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The main international gateway into Italy is Rome Fiumicino "Leonardo da Vinci" Airport that serves as a hub for Alitalia, Air Alps, Blu-express and easyJet. The Italian flag carrier and the country’s biggest airline is Alitalia which also owns Air One, Air One CityLiner, Alitalia Express and Alitalia-Compagnia Aerea Italiana.
ENAV S.p.A. and EUROCONTROL provide air navigation services for Italy; while the regulatory body overseeing and regulating the aviation industry is the Civil Aviation Authority - ENAC - Enta Nazionale Aviaziona Civile.
Airports in Italy
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Air Canada reached a milestone in 3Q2013 as its return on invested capital (ROIC) as of 30-Sep-2013 was 10.8% compared with 7.7% at YE2012. The improvement is notable as the company broaches its stated objective of achieving an ROIC between 10% and 13% on a sustainable basis by 2015.
It is a laudable achievement given a couple of years ago the carrier was working feverishly to combat significant financial challenges and battled labour strife throughout much of 2012 in order to forge collective bargaining agreements that it believes will aid in its ultimate goal of sustainable profitability.
Obviously the carrier still has a long road ahead in proving its mettle in regular profitability, but for the moment it seems to be holding its own against increased competitive pressure from WestJet while getting its own new low-cost carrier Air Canada rouge off the ground.
A 16-day US Government shut-down and continuing pressure created by the devaluation of Japan’s currency did not hinder Delta’s 3Q2013 earnings growth as profits improved by USD444 million year-on-year to USD1.2 billion (excluding special items).
With corporate demand holding steady and holiday bookings looking relatively solid for Nov-2013 and Dec-2013, Delta CEO Richard Anderson is declaring the carrier will post an all-time record profit during 2013.
Delta throughout much of 2013 has been riding a wave of positive momentum despite some miscalculation in the spool-up of its Trainer refinery, and the continuing pressure from the devaluation of the Japanese yen. Even as it makes proclamations of record profits for 2013, Delta’s CEO Richard Anderson stresses that the carrier is keeping its head down as it works to continue the carrier’s advancement.
Air Canada’s low-cost carrier Rouge is ratcheting up service to leisure destinations in Europe during the 2014 summer high season, which should prove a definitive test for the carrier’s theory that a low cost operation on routes producing softer yields is the correct equation to turn profits.
The growth and operation of Air Canada Rouge to a possible fleet of 50 aircraft is a strategic pillar of the company’s efforts to cut its unit costs by 15% – quite a formidable goal. Similar to Rouge’s initial roll-out of service from Toronto to Athens, Edinburgh and Venice and from Montreal to Athens, most of Rouge’s planned route expansion during 2014 is into markets that have been served by Air Transat during the high season. With just a few months of operations under its belt, no clear-cut conclusions can be made about Rouge’s future or the total effects on Air Transat, but Air Canada appears to be throwing down the competitive gauntlet, noting that it is now in a much better position to compete on those routes.
Alitalia had another bad start to the year. Its 1H2013 net loss, reported on 26-Sep-2013, was EUR93 million worse than the same period last year and it faces the real prospect of running out of funds before the year end.
Only eight months after requesting an emergency loan from shareholders, its Board will seek a EUR100 million capital increase at a shareholders’ meeting on 14-Oct-2013. 25% owner Air France-KLM has signalled opposition to this plan and this sum may not even be sufficient beyond the short term.
Alitalia’s 2013-2016 industrial plan, announced only in Jul-2013, aims for breakeven at the net profit level in 2015. This will not be worth the paper it’s written on if Alitalia does not manage to raise survival funds quickly. The Italian government, although not a shareholder, is reported to be talking to Italian banks about additional loan finance. If Alitalia’s short term needs can be met, this could give vital breathing space for a long term solution to be found, possibly involving new shareholders. But more "last chances" cannot be anticipated.
Air Dolomiti has seen a lot of route volatility recently, as highlighted by a recent wave of route closures. The Italian regional airline is suspending Milan Bergamo-Frankfurt, Verona-Frankfurt and its two Moscow services. Earlier this year, it ceased Verona to Vienna and Zurich and Florence-Monaco. Many of these routes were only started quite recently. Its website currently offers only five routes, all of which it took over from its owner Lufthansa earlier in 2013. Lufthansa operates 25 routes between Germany and Italy and its LCC Germanwings operates 23.
Lufthansa has had an equity stake in Air Dolomiti since 1999 and owned it outright since 2003. It does not separately disclose traffic data or financial results, but is included within the Lufthansa Passenger Airline Group for reporting purposes and is a minnow compared with its leviathan parent. To give some context, its operating fleet of fourteen regional aircraft compares with the Lufthansa Group fleet of 637 aircraft as at 30-Jun-2013. Does Lufthansa need Air Dolomiti?
Beijing Airport remains on the brink of becoming the world's largest airport, Dubai International Airport is fastest growing, rising to fifth place worldwide, while Madrid and Rome Fiumicino languish.
It is interesting to compare IATA’s recently revised global traffic demand projections for 2013 with those airports that offered the greatest amount of seat capacity in 2012 and 1H2013 (to end June) and with those airports that are preparing for traffic increases by constructing additional infrastructure.
IATA upgraded its global outlook for the airline industry at the beginning of Jun-2013.
It now predicts revenues for the year will hit USD711 billion, with airline industry profits to rise from USD10.6 billion to USD12.7 billion with a net margin of 1.8% and a return on invested capital of 4.8%.