Italy orders airlines to curb fare deals

[iceman51]

from www.ft.com/home/europe

Italy has ordered leading European airlines, including British Airways and Germany's Lufthansa, to stop offering lower fares than Alitalia, the struggling majority state-owned Italian flag carrier, on competing long-haul services

the relevant article is available here (http://news.ft.com/cms/s/479eac14-e968-11d8-b556-00000e2511c8.html)


I hope that the European Commission will intervene promptly on the subject, and will take a strong action against AZ, the Italian Govt and ENAC, the Italian Civil Aviation Authority. :yuk: :mad:

[brabazon]

Indeed this is not what liberalisation of the Airline Industry in Europe was all about. Mind you BA is offering some cracking deals from Italy to the US when I thought they were trying to reduce their connecting traffic and concentrate on the higher yield point-point travellers.

[warkman]

according to CEEFAX BBC2 page 209
The European commission says it is investigating a complaint from BA after italy tried to force the UK carrier to increase`prices

[sparkymarky]

Hmmm, so the airlines and governments expect us as taxpayers and passengers to subsidise them twice?

Once by paying inflated fares, and once by paying our taxes into their coffers because they are too inefficient to operate in a free market.

Doesn't sound very attractive to me.

[MarkD]

So: who were the EU countries wanting AZ to delete low fares (should be interesting)

and how much legal force do bilaterals have in a deregulated European airspace? surely not much???

[quixeven]

and how much legal force do bilaterals have in a deregulated European airspace? surely not much???

Definitely not much, in my view. As I said in the Italian forum, I think the European Commission is following this case very closely (and rightly so), as today's declarations by Mrs. de Palacio show.
Such agreements, although legally valid for the time being, are clearly in contradiction with the concept of "european market", as it has been developed over the last 5 decades.

Cheers,

Nicola

[trainer too 2]

It is pathetic that Italy keeps on subsidising AZ!! We all pay for this through higher fares!! It is time that a proper airline takes over....

Look at Belgium and Swiss, they show clearly that not every country needs a Flag carrier of massive size! Let AZ downsize to to the few markets it can make some money on and let proper competition bring low fares to the Italian market... :*

(the same to this loss making venture Olympic! :yuk: )

[Robert Vesco]

Written by Trainer too 2: Look at Belgium and Swiss, they show clearly that not every country needs a Flag carrier of massive size! Errrrrr, you obviously do not have a single clue about what goes on in Switzerland! S.w.i.s.s. (a.k.a. So What It´s Still Swissair) is a massive airline (for the country´s size) and only kept afloat with massive government subsidies and protection. Do some research on PPRuNe and you will see the bigger picture.

You are correct about Belgium/Sabena, but Swiss(air) is definitely another oversubsidized national toy (which will soon run out of money, again!), just like AZ.

[epsilonmiuraised]

So: who were the EU countries wanting AZ to delete low fares (should be interesting)

UK as you can read here (http://it.biz.yahoo.com/040810/2/2waof.html) alitalia had to rise its fares to BA level two times (one at the end of July) in answer to a CAA action. :rolleyes:

[iceman51]

On the subject I would suggest to read the following articles available on ft.com. They are still available for free:

Cheap fares and Italian practices (http://news.ft.com/cms/s/247bb59e-ea6a-11d8-a22e-00000e2511c8.html)

Alitalia's wheeze will not wash (http://news.ft.com/cms/s/06a9a252-ea69-11d8-a22e-00000e2511c8.html)

CAA confirms previous move over Alitalia (http://news.ft.com/cms/s/1f5e2c7a-eb34-11d8-91ae-00000e2511c8.html)

For additional information it is also worth to note that Intesa dei Consumatori, a group formed by the Italian consumer associations Codacons, Adoc, Federconsumatori and Adusbef, has informed that it will call on the relevant administrative court on the subject. In the meantime, they also suggest BA to comply with ENAC's request, but to allow the passangers to use the issued tickets as a voucher for the price difference against future purchases of BA's tickets. :p

A press release in this respect is available here (sorry, Italian only): http://www.codacons.it/comunicati.asp?id=5014

ENAC may have a legal basis on the subject thanks to bilateral treaties dating back some 60 years ago :{ , the truth however is that its effort to help Alitalia to survive will, perhaps, only delay its agony. :(

[sparkymarky]

Two wrongs do not make a right.

