From Alitalia’s Ashes: The Brief But Promising History of Italy’s ITA Airways
From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - The Fall of Alitalia
Alitalia’s demise was a slow and painful one. The once proud flag carrier of Italy struggled for years before finally succumbing to its troubles in 2017. So what led to the downfall of this iconic airline?
Experts point to a number of factors that ultimately sealed Alitalia's fate. For starters, the airline faced stiff competition from low-cost carriers like Ryanair and easyJet, which chipped away at Alitalia's short-haul business. Meanwhile, powerhouses like Lufthansa and Air France-KLM dominated the lucrative long-haul routes that Alitalia relied on.
Caught in the middle, Alitalia struggled to compete on either front. The airline tried to go toe-to-toe with the low-cost carriers, but that ate into profits. Alitalia also lacked the scale and reach of the larger legacy carriers, making it difficult to compete in the global long-haul market. This lack of a clear strategy proved disastrous.
Making matters worse, Alitalia was plagued by years of mismanagement and political meddling. The airline went through a dizzying succession of CEOs, none of whom could plot a successful course forward. The Italian government also used Alitalia as a source of jobs and political patronage over the years, loading the airline up with excess staff and bureaucracy. This lack of strong, stable leadership and strategic vision crippled Alitalia.
The airline also failed to adapt and innovate. While competitors modernized their fleets and adopted new technologies, Alitalia fell behind the times. Maintenance issues, flight delays, and poor customer service became commonplace. Travelers took note, and Alitalia's bookings suffered as a result.
By 2017, the struggling airline was lurching from one crisis to another. Alitalia filed for bankruptcy after employees rejected a major restructuring plan that would have cut jobs and salaries. With over $3 billion in debt and its core business unprofitable, Alitalia could no longer stay airborne. After surviving over 70 years, the lights finally went out.
What else is in this post?
- From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - The Fall of Alitalia
- From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - ITA Emerges from Alitalia's Ashes
- From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - A New Airline is Born
- From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - ITA's Fleet Takes Flight
- From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - Workforce and Route Network Downsized
- From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - Building Partnerships for the Future
- From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - The Road Ahead for ITA Airways
From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - ITA Emerges from Alitalia's Ashes
After Alitalia’s collapse, an airline-shaped hole was left in the Italian aviation market. But nature abhors a vacuum. Rising to take Alitalia’s place is ITA Airways, a new national carrier for Italy. ITA emerged from Alitalia’s ashes in 2021 as a leaner, more modern airline unfettered by the baggage of the past.
Many skeptics doubted whether ITA could succeed where Alitalia failed. But ITA has studiously learned from Alitalia’s mistakes. This newest iteration of Italy’s flag carrier is determined not to repeat the errors of the past.
ITA has charted a new course right from the start. The airline is not a direct successor to Alitalia, but is an entirely new company with a clean balance sheet. This has allowed ITA to build a business model focused on profitability rather than prestige or politics. No more treating the airline like a jobs program or personal fiefdom.
ITA has also recognized that it cannot be all things to all people. It is not trying to compete across both short- and long-haul routes against both full-service and low-cost rivals. Instead, it is picking its battles carefully. ITA is positioning itself as a premium airline centered firmly on the long-haul market. This targeted approach gives the airline a fighting chance.
The airline has also invested wisely in a new, fuel-efficient fleet. ITA’s fleet contains next-generation Airbus and Boeing aircraft designed for efficiency and passenger comfort. The tired old planes that were the symbol of Alitalia’s decline are gone. ITA’s sleek new cabins and top-notch in-flight amenities set a new standard for Italian air travel.
None of this would matter without a customer-centric company culture focused on service and punctuality. ITA is building its workforce and work rules from the ground up with this in mind. Employees will be shareholders, giving them a vested interest in ITA’s success. Profit-sharing plans help further align workers’ interests with the airline’s bottom line.
Partnerships have also been key to getting ITA off the ground. Joining the SkyTeam alliance gives ITA a truly global network. Codesharing deals expand options for passengers while keeping costs low. ITA is not trying to recreate Alitalia’s entire network overnight. It is leaning on strong partners to fill the gaps during its rapid expansion. This prudent growth strategy has served ITA well as it stretches its wings.
From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - A New Airline is Born
With ITA rising from the ashes, Italy once again had a national airline it could be proud of. But birth is just the beginning of any airline’s story. The real work was still ahead for ITA as it sought to prove itself in the unforgiving airline industry.
ITA faced its first major test merely months after launch. When COVID-19 hit Europe in early 2020, the fledgling airline had little cash reserves to weather the massive drop in travel demand. ITA’s very survival was in doubt before its first birthday. But the airline navigated the storm thanks to government loans and its nimble, compact structure. Within a year, ITA was back flying a full schedule to meet pent-up travel demand.
