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Low-cost carriers increasingly dominate Italy’s short and medium-haul traffic

18th September, 2012

Italy has reached a seemingly point-of-no-return in the expansion rate of low-cost carriers, which now offer almost 50% of seats on all scheduled domestic flights and about 46% of seats on international flights. Italian no-frills operators are being worsted by foreign budget airlines despite honest efforts by Alitalia to grow its own LCC, Air One Smart Carrier, with Ryanair taking the lead as the country’s largest budget carrier on international as well as domestic routes.

LCCs are now the dominant segment at four of Italy’s 10 busiest airports in terms of weekly seat capacity on scheduled short- and medium-haul services, including Milan Malpensa, Milan Bergamo, Palermo and Rome CiampinoRome Fiumicino Airport, the country’s main international gateway, will also be inundated with low-cost flights temporarily from 24-Sep-2012 through 02-Oct-2012 when Rome Ciampino Airport closes due to essential runway works and consequently all of Wizz Air and Ryanair’s operations move to Fiumicino. Ryanair offers about 111,000 seats on approximately 600 weekly frequencies to 48 destinations from Rome’s city airport, according to schedules in Innovata.

Among Europe’s five biggest aviation markets – the UK, Germany, Spain, France, and Italy – Italy ranks as the country with the highest LCC penetration (in terms of seat capacity) on domestic routes and the second highest on international routes, based on OAG data.

LCC capacity share (% of seats) in Europe’s five biggest aviation markets: Jan-2012 to Sep 2012

Country

Domestic

International

Italy

48%

46%

France

14%

25%

Germany

31%

26%

Spain &   Canary Islands

46%

56%

United Kingdom

31%

38%

While the growth rate of the capacity share by LCCs on international routes to/from Italy has been growing gradually over the past 10 years to approximately 46% in 2012, it has spiked on domestic routes only in recent years and it has nearly doubled since the bankruptcy of the so-called “old” Alitalia – Linee Aeree Italianee in 2008.

LCC capacity share (% of seats) in Italy's domestic market: 2001 to 2012*

LCC capacity share (% of seats) in Itlay's  international market: 2001 to 2012*

Italian LCCs have failed to build a notable presence 

Italy’s short- and medium-haul air transport market is a sizeable one with Western Europe representing an approximate 70% share of the country’s system seat capacity. This equates to about 1.6 million seats.

When adding up the capacity produced on routes to Central and Eastern Europe, the medium-haul market grows to almost two million weekly seats. Yet Italian budget carriers have failed to build a prominent presence. Sicilian LCC Wind Jet ceased operations in Aug-2012, leaving just two Italian counterparts – Air One and Blu-Express – offering more than 30,000 seats system-wide per week.

See related article:  The failure of Italy’s Wind Jet could prove to be a windfall for Alitalia

Ryanair is the dominant LCC in Italy in terms of seat capacity, routes and frequencies. It operates nine bases in the country and produces around 646,000 seats, according to schedules in Innovata for the week of 17-Sep-2012 to 23-Sep-2012. The second largest LCC in terms of seat capacity is easyJet.

The largest Italian LCC, Air One, is only the third largest LCC in the country, producing about 115,000 seats per week. The second largest Italian LCC, Rome Fiumicino Airport-based Blu-Express, operates only a little over 30,000 weekly seats. Blu-Express is the low-cost arm of Blue Panorama Airlines.

LCC systemwide capacity (seats per week) in Italy by carrier: 17-Sep-2012 to 23-Sep-2012

Air One deploys most of its capacity on domestic routes and it flies slightly more seats than easyJet in the Italian domstic market, however its domestic capacity is half of Ryanair’s.

The absence of Italian LCCs in Italy’s short- and medium-haul market is even more prominent on international routes. Only one Italian budget carrier, Air One, features in the top nine of largest LCCs in terms of seats. Air One ranks only fifth and produces half of the seat capacity of Barcelona-based Vueling Airlines or the Eastern European LCC Wizz Air.

LCC international capacity (seats per week) by carrier  in Italy: 17-Sep-2012 to 23-Sep-2012

Rome Fiumicino and Milan Linate are holding up against LCC invasion

LCCs are now the dominant segment at four of the country’s 10 busiest airports in terms of weekly seat capacity on scheduled short- and medium-haul services, including Milan Malpensa, Milan Bergamo, Palermo and Rome Ciampino while at Bologna, Venice Marco Polo and Naples Airport a no-frills carrier accounts for the largest share of capacity in terms of seats per week. Only at Milan Linate Airport have LCCs not gained a significant foothold while LCCs represent a small capacity share at Rome Fiumicino and Catania Airport in Sicily.

Top 10 Italian airports in passenger numbers 2011

Airport

Passengers (in millions)

Rome Fiumicino

37.4

Milan Malpensa

19.1

Milan Linate

9

Venice Marco Polo

8.5

Bergamo

8.3

Catania

6.8

Bologna

5.8

Naples

5.7

Palermo

4.9

Rome Ciampino

4.8

Several no-frills airlines do operate to Rome Fiumicino, such as easyJet, Vueling Airlines, Blu-Express, Norwegian Air Shuttle, Germanwings, Wizz Air and NIKI, but full-service carriers are the foundation of the airport’s operations and network. Alitalia has managed to defend its hub at Rome Fiumicino and has an approximate 46% share of the airport’s system seat capacity and an almost 75% share of domestic seat capacity. This grows to a 48% and 80% share respectively when factoring in the seat capacity offered by of its subsidiary Air One, based on schedules in Innovata for the week of 17-Sep-2012 to 23-Sep-2012.

