an objective and indisputable argument: this, moreover, has always been the case.
The disposals of aircraft and the consequent, sometimes significant, reduction in percentage of the fleet which necessarily occurred during the lockdown and in the following period were apparently more substantial for Lufthansa rather than for Air France and KLM, also given the problems which, recently, they have arisen in the hands of Lufthansa due to the inability to fully satisfy the demand for air transport, again in a recovery phase and then actually increased, until it again tends to the levels existing before the lockdown. Hence, therefore, the need for the German carrier to immediately and fully reconstitute the transport capacity (in other words, again increasing the number of aircraft in its fleet), perhaps without waiting for the options to materialize, probably positioned by the same carrier on the producers tori Airbus and Boeing to rebuild their fleet to pre-pandemic levels; this necessity from which derives, therefore, the convenience and the need of the German carrier (as, moreover, perhaps to a lesser extent, also of the other carriers) to recover capacity on the market, above all of medium range, in order to "feed" their hubs for the benefit of the more profitable long-haul flights, which will clearly be operated directly instead.
Let it be clear, such an interest is quite similar to any other international air carrier which, therefore, would not behave differently from the German carrier: all the arguments that have been used to support one choice rather than another are, in fact, well see, fully cloneable and perfectly repeatable for all other major/full service carriers (including the French-Dutch group).
Even this possible and possible different choice (barring the advent of further bidders, however perhaps improbable at this point), therefore, will produce, in any case, the consideration of reducing, as after all largely then already partially turns out to be, Ita Airways as a support company to the long-haul network operated, in most cases, directly by the others, consequently bringing the revenue of the (now former) national company into the possible profit margins that can be derived from medium-haul connections; this terrain of medium-haul flights on which an unbridled battle will therefore be even more necessary for the company thus acquired against the low-cost airlines which have certainly not been on the sidelines in recent decades and which will continue, without exclusion of blows, to fight tenaciously for the consolidation and also for the increase of the market quotas already reached.
Finally, therefore, only the need to consider the importance - lucidly mentioned - of air transport remains in terms of a fundamental element for national industrial policy and, consequently, the intention to continue to have a dream: to protect, even here and we too, the interest of our country, without leaving others the possibility of pursuing only their own advantage. This regardless of the language - foreign - spoken by the possible future "master".
*Lawyer, partner of Rp Legal & Tax
This article was issued on “L’incontro”
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