Observers remained skeptical, however. New airlines, even under the best circumstances, often fail in their first years. With legacies like Pan Am, Eastern, and Braniff fizzling out after promising starts, ITA knew the statistics were stacked against it. But by learning from the struggles of others, ITA aimed to beat the odds.
Industry veterans advise new entrants to avoid rapid, reckless growth that overextends the airline. Acquiring too many aircraft or routes too quickly burdens startups with high fixed costs. ITA has taken this advice to heart. While competitors like Norwegian rushed pell-mell into the transatlantic market, ITA has kept expansion measured. This prudent approach has kept cash reserves healthy.
Network limitations are another common pitfall for startups. But ITA has leveraged partnerships to punch above its weight class. Through alliances and codeshares, ITA can offer global reach that belies its modest fleet. Relying on partners also provides scheduling flexibility as ITA tests new routes. This allows the airline to trial markets before fully committing. Such small bets help ITA minimize risk.
A devoted workforce is also crucial for airlines, startups especially. ITA is building loyalty by making employees shareholders and offering profit-sharing. Other new airlines have faltered when workers lost faith. But ITA aims to align labor and management priorities for a united front.
From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - ITA's Fleet Takes Flight
For any airline, the fleet is its lifeblood. Aircraft and how they are deployed make or break an air carrier. ITA recognized this in plotting its fleet strategy. By taking a studied, patient approach to building its fleet, ITA is avoiding the mistakes that have grounded other startups.
Rome was not built in a day, and neither will ITA’s fleet. The airline is adding new aircraft incrementally over a multi-year period. This precludes ITA from saddling itself with more planes than it needs or can profitably employ. Other eager new entrants have crippled themselves by gulping down aircraft to spur quick growth. Yet without sufficient demand, these planes become expensive albatrosses rather than profit drivers.
ITA’s fleet plan has focused squarely on new-generation, fuel-sipping aircraft. For its debut, ITA leaned on Airbus A320-family narrowbodies well-suited to European routes. But widebodies soon followed as ITA expanded across the Atlantic and to Asia. Here, the airline split its orders between Airbus A330neos and Boeing 787 Dreamliners. This dual-source approach provides flexibility while benefiting from the unique strengths of each jet.
The A330neo offers ITA excellent capacity for mid-range routes that don’t require the 787’s extended range. The Dreamliner, meanwhile, is ideal for longer missions ranging from the U.S. West Coast to Tokyo. ITA has already put both jets through their paces on routes like Rome to Boston, Los Angeles, and Tokyo. Feedback from passengers has been glowing.
Yet ITA has not rushed to fill its fleet to the brim. Measured growth allows the airline to match supply with demand. Having too many aircraft too soon forced other failed startups into money-losing overcapacity. ITA’s deliberate strategy protects profit margins.
Once larger narrowbodies like the A321neo arrive, ITA will gain even more flexibility. These jets can economically serve destinations once only possible with widebodies. This will enable ITA to fine-tune its networks as new opportunities arise.
ITA is also avoiding peril by not overextending with too many leased aircraft. Relying heavily on leasing helps airlines grow quickly but expose them to volatile lease rates. ITA is taking a balanced approach, buying some aircraft outright while also leasing others. This diversified sourcing smooths costs as market conditions fluctuate.
From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - Workforce and Route Network Downsized
Turnarounds require tough choices. For ITA, building a sustainable airline meant reducing its workforce and route network from Alitalia’s bloated state. Though painful, this downsizing was crucial medicine for an airline seeking profitability.
Other carriers in similar straits have flinched when faced with layoffs and network cuts. But ITA remained resolute, determined not to repeat Alitalia’s fatal reluctance to confront hard truths.
The airline targeted its most severe workforce reductions on non-flight staff. Bloated management ranks were thinned while administrative and commercial positions were sharpened. Frontline employees did not escape untouched, but absorbed targeted cuts designed around ITA’s planned fleet and destination network.
In total, ITA’s workforce now numbers around 3,600 - less than half that of Alitalia’s at its peak. Staffing levels were right-sized to fit ITA’s streamlined structure and strategic needs. The airline walks a fine line, retaining sufficient talent while eliminating excess.
Network trimming was even more severe. ITA sliced away over 60% of Alitalia’s bloated short-haul network, retaining only key domestic and European routes. The long-haul network saw similar dramatic cuts.
Instead of clinging to prestige routes that lost money, ITA took a pragmatic approach. Long-haul flying will center on key global hubs: New York, Boston, Los Angeles, Buenos Aires, Sao Paulo, and Tokyo. These strongholds give ITA a foundation for global growth while avoid overextension.
This smaller network imposed internal discipline lacking at Alitalia. ITA must squeeze maximum revenue from each route and cannot afford underperformers. This pressure-testing helps ensure the viability of its network as a whole.
