Alitalia deftly dropped all promotional fares within Europe in February to avoid the European Commission re-considering approval of its state aid.
Alitalia had come under fire from domestic airlines Alpi Eagles and Air One, which claimed the Italian flag carrier was 'price leading' on key routes, violating conditions attached to last year's Commission approval of L2.8 billion (US$1.6 billion) in state aid. Alitalia agreed, however, to revert to its base fares and not to match its rivals' revised tariff structures before March.
Air One is less than satisfied with the verdict. 'Alitalia has broken the rules and if you're not playing by the rules you should be dealt with,' it says.
The Commission's moves to resolve further complaints against Alitalia have, however, met with a more favourable response. The Commission has intervened to ensure that new route applications are not judged in favour of Alitalia, demanding that all outstanding route applications be granted by 10 February. Alitalia had faced criticism from rivals Lauda Air Italia and Air Europe, which were unable to secure the traffic rights to launch new routes out of Italy. Lauda Air Italia plans to launch services to the Dominican Republic while Air Europe will introduce leisure routes to the Maldives, Jamaica and the Seychelles.
Air Europe says it is 'quite happy' with the Commission's move. 'The Italian government had to be reminded that the Commission decision was something to be taken very seriously,' declares Air Europe's president Lupo Rattazzi. Air Europe shelved its 35 per cent initial public offering, scheduled for December 1997, while the 'whole traffic routes issue' was being dealt with, says Rattazzi.
Lois Jones
Source: Airline Business
