Monday, May 8, 2017

What markets are viable if Alitalia fails?

Over the past week, there have been numerous media reports of Alitalia entering into "administration" or "bankruptcy protection" in Italy whilst the local Government looks to supply it with a $600 million loan to keep it afloat until November 2016 only. The Italian Government has categorically stated that it has already invested nearly $8 billion into the ailing carrier since the past decade and the public appetite for another bailout is totally non-favorable.

Mentioned below are the top medium/long haul markets to/from Rome + Milan in 2016 that AZ's competitors can take advantage of (by operating higher or year round frequencies) if the carrier goes bust. The route segments highlighted in green especially are the ones to be considered.

ITALY-NORTH AMERICA 2016 DEMAND
Route
FCO
MXP/LIN
Difference
BOS
94,000
40,000
54,000
DFW
38,000
17,000
21,000
EWR
93,000
90,000
3,000
IAD
81,000
20,000
61,000
JFK
274,000
550,000
(276,000)
LAS
20,000
23,000
(3,000)
LAX
150,000
91,000
59,000
MCO
29,000
15,000
14,000
MIA
100,000
118,000
(18,000)
ORD
124,000
52,000
72,000
PHL
70,000
11,000
59,000
SEA
27,000
12,000
15,000
SFO
101,000
72,000
29,000
YUL
108,000
22,000
86,000
YYZ
155,000
40,000
115,000
TOTAL
1,464,000
1,173,000
291,000


ITALY-MAIN WORLD CITIES 2016 DEMAND
Route
FCO
MXP/LIN
Difference
BKK
126,000
160,000
(34,000)
IKA
55,000
83,000
(28,000)
CMB
69,000
75,000
(6,000)
DEL
84,000
146,000
(62,000)
DXB
239,000
210,000
29,000
EZE
175,000
60,000
115,000
GIG
55,000
35,000
20,000
GRU
110,000
105,000
5,000
HKG
93,000
120,000
(27,000)
ICN
316,000
101,000
215,000
MNL
77,000
85,000
(8,000)
NRT/HND
195,000
208,000
(13,000)
PEK
99,000
115,000
(16,000)
PVG
91,000
160,000
(69,000)
TLV
311,000
275,000
36,000
TOTAL
2,095,000
1,938,000
157,000

With regards to the USA-Italy market segment:

1. American Airlines or United should consider making ORD-FCO a year round service with at least a 4 weekly B763ER operated service during the winter season

2. LAX-Italy I have not highlighted as its a ultra long haul service totaling 13 hours each way hence extremely high risk since the yields are not that great. It could however sustain a summer seasonal service only.

3. MIA-Italy should be operated year round by AA with a B787. Currently AA only flies a daily year round B763ER between MIA and MXP but with such a large MIA hub operation already in place, it can be able to sustain along side with MIA-MXP a 4 weekly year round MIA-FCO service.

As far as the other worldwide markets are concerned:

1. It is really surprising to note that ICN-FCO demand is higher than FCO-JFK considering the huge Italian emigrant community residing in NYC

2. TG can increase BKK-MXP from the current 3 to 5 weekly using an A359 along with BKK-FCO too from 4 to 5 weekly

3. AI can sustain a 5th weekly DEL-MXP nonstop service using a B788

4. With AZ out their daily nonstop MXP-NRT + FCO-NRT service would leave a huge void which JAL or ANA can fulfil by operating a 4 weekly service of their own using a B787.



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