Alitalia and the Italian airline market over the period  2004-2016

Ugo Arrigo, Andrea Battaglia, Giacomo Di Foggia

Abstract

This paper summarizes the characteristics of the Italian air transport market in the period 2004-2016 and the role played by Alitalia. It also analyzes the main industrial and economic results of the national carrier, comparing the costs with those of the major low cost carriers operating in Italy, its direct competitors. Finally, it proposes a first assessment of the economic sustainability conditions of the carrier, in particular the requirements that a different management of Alitalia should respect to support the high competition of low cost carriers on short-haul flights, national and European, interrupting the high losses that in the three year period 2012-15, they were mainly driven by a market push to reduce tariffs much faster and more incisively than the cost containment achieved by company management.