For an airline that’s already been struggling for years, Alitalia faced a deadly crossroads with the railway high-speed network.
A new Italian high-speed rail network, as great as its name suggests, is entering the industry’s premier market: international tourism. In the European Union, 32 of the 44 largest countries have fast-rail networks to bring more tourists to Europe’s shores. In a region where flights are more expensive than trains for traveling within the European Union, the high-speed rail infrastructure is starting to have a huge impact. Countries and regions in Europe are pinning their future hopes of economic growth on the railway and tourism industries. Italy hopes that the new network will bring millions of new visitors to the country.
For the longest time, Alitalia never had an innovative plan to bring more tourists to Italy – until, that is, it hooked up with high-speed railways.
Between 2000 and 2008, Rome was served by the only passenger-operated domestic and European train on the A1. It kept booking aircraft during peak hours and used empty seats to make money off of connecting passengers. When the high-speed network came online in 2009, Alitalia dramatically changed its business plan. By the time a new CEO took over in 2014, the company had to drastically cut its staffing. In addition, the company locked down a deal with airports in exchange for payments based on passenger numbers. The agreement called for the company to file a court complaint if it showed a decrease in passengers. A judge ruled that the airport system needed to pay the company if Alitalia saw its passenger numbers decrease – and so the bad financial relationship between the two arose.
What the company lacked in passengers and revenue, it made up for in financial support: In 2013, Italian trainmaker Alpek received an order for more than 650 locomotives worth around 900 million euros. Several small strategic decisions, including to buy over 200 extra bogies in 2016, the final year before the sale, was also made after Alitalia made a legal complaint against Rome airport authorities.
