Marco Ponti is a professor of transport economics at Politecnico University of Milan and a former consultant to the Italian government and World Bank.
Etihad, Alitalia, and the future for European skies
Marco Ponti is a professor of transport economics at Politecnico University of Milan and a former consultant to the Italian government and World Bank. Here he tells The National what the future may hold for Alitalia and the rest of the European carriers.
Some are sceptical the Etihad-driven turnaround for Alitalia will work. Do you think it will succeed?
aWhat Etihad has given so far are mainly outlines, guidelines and that’s fair. One of the weapons of a new company is to keep its plans vague enough as to be flexible, because markets can always change. For sure, this plan makes more sense than the previous one, it seems better organised and it aims at the long-haul business, which makes sense because it enjoys higher margins than the short haul, where low-cost carriers, such as Ryanair, easyJet and the others operate.
European airlines in the past called for curbs on the expansion of Arabian Gulf carriers on long-haul routes, claiming they use unfair subsidies to finance aircraft deals. What do you make of these accusations?
It’s difficult to prove that they are getting subsidies from their rich governments, but even if they do, that would be good for European passengers who, in exchange, can get cheaper tickets. It’s the same thing that happened years ago when French companies, subsidised by the government, bought British utilities. In this case we are talking about services and not about industrial production. We are not talking about making planes, so for European interests there’s no loss of technological know-how. In the end, London decided that it was the best thing to do for British consumers and opened the door to the French. Furthermore French and German [carriers] have enjoyed protection and the EU has assigned slots in a way that was favourable to them. It doesn’t make sense to defend incumbents, they don’t learn how to compete.
What other impacts do you expect from the strengthening of non-European operators on European skies?
It can accelerate the opening up of the European fortress. The Open Skies agreement between the European Union and the US should be expanded to all markets because it would reinforce competition for the good of European customers. This is not a strategic sector. A stronger pressure from outside the EU could speed up a further liberalisation of the airline industry. And there are positive signs. Etihad-Alitalia, for example, won’t play any more the protectionist card, lobbying in Brussels to keep outsiders far from this market.
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