The reduced network also forced ITA to be creative in serving markets still vital to Italy. Here, partnerships have plugged holes instead of unprofitable own-metal flights. Through alliances and codeshares, ITA links into partner hubs like Paris, Amsterdam, Frankfurt, and London. Connecting flows from these megahubs keep ITA’s network reach far broader than its physical footprint.
From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - Building Partnerships for the Future
ITA recognizes that no airline is an island, especially not a scrappy upstart like itself. Instead of struggling alone against giants like Lufthansa and Air France-KLM, ITA is embracing partnerships and alliances as a key growth driver.
This cooperative strategy lets ITA punch far above its weight class by linking into the networks of allied airlines. Just as importantly, partnerships expand ITA's itinerary options and global reach without overextending its fleet or balance sheet. Relying on allies for lift is simply smarter business than flying loss-leading routes solely for pride.
Of course, the most pivotal partnership is ITA's new role in the SkyTeam alliance. By joining SkyTeam, the airline gains access to a vast web of partner hubs across Europe, the Americas, and Asia. This transforms ITA from a regional carrier into a truly global network. Without a single new flight, ITA can now offer one-stop journeys to over 175 destinations worldwide.
That broad connectivity will drive higher revenues by expanding ITA's target customer base. No longer confined just to origin-and-destination Italy traffic, ITA can now attract lucrative transfer flows. A Milan-New York passenger connecting onwards to Santiago is much more valuable than a simple point-to-point flyer. SkyTeam connects enable ITA to capture that higher-yielding traffic.
Partnerships within the alliance are just as vital. Among SkyTeam members, ITA maintains especially close ties to Air France-KLM and Delta. Codesharing and reciprocal frequent flyer privileges with these airlines boost ITA's appeal to status-conscious business flyers. Joint lounges and unified premium check-in streamline the customer experience while lowering ITA's costs.
Beyond SkyTeam, ITA is also forging ties outside the alliance to fill key network gaps. The most important here is a comprehensive codeshare with Lufthansa. Given Lufthansa's massive German and Austrian hub networks, this unlocks valuable passenger flows for ITA. An Alitalia join with antagonized Lufthansa would have scoffed at such cooperation. But ITA recognized the foolishness of that thinking.
Additional partnerships in the Americas, including prospective Brazilian carrier Azul, will feed ITA's long-haul network from Rome and Milan. In a dynamic industry, ITA cannot afford to ever be complacent about its partnerships. New opportunities must always be evaluated as market conditions and models evolve.
This is not to say ITA should take a totally passive role, merely feeding partners without operating flights of its own. On the contrary, ITA is using partnerships to underpin and complement its own strategic growth. Partners provide connectivity where ITA presently lacks the scale to fly, not replace flying that ITA should operate itself. Striking this mix is key.
From Alitalia's Ashes: The Brief But Promising History of Italy's ITA Airways - The Road Ahead for ITA Airways
What does the future hold for Italy’s rising phoenix, ITA Airways? The airline has made an impressive start, deftly avoiding the pitfalls that grounded many past startups. But the hard work of building a sustainable airline has only just begun. ITA must stay nimble and forward-looking to prosper in the years ahead.
Other reborn flag carriers show the difficult road ITA has yet to travel. Swiss International Air Lines faced turbulence for years before finding stability through focus and partnerships. Austrian Airlines struggled through a painful restructuring before emerging as a successful Lufthansa subsidiary.
ITA must prepare for similar hardships along its journey. The headwinds buffeting global aviation look unlikely to abate. Fuel prices and inflation remain stubbornly high. Labor strife continues brewing as employees press for raises to keep pace with the soaring cost of living. Environmental pressures mount for airlines to curb emissions.
Expanding long-haul flying will be crucial to ITA’s development. thus far, the airline’s long-haul growth has centered on North America and a few key global hubs. But further growth beckons in Africa, South America, and Asia. Sao Paulo and Buenos Aires are natural candidates for South American growth. Johannesburg and Nairobi would deliver strong connecting flows from African destinations. And partner hubs like Seoul, Bangkok and Singapore offer additional options for tapping Asia’s vast potential.
ITA should also keep exploring new commercial models like its upcoming new leisure brand. Branded fares help attract distinct customer segments. Creative products catering to student and family travelers could be next.
Continued fleet enhancement will support such network growth. ITA has wisely focused initially on Airbus and Boeing narrow- and widebodies. But turboprops and regional jets have key roles to play for thinner routes. Pinpoint deployments of smaller aircraft could help ITA profitably expand to secondary cities.
Whatever comes next, ITA must maintain its nimbleness and cost discipline. With the lessons of Alitalia’s downfall etched firmly in mind, ITA knows it cannot afford to slip into bloated complacency. Keeping costs structurally lower must be a constant priority.
Partnerships will likely grow even more vital as well. Joining an alliance was just ITA’s first step - next come deeper integration and joint ventures. Creative new commercial ties should be on the table.