It's time these restrictive practices were set aside.

[iceman51]

Two wrongs do not make a right.
It's time these restrictive practices were set aside.


I agree in full! Market forces shall rule the game. :ok:

[trainer too 2]

Errrrrr, you obviously do not have a single clue about what goes on in Switzerland!

I do know what is going on and also know that the airline is still shrinking and that even the Swiss are now at a point that they are publicly doubting whether they should have subsidiesed Swiss when it went down.

:rolleyes:

[brabazon]

Market Forces eh? The day that the airline industry will be subject to market forces alone is a long way off, since it would mean the end of global ownership rules, bilaterals, fly home carrier only deals etc etc. Not going to happen this decade or even in my lifetime me thinks.

[trainer too 2]

BRabazon

That is what we thought about between European countries only 10 to 15 years ago. If we can extend it to the US as well and get proper market forces in Europe ie Olympic, Alitalia and Swiss bust or sold we are a long way there.

The bilateral with the US and cabotage for European carriers in the US will make it the biggest open aviation market. Places like Dubai, Sin etc will join and before the next decade is over we COULD be there....

The fact that this PATHETIC behaviour of AZ is out in the open and not a backroom political thing is a good sign that we move in the right direction :ok:

:8

[iceman51]

brabazon

It might be that I am too much optimistic ...but I firmly believe that in 5 - 10 years time the European airline scenario will be completely different, as well as the USA one.

In Europe, Alitalia, Olympic, Swiss and others (including many LoCos) will go belly up or will merge, others will reshape a lot (BA long haul only?) ...

In the USA, well the Chapter 11 area and beyond looks over crowded already now ...

...and hopefully the EU will take over in bilateral talks, cabotage, etc.

I see good signs all around, so keep on moving.

:ok:

[iceman51]

I start believing either that the aircon was not working early August at ENAC's HQ in Rome and they have all had an heat stroke, or that they have drunk too much ... :cool:



Italy Suggests EU End Airline Price Controls

August 27, 2004

Italy's air regulator, criticized this month for ordering 40 foreign airlines to stop undercutting Alitalia's ticket prices, recommended on Friday the European Union collectively abandon pricing controls.

The proposal would effectively strike provisions from a web of bilateral air service treaties, some dating back decades, that allow certain protections for national airlines.

That includes the right, exercised by ENAC, to demand that a flag carrier's rivals do not undercut prices on some international routes.

"ENAC proposes to the Italian government that it suspends the initiative in view of the EU's readiness to put in place a regulation soon, as long as there is reciprocity from all the EU countries," said ENAC head Vito Riggio.

The pricing provisions in the seldom-discussed agreements were thrust into the spotlight earlier this month when British Airways said Italy was forcing it to hike its fare on its Rome-New York route, via London, to protect Alitalia, which is struggling to fend off bankruptcy.

Italy responded that it was only following London's example. Britain's Civil Aviation Authority confirmed that it asked Alitalia in 2002 to raise fares on two routes to countries outside Europe.

Germany threatened to fine Alitalia last year if it did not stop undercutting Lufthansa on a Munich-Miami flight, which it offers via Italy, ENAC said.

The European Union, which deregulated the internal market in 1997, has sent letters to each of its 25 member countries asking for information on their air service treaties.

The EU executive will examine the responses when they arrive in September and use them to draft a new set of laws.

(Reuters)

I believe that no additional comment is required rather than ...:mad: