Skift Take

Etihad is aggressively moving the pieces of its chessboard around Europe. But Alitalia is no versatile queen for the center of the board. At most, it’s a bishop.

While admitting he’s been asked not to refer to Alitalia this way, James Hogan, President and CEO of Etihad Aviation Group and Vice Chairman of Alitalia, called the airline the “sexiest brand in aviation” when unveiling a new strategic plan for the Italian carrier.

Also presenting details on the planned recovery for one of the most unprofitable brands in aviation, were Luca di Montezemolo, Chairman of Alitalia, and Silvano Cassano, Chief Executive Officer of Alitalia. Some strategies were vague, the goal of returning Alitalia to profitability by 2017 was concrete. The core message was that major changes in Alitalia, and in Italy, would be required. Listening past the lingo, this strategy consists of more than giving Alitalia its ’sexy’ back through stylish rebranding.

Hogan referred to Alitalia as “one of the innovators of aviation, but a poor business,” a flaw which he attributed to the carriers’ “public utility mentality.” He indicated this malady is common among established European carriers, saying: “Legacy airlines are struggling with restructuring, probably with the exception of British Airways.”

To turn Alitalia around, protecting the Etihad Group’s 49% share of the Italian airline and investment of 560 million Euros, Hogan promised to work with the unions “to ensure that we create the right environment” and address “challenges with taxation.” He encapsulated the new strategy as “consolidation and economies of scale.”

Cassano spoke of avoiding “political interference,” and “rebuilding Alitalia as a global airline,” saying it had previously “suffered due to the scarcity of resources.” He pointed to the pressure from Low-Cost competitors in the region, though later clarified that he doesn’t “blame Low-Cost Carriers” for the failings in Alitalia, rather that Alitalia will differentiate its brand through “top service.” Cassano described the industry as an hourglass, saying Alitalia’s previous position at the middle of that hourglass had been problematic.

“[It’s an] hourglass world,” Cassano said, “either you are at the bottom and you count on price–and this is the case of easyJet and Ryanair–or you are at the top of the hourglass which means relying on long-haul flights [and] services. Being in the middle of the hourglass means being weak. This is the case not only of Alitalia but also of other companies.”

A hint of how this middle-hourglass brand might move to the top included mentions of new Boeing aircraft and Panasonic In-Flight Entertainment systems. Cassano said that Alitalia would be “smart collaborating with Etihad” on airplanes and other acquisitions.

The assignments of Etihad’s own Aubrey Tiedt as Chief Customer Officer for Alitalia, and Duncan Naismith as Chief Financial Officer for Alitalia, also hint at how involved Etihad intends to remain throughout the reorganization and rebranding. These assignments will help the Etihad Group ensure that the onboard product at a re-sexified Alitalia are on a scale consistent with Etihad’s own standards, while maintaining sound financial oversight on investments.

An Italian reporter raised a bone of contention which was circled around then answered in a surprising manner: how could Alitalia increase routes and hubs—as promised in the strategy presentation—while at the same time reducing the airline’s fleet?

In answer to the reporter’s question, Cassano placed great emphasis on rail. “Connections between aircraft and trains are important,” he said, adding that he would not “go into the details—it is very elegant.” He did say: “If you go to Amsterdam, for instance, you take the high-speed train into the airport. Our mantra, like with connectivity and hubs, if you are in Bologna, Florence, Venice, you do need high-speed train service to reach the airport. The name of the train company is not that important. It’s the national infrastructure that has to improve. Without an integrated support policy, we miss opportunities.”


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Tags: alitalia, etihad

Photo credit: Alitalia planes are pictured before takeoff at the Fiumicino airport in Rome December 10, 2013. 123462 / 123462

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