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Italy aviation: Ryanair, easyJet and Vueling pursue Alitalia across the country

The Italian market continues in a state of flux. It looks like 2015 will join 2014 as a growth year, following contraction in 2012 and 2013. Alitalia has stabilised its total seat capacity after years of decline, but continues to lose market share to fast-growing rivals. Europe's three biggest LCCs - Ryanair, easyJet and Vueling - are pursuing what seems like relentless expansion across Italy, but Wizz Air is also building a presence.

Furthermore, the leading airlines in Italy continue to jostle for places in difference parts of the market. This is illustrated by easyJet's recent decision to close its Rome Fiumicino base from Apr-2016 and to redeploy aircraft through the expansion of bases at Milan Malpensa and Naples and at a new base at Venice Marco Polo.

Ryanair overtook Alitalia as the biggest airline in Italy by seats in 2013 and offers far more destinations. As it continues to improve customer service quality and to increase the proportion of primary airports in its pan-European network, Ryanair's position as market leader in Italy and the lowest cost producer in Europe will make it hard to beat.

See related report: Rome Fiumicino Airport: Vueling, Ryanair, easyJet and Alitalia are locked in mortal combat

International market and LCCs drive overall growth in Italian market

The total Italian market by number of seats has seen a return to growth in 2014 and 2015, after contracting from 2011 to 2013. According to OAG data, 2015 will see 156.7 million scheduled seats, up 4% from 2014.

This growth is coming entirely from the international market, up 7% in 2015, while the domestic market will suffer a 3% drop in seats this year. The domestic market has gained only around one million seats over the past ten years (with plenty of fluctuations on the way), whereas the international market has gained 40 million seats over the same period.

Total seats (million) in Italy 2005 to 2015

The main reason for this return to growth in the number of seats in Italy in 2014 and 2015 is the continued growth by LCCs Ryanair, easyJet and Vueling. In addition, whereas Alitalia had previously been on a downward path, the Italian flag carrier has managed a stabilisation in its capacity since 2013.

See related report: Alitalia's "new" strategy realigns it to feed Etihad, but needs to change loss-making mindset

Total seats (million) in Italy for selected airlines 2005 to 2015

Ryanair is the overall market leader and growing its share; Alitalia's share continues to fall

Nevertheless, Alitalia's share of total seats in Italy continues to fall. We calculate from the OAG data on scheduled seats that Alitalia will have a market share of 18% in 2015, down from 22% in 2010 and 38% in 2005.

Ryanair, the leading airline by seats in Italy since 2013, will have a 22% share in 2015, up from 10% ten years earlier. EasyJet's 2015 share of 11% compares with 3% in 2005, while Vueling will have 5% this year (compared with less than 1% in 2005, including its predecessor Clickair, and 2% in 2010).

No other airline has more than 5% of seats in Italy. Lufthansa, with a 4% share is the nearest to the leading four, but is contracting and risks being overtaken by the expanding Wizz Air, currently on a 3% share.

Share of total seats in Italy for Ryanair, Alitalia, easyJet and Vueling 2005, 2010 and 2015

Overall growth rates were slower in 2010-2015 versus 2005-2010

The total number of seats in the Italian market has grown at a compound average rate of just 1% pa from 2010 to 2015, representing a significant deceleration from the average of 5% pa from 2005 to 2010. These figures mask significant differences in the growth rates of the leading airlines.

Ryanair and easyJet have both grown at healthy compound average rates of 6%-7% pa from 2010 to 2015, but this is much slower than the rates of 17% pa for Ryanair and 33% pa for easyJet in the five year period before that. Vueling has also slowed is growth rate, which was 38% pa from 2005 to 2010, but its average of 22% from 2010 to 2015 remains comfortably double digit.

Although Alitalia's seat capacity has flattened out in 2014 and 2015, its average change in seat numbers from 2010 to 2015 was a decline of 2% pa. This was a slower rate of decline than the 6% pa drop of 2005 to 2010.

