MIAMI – The ax will finally fall on Alitalia (AZ) on October 14 and the airline will cease all activities then but tickets have been and are still being sold for travel beyond this date.
What will happen to them since, because of the discontinuity required by EU Commission, reprotection on the new national carrier ITA will not be possible nor allowed? The Italian newspaper Il Corriere della Sera, generally well-updated on AZ matters, has tried to bring an answer to the question.
By October 15, AZ will have to honor, reprotect, or refund a total of approximately 255,000 tickets or vouchers, sold in Italy and abroad, amounting to an average of US$160 (€135) apiece, all types of travel included, for a total amount of US$40.2m (€34m). AZ liquidators have not confirmed nor denied the figures put forward by the newspaper.
The Italian government safeguards refunds
By decree n°99 of June 29, 2021, the Italian government has set aside a fund of US$118.3m (€100m) destined to safeguard the value of the tickets, either for refund or transport on other carriers. The fund may only be used if there are no other flight alternatives on other carriers.
Regulation for refunds, or additional expenses if other carriers ensure transportation, is to be set up by the Italian Ministry of Economic Affairs, which has the charge of the matter, with an unknown aspect on the exact number of tickets concerned since AZ is still selling awaiting the outcome of the ITA set up conditions and beginning of operations.
Alitalia, a Worldwide First in Customer Protection
The AZ case is a worldwide first customer protection operation, involving an airline closing down voluntarily, vastly different from cases where a carrier goes abruptly “belly up” leaving thousands of travelers stranded as was the case with Thomas Cook when 144,000 people were left on the ground outside the UK.
Although the number of tickets sold to be refunded is not comparable to the 360,000 that Thomas Cook (MT) had to reimburse after its demise, the AZ numbers stand second in volume in the recent history of air transport, more than double of the 110,000 recorded when Monarch Airlines (ZB) closed down.
The MilleMiglia Frequent Flyer Program
One more aspect is linked to tickets, not the ones sold and paid for but those that can be purchased by redeeming accrued miles. Following the decision taken by the EU Commission, ITA is barred from participating in the open tender under which the MilleMiglia program is going to be sold and the first question that arises is: what will happen to the MilleMiglia’s members and their miles?
Will they be honored by the existing interchange with the other members of the Skyteam alliance? Will they be part of the refund protection set up by the Italian government? Of all these questions one answer is already given: AZ’s MilleMiglia miles will not be redeemable on ITA’s flights, the EU commission is watching.
The risk for ITA is purely commercial. Facing a more than probable purchase of the program by a competitor, which would gain access to a substantial customers database mainly composed of Italian business travelers, ITA will lose a reservoir of potential high yield passengers and consequent revenue.
Featured image: Alitalia Boeing 777-300 EI-WLA. Photo: Misael Ocasio Hernandez/Airways