See related article:  Aeroporti di Roma’s Master Plan requires EUR12 billion in investments

Rome Fiumicino system capacity share (% of seats) by carrier: 17-Sep-2012 to 23-Sep-2012

Airlines belonging to the Alitalia Group have a 65% share of Linate Airport’s total seat capacity and frequencies. The only LCC with somewhat of a presence at this high-yield inner-city airport is Alitalia Group’s fully owned subsidiary Air One, which operates to nine destinations from the airport. This has led to tension with easyJet, which for years has lobbied to get more slots and access – not quite successfully as it only has received slots for a 13 times weekly service to London Gatwick and a six times weekly to Paris Orly Airport.

Other LCCs with a minor presence at Milan Linate include airBaltic, which operates a daily service to Riga; Aer Lingus with a daily service to Dublin; and Blu-Express with a six times weekly to Reggio Calabria Airport, also known as Aeroporto dello Stretto, located in the south of Italy.

Milan Linate Airport system capacity share (% of seats) by carrier: 17-Sep-2012 to 23-Sep-2012

easyJet is the leading carrier at Milan Malpensa

UK budget carrier easyJet is Milan Malpensa Airport’s dominant airline with about a third of the airport’s total seat capacity and frequencies, although Air One is trying to regain lost ground. Alitalia was the airport’s main customer before its 2008 bankruptcy and the airline focused on a one-hub strategy (Rome Fiumicino) as part of its restructuring and relaunch under private ownership of CAI – Compagnia Aerea Italiana – in Jan-2009.

Air One operates just under 43,000 seats at Malpensa with 238 weekly frequencies to 25 destinations, according to schedules in Innovata for the week of 17-Sep-2012 to 23-Sep-2012. easyJet is the largest carrier at the airport, with a 32% share of seat capacity and 968 weekly frequencies to 35 destinations. Vueling Airlines has a growing presence and currently accounts for a 3% seat capacity share.

These three LCCs combined have a 43% share of system seats, but a much higher share of seats produced on short- and medium-haul flights.  

See related article: Milan Malpensa is trying to gel low-cost and full service to rebuild its lost glory

Milan Malpensa Airport system capacity share (% of seats) by carrier: 17-Sep-2012 to 23-Sep-2012

Ryanair is the dominant airline at Bergamo and Rome Ciampino

Milan Bergamo, also known as Orio al Serio Airport, is an almost exclusively low-cost carrier airport and a major Ryanair base. Europe’s largest LCC accounts for 87% of seat capacity and 85% of frequencies at Bergamo, according to schedules in Innovata for the week of 17-Sep-2012 to 23-Sep-2012. The airline serves 80 destinations from the airport.

Milan Bergamo/Orio al Serio Airport system capacity share (% of seats) by carrier: 17-Sep-2012 to 23-Sep-2012

Also Rome Ciampino is a major Ryanair base. The airport is used by two LCCs, Ryanair and Wizz Air. Ryanair operates to 48 gateways from Ciampino, based on schedules in Innovata for the current week.

Rome Ciampino Airport system capacity share (% of seats) by carrier: 17-Sep-2012 to 23-Sep-2012

Also Palermo is firm LCC territory

LCCs for over 50% capacity in terms of seats at Palermo Punta Raisi Airport, owing mainly to the activity of Ryanair and easyJet which account for about a 25% and 12% share of seats respectively. Air One is the airport’s third largest LCC in terms of seat capacity, while start-up Volotea has added to the expanding presence of the budget segment at the airport as it has launched several new domestic and international routes from Palermo Airport since Apr-2012. According to Innovata, Volotea now operates 15 weekly flights from Palermo to five destinations.

Alitalia remains the airport’s largest airline holding about a 33% share of seat capacity and a 32% share of frequencies, based schedules in Innovata for the week of 17-Sep-2012 to 23-Sep-2012.

Naples and Bologna are becoming no-frill domain

Ryanair is Bologna’s dominant airline with more than a third of the airport’s total seat capacity and more than a quarter of frequencies. There are plenty of other low-cost airlines operating to the airport serving the northern Italian city of Bologna, although with a limited number of routes and frequencies only; easyJet is notably the second largest LCC at the airport.

Overall, low-cost carriers have already a near 44% share of the airport’s seat capacity.

Bologna Guglielmo Marconi Airport LCC capacity (seats per week) by carrier: 17-Sep-2012 to 23-Sep-2012

easyJet is the largest carrier operating from Naples Capodichino Airport in the south of Italy, with an approximate 28% share of seat capacity, according to schedules in Innovata for the week of 17-Sep-2012 to 23-Sep-2012. LCCs account for a 42% share of capacity (seats) at Capodichino while full service carriers have a 52% share, with regional carriers flying the remainder.

The UK-based budget airline also has a leading market position at Venice Marco Polo Airport. Air One also launched a base at Venice Marco Polo in May-2012, but it is being challenged on its home turf by the new Spanish LCC Volotea which is making the airport its biggest base in 2012 with a total of 24 routes. It is too early days to know if Volotea’s venture will be successful, but Italian airlines have to gear up quickly and start to fight for a noteworthy share of their own sizeable low-cost market.

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