Compound average annual growth in total seats in Italy for Ryanair, Alitalia, easyJet and Vueling 2010 versus 2005 and 2015 versus 2010

Alitalia is ranked third in international markets from Italy in 2015, behind Ryanair and easyJet

Turning to the international market to/from Italy, Ryanair's market share, which was 14% ten years ago, reached 19% in 2011 and remains at this level in 2015, according to data from OAG. Ryanair overtook Alitalia has international market leader by seats in 2009. Alitalia's share of seats fell from 24% in 2005 to 11% in 2010 and it remains at 11% in 2015.

easyJet has continued to grow its share of the international market, moving from 4% in 2005 to 9% in 2010 and to 12% in 2015, overtaking Alitalia as the number two airline in this market. Vueling's share of seats, below 1% in 2005, has expanded to 5% in 2015, but is just less than that of Lufthansa. Although the German national airline does not have enough of the overall market to claim a 5% share, its presence in international markets just crosses this threshold and pushes Vueling into fifth place.

Share of international seats in Italy for Ryanair, Alitalia, easyJet, Lufthansa and Vueling 2005, 2010 and 2015

International market from Italy: Vueling is growing the fastest

OAG data show that Vueling has been the fastest growing airline in the international market in the period 2010 to 2015, with a compound average growth rate of 16% pa (and a 2015 growth rate of 41%). Vueling should soon pass Lufthansa, which has declined at an average rate of 7% pa over the same period.

Ryanair has grown its international seat numbers in Italy at the same average annual rate as the market, 3% pa, from 2010 to 2015, much slower than the Irish LCC's 12% pa average rate from 2005 to 2010.

EasyJet has also slowed its international rate of growth in Italy, but its compound average of 9% pa from 2010 to 2015 is stronger than the market. Alitalia's international seat capacity contracted at an average rate of 9% pa from 2005 to 2010, but has achieved modest growth at an average of 2% pa from 2010 to 2015.

Compound average annual growth in international seats in Italy for Ryanair, Alitalia, easyJet, Lufthansa and Vueling 2010 versus 2005 and 2015 versus 2010

Alitalia still leads the domestic Italian market, but others are gaining ground

Alitalia remains the leading airline by seat numbers in the domestic Italian market, although its 2015 seat share of 42% is well below the 69% share it held ten years ago. It is also down from its 2010 level of 46%, although 2015's figure is up from the 40% it achieved in 2014. Ryanair had 1% of the domestic market by seats in 2005, but its share has leapt to 31% in 2015.

EasyJet, which only entered the domestic market in 2006, achieved a 7% market share by 2010 and holds 8% of seats in 2015, but this has dropped from its peak share of 10% in 2013. Vueling only entered as recently as 2013, but is approaching a 5% share of domestic seats in 2015.

As with the international market, Italy's four leading airlines are joined in the domestic market by one other player with a share of 5% or more. In the domestic market, Vueling is pushed into fifth place by Meridiana's 7% share. However, Meridiana has been losing market share: it had 15% of the domestic market in 2005 and 12% in 2010. It seems only a matter of time before Vueling overtakes it and moves into fourth place.

LCC Volotea, whose biggest base is Venice Marco Polo, has accelerated from a standing start in 2013 to reach a 4% share of domestic Italian seats in 2015.

Share of domestic seats in Italy for Ryanair, Alitalia, easyJet, Meridiana and Vueling 2005, 2010 and 2015

Domestic Italian market is in overall decline, but Ryanair and Vueling are growing

According to schedules data filed with OAG, the domestic Italian market is set to fall by 3% in 2015 and the number of seats has fallen at a compound average rate of 4% pa from 2010 to 2015, after growing at an average of 5% pa in the preceding five year period. The two Italian-based airlines, Alitalia and Meridiana have contracted at average rates of 5% pa and 13% pa respectively from 2010 to 2015.

In Alitalia's case, the domestic capacity cuts were concentrated on the period 2012 to 2014 and it will actually grow by 2% this year. Meridiana's domestic capacity will be down by 21% in 2015, after a 22% cut in 2014. EasyJet has also reduced its domestic seat capacity since 2010, at an average rate of 1% pa, and its 2015 capacity will be 9% down on 2014's level. This compares with easyJet's average growth in the period from 2006 (when it entered the domestic market) to 2010 of 82% pa.

By contrast with these capacity cuts by Alitalia, Meridiana and easyJet in the period 2010 to 2015, Ryanair and Vueling continue to pursue strong growth in the Italian domestic market. Ryanair's average rate of growth from 2010 to 2015 is 14% pa (albeit slowing to 6% for 2015), while Vueling's domestic capacity will grow by 39% in 2015 versus 2014 (it only entered in 2013).

