MIAMI – Italian national carrier Alitalia (AZ) has suspended the last long-haul flight that it had been currently operating from Rome (FCO) to New York (JFK).
The air link will remain suspended until the end of the month as with the other international routes in its portfolio.
In a statement, the airline cited reasons for the suspension being the increased slowdown in demand in the last ten days of April as well as the spike in new COVID-19 cases ongoing in the state of New York.
Opposition from the Unions
The suspension also came with some opposition, with FNTA, a federation of three of Italy’s flight crew unions, stating that it would encourage more positive results for rival Air France instead.
According to the letter seen by Reuters, it outlines why this would be detrimental to the Italian economy.
“We consider this decision to be absolutely inexplicable and unacceptable, both for commercial reasons and in general, because it deprives Italian citizens of the only direct connection still existing between Italy and the United States and diverts passengers to Air France-KLM,” said the union.
It is understood that the union has taken the airline to court over an appeal regarding such route closures.
A Change in Approach for Alitalia
With that last long-haul route now being suspended, it now means the carrier is only operating on a short-haul basis, especially due to it only operating around one-tenth of its 500 daily flights.
Alitalia saw a 95% fall in passenger revenue within the first three weeks of April, as the virus had continued to wreak havoc on the country.
The Italian Government currently has plans to send around US$546m to the debt-stricken airline, with Italian authorities expecting to take full control in the carrier by next month.
Such nationalization plans have revealed that a new model for the airline will be implemented, cutting the workforce from 12,000 employees down to 3,000 as well as flying only 25-30 aircraft as opposed to the current 93 it has in its fleet.
SkyTeam Membership at Risk Due to Reforms?
On top of this, Simple Flying reported earlier last month that such changes would also include a re-evaluation of the airline remaining within the SkyTeam alliance.
It has until May 21 to decide whether it will continue with its membership, meaning that if it chooses not to go ahead with it, carriers such as Delta (DL) will not be able to codeshare with AZ anymore.
Delta has in recent times been very prevalent in the Italian market, servicing Rome from Atlanta, Detroit, and New York JFK while offering around 132 flights per week between April and May this year under the current COVID-19 conditions.
With codesharing arrangements, that is a portion of revenue that AZ won’t be able to secure if it chooses to revoke and leave the alliance.
Restructuring, Good News for Alitalia?
The restructuring of the carrier could not have come at a better time for the airline. The COVID-19 pandemic could mean that the government would be able to focus on preparing AZ to return to extended operations after the virus has passed.
Whilst long-haul services may not be in the picture for 2020, once the business model has been amended and streamlined, then there is no reason why it cannot thrive.
On the domestic front, if it can keep fares on par with the likes of Ryanair (FR) and easyJet (U2), then it has a good opportunity to capitalize on the way the industry works.
On the other hand, the fact that the restructuring is going to essentially remove 9,000 jobs also shows the detriments to those who rely on the livelihood of aviation and what they can’t do without it.
After a shaky 11 years that the airline has had, the light at the end of the tunnel may finally be emerging for it, and if focused right by the Italian Government, it could transform it to a point where those who had lost their jobs could be reinstated.
In-all, for the financial survivability of the business, the cuts, of course, will be necessary. But the question, therefore, remains as to whether the Italian Government could support the fallout of those losing their jobs both politically and economically.