Lingua e linguistica inglese - Alitalia crisis and low-coast business model

Alitalia crisis and low-cost business model

Alitalia was established in September 1946 as Aereolinee Italiane Internazionali. It started operations on 5 May 1947. By the 1990s, Alitalia was carrying 25 million passengers annually, and in 2001 it became a member of the SkyTeam alliance. During this period, it had many financial and economic problems; in fact, it would cut 2700 jobs in 2003, a number that increased in 2004 to 5000 jobs.

The Alitalia crisis comes from far. Since 1996, the Italian Minister of Treasury made three operations of refinancing through the sale of shares that have carried huge resources into the company's coffers. These were meant to serve for balancing and economically relaunching the company, but the result has been ruinous. Alitalia increased passengers and revenues but every year wasted 500/600 million euros. It was more flying, more wastes; it is necessary to reduce wages and increase efficiency.

The most important relaunching trial of Alitalia was made during 1996 and 1998: there were resources like a strategic alliance with KLM, an industrial plan, but the management, conditioned by political pressures, couldn’t finish the project. The State kept 51% of the social capital, the hub of Linate wasn’t reorganized, and the agreement with KLM was not found on the governance of the carrier. Meanwhile, competitors and low-cost companies conquered a slice of the Italian and European market.

Low-cost business model

A low-cost carrier is an airline that offers generally low fares in exchange for eliminating many traditional passenger services. The concept originated in the USA.

• A single business class
• A single type of airplane, reducing training and servicing costs
• A simple fares scheme
• Unreserved seating
• Flying to cheaper, less congested secondary airports and flying early in the morning or late in the evening to avoid air traffic delays and take advantage of lower landing fees
• Emphasis on direct sales of tickets, especially on the internet
• Employees working in multiple roles
• Aggressive fuel hedging program

Ryanair was established in 1985 by Tony Ryan, but actually, the CEO is Michael O'Leary. The first flight was from Waterford to London. It’s Europe’s largest and most successful airline. Ryanair has been characterized by rapid expansion, a result of the deregulation of the air company in the EU in 1997. Over the years, it has become a social-carrier with a specific social function among young people that can travel to all places in the EU with the cheapest fares. However, it is also one of Europe’s most controversial companies, praised by some, criticized by others. Critics have attacked its policies with trade unions, hidden taxes and fees, limited customer service, and charged that it practices deceptive advertising.