See related report: easyJet & Ryanair: squaring up to each other as head to head competition increases

Compound average annual growth in domestic seats in Italy for Ryanair, Alitalia, easyJet*, Meridiana and Vueling** 2010 versus 2005* and 2015 versus 2010**

Ryanair offers more than twice the number of destinations from Italy of its nearest rival easyJet

Ryanair's total seat capacity in Italy is 19% more than that of Alitalia in 2015, but its network from Italy has significantly more than twice the number of routes of Alitalia's. Alitalia's network is, on average, higher frequency than that of Alitalia, whose long haul routes also distort this comparison to some extent. Nevertheless, Ryanair's vast footprint in Italy, both on international and domestic routes, is a significant asset.

With 348 routes from Italy (279 international and 69 domestic), Ryanair also has more than double easyJet's 169 routes (155 international and 14 domestic), but this is consistent with the ratio of Ryanair's seat capacity in Italy relative to that of easyJet. Alitalia offers 149 routes (97 international, 52 domestic) and Vueling has 102 (92 international, 10 domestic). (Data source: OAG, week of 6-Jul-2015).

Number of routes in Italy for Ryanair, easyJet, Alitalia and Vueling week of 6-Jul-2015

Ryanair, Alitalia, easyJet and Vueling: nation-wide competition in Italy

A least one of the four leading airlines in Italy (Ryanair, Alitalia, easyJet and Vueling) is present in the top 34 out of the 39 airports in Italy that offer scheduled flights (according to OAG data for the week of 6-Jul-2015).

All four of these airlines are present in nine airports (all nine are in the top 18) and there are 19 airports with at least three of the four. Each has different airports where they are stronger and, as easyJet's recent moves illustrate, the detail of this situation is likely to continue to change.

The battle involving Europe's three leading LCCs and Alitalia for Italy's air travel markets has spread the length and breadth of the country.

Ryanair, Alitalia, easyJet and Vueling in Italian airports*

 

Airport

Ryanair (25 airports)

Alitalia (29 airports)

easyJet (16 airports)

Vueling (18 airports)

Total seats at airport

1

Rome Fiumicino

Yes

Yes

Yes

Yes

1,151,401

2

Milan Malpensa

 

Yes

Yes

Yes

475,434

3

Milan Linate

 

Yes

Yes

 

273,391

4

Venice Marco Polo

 

Yes

Yes

Yes

256,937

5

Milan Bergamo/Orio al Serio

Yes

 

 

 

239,718

6

Catania Fontanarossa

Yes

Yes

Yes

Yes

177,978

7

Bologna Guglielmo Marconi

Yes

Yes

Yes

Yes

177,052

8

Naples Capodichino

 

Yes

Yes

Yes

170,828

9

Palermo Falcone Borcellino

Yes

Yes

Yes

Yes

142,030

10

Pisa Galileo Galilei

Yes

Yes

Yes

Yes

139,344

11

Cagliari Elmas

Yes

Yes

Yes

Yes

119,827

12

Olbia Costa Smeralda

 

Yes

Yes

Yes

119,173

13

Rome Ciampino

Yes

Yes

 

 

117,943

14

Bari Palese

Yes

Yes

Yes

Yes

100,986

15

Turin Caselle

Yes

Yes

 

Yes

99,106

16

Florence Peretola

 

Yes

 

Yes

76,528

17

Verona Villafranca

Yes

Yes

Yes

Yes

70,566

18

Brindisi Casale

Yes

Yes

Yes

Yes

63,735

19

Lamezia Terme

Yes

Yes

Yes

 

61,715

20

Venice Treviso

Yes

 

 

 

56,700

21

Alghero Fertilia

Yes

Yes

Yes

 

53,130

22

Trapani Birgi

Yes

Yes

 

 

44,240

23

Genoa Cristoforo Colombo

Yes

Yes

 

Yes

41,322

24

Trieste Ronchi dei Legionari

Yes

Yes

 

Yes

19,356

25

Ancona Falconara

Yes

Yes

 

Yes

17,118

26

Pescara Abruzzo

Yes

Yes

 

 

16,216

27

Reggio di Calabria Tito Menniti

 

Yes

 

 

13,233

28

Perugia San Francesco d'Assisi

Yes

Yes

 

 

10,820

29

Lampedusa

 

Yes

 

Yes

10,576

30

Comiso

Yes

Yes

 

 

8,252

31

Pantelleria

 

Yes

 

 

7,546

32

Crotone

Yes

 

 

 

6,804

33

Parma

Yes

 

 

 

5,292

34

Cuneo Levaldigi

Yes

 

 

 

4,770

 

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