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|Alitalia should go to Air France-KLM|
Corriere della Sera - December 18th 2007
When the board of Alitalia meets today to consider the competing acquisition proposals from Air France-KLM and Air One, the air will be filled with distracting issues. Does the buyer’s nationality matter? Should an airline, one attached to the name of
The reason to focus strictly on commercial arguments, on the likely effects on profitability, revenue, debt and customers’ satisfaction, is not an ideological one. It is a practical reason. In some parts of the transport sector, it still makes sense to manage companies according to public goals rather than commercial ones. Railways is the main example: it is hard to introduce effective competition on railways, as the failed privatisation of British Rail showed in the 1990s; and the environmental case for subsidising rail travel to help it compete with roads and airlines is strong. This is not true of airlines.
Nowadays, the airline business is highly competitive. Britain has a successful airline that still carries the country’s name, British Airways, but it is privately owned and there are several other private competitors—Virgin Atlantic, British Midland (part-owned by Lufthansa), Easyjet, Flybe—as well as all the foreign carriers that land at British airports. Unlike with railways, there is no shortage of choice. Given the European Union’s open air transport market, and the recent open skies deal with the
That is what Alitalia’s losses prove. The non-commercial operation of the national airline has failed, is costly for the Italian taxpayer, is bringing constant tension with the European competition authorities, and cannot be sustained in the modern world of competitive, low-priced air travel.
The French state retains a shareholding in Air France-KLM. But it is only 18.6%. Moreover, the reason why Air France-KLM is now
With Alitalia, politics will always intervene, regardless of who owns the firm. Anyone who dreams of another outcome should simply look at Telecom Italia. But if political influences are to be kept under some restraint, then paradoxically a foreign, even state-owned, buyer might be the best solution. Distance, even between
The board should thus take its decision on commercial grounds, bearing in mind today’s intense competition in civil aviation. Those grounds should include the ability to withstand political pressures. If that reasoning is followed, then the decision should go to Air France-KLM.