ITA says airport incentives for low-cost airlines could cause “bloodbath”

MILAN, Jan. 20 (Reuters) – ITA Airways is seeking the same incentives that small airports and local governments in Italy grant to low-cost carriers, the chairman of Alitalia’s successor said Thursday, warning of dire consequences if this does not happen.

The small airline began operations on October 15 with less than half the fleet its predecessor Alitalia had and has seen Ryanair (RYA.I), Wizz Air (WIZZ.L) and other budget rivals quickly gain market share in its home territory.

“The competition is unfair…we risk carnage if we try to regain market share at airports where budget airlines enjoy incentives that we do not have,” ITA Airways chairman Alfredo Altavilla told a parliament committee.

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“We want the same incentives that are paid for at a low cost.”

Altavilla said budget airlines received a total of nearly 400 million euros ($454 million) in subsidies in 2019 from small airports that competed with each other to attract foreign passengers.

In the same year, Alitalia did not receive any incentive under government pressure to connect small towns to its main hubs in Rome and Milan.

Speaking of Italy’s large number of small airports, the former Fiat Chrysler executive also said the country should consider banning short domestic flights to cut carbon dioxide emissions in the medium term.

The top executive said ITA had posted a negative operating profit of EUR 170 million in the first two months and half to the end of December, and added labor costs accounted for 14% of the total.

Altavilla added that after the airline bought new aircraft from Airbus (AIR.PA) last year, the French group committed in return to find ways to increase its orders for aircraft parts produced in Italy.

He added, however, that it would be up to Airbus and Italian aerospace group Leonardo (LDOF.MI) — which produces components for the jetmaker — to discuss ways to put the commitment into practice.

Altavilla dismissed a report in the Italian daily la Repubblica as “speculation” that he had questioned the role of ITA Airways Chief Executive Fabio Lazzerini.

“The unity of goal with Lazzerini has never been questioned,” said Altavilla.

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Reporting by Francesca Landini; edit by David Evans

Our Standards: The Thomson Reuters Trust Principles.

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