Airports shake-up faces challenge

Date: 02/07/1998

By Chris Johnstone

TRANSPORT Commissioner Neil Kinnock's officials will set out their demands for the Italian government to rethink the controversial shake-up of services out of Milan's airports by the end of this month.

The move follows complaints from rivals that flag-carrier Alitalia is being given an unfair advantage.

Transport officials are expected to uphold complaints by a series of airlines that the decision to leave Alitalia as the main occupant of Linate airport, which is close to the city centre, while banishing rivals 50 kilometres out of town to the newly expanded Malpensa 2000 is unfair.

Competitors suspect a thinly disguised move to reinforce Alitalia by making its rivals' services less attractive. They argue that international travellers are more likely to opt to take an Alitalia feeder flight from Linate to connect with international services rather than go to Malpensa to catch a connecting flight.

International long haul flights are the airlines' main money spinner and Alitalia's ability to channel passengers to its flights would give it a clear advantage.

Commission officials have already indicated that they agree with the complaints and would like the October target for the transfer of services between Milan's airports to be staged or delayed, allowing more time for vital transport links to Malpensa to be put in place. Improved road and rail links to the expanded airport will not be ready before the year 2000.

In spite of this, Alitalia's owner, the state holding company Istituto per la Ricostruzione Industriali (IRI), remains upbeat about the chances of the Commission rejecting the complaints, claiming that the Rome government's plans are in line with European strategy to boost Malpensa.

But British Airways, Lufthansa, Iberia, Olympic, Sabena, SAS, and TAP-Air Portugal, which have all protested against the Italian plan to force them out of Linate, are optimistic that the Commission will uphold their complaints.

At a meeting of the International Air Transport Association (IATA) last month, they opted for a no-change scenario for their autumn timetables out of Milan, underlining their belief that they will still be flying from Linate.

Cornering a greater part of the rich north Italian business market has long been a target for Alitalia and the Italian government, which have watched with dismay as local passengers voted with their feet for the rival attractions of Swiss and German airports and airlines.

Alitalia and IRI have not endeared themselves to the Commission by repeatedly stating that they want the conditions attached to the airline's 1.4-billion-ecu state aid renegotiated if it does not take all the money.

The airline has pocketed the first two tranches of funding, but is now looking to tap the financial markets for the final 375,000-ecu slice. “In our opinion there is room for a re-examination of the problem,” said IRI president Gian Maria Gros-Pietro. “If these conditions mean that Alitalia is unable to meet increased demand, there should be a re-examination of them.”

No formal demand for a reassessment of the conditions has been made by Alitalia, however, with some aviation commentators dismissing such talk as bluster.

IRI plans to cut its stake in Alitalia from the current 85&percent; to at least 53&percent; by the end of the year through a combination of an ongoing shares placement and distribution of about 20&percent; of the company shares to employees.

General manager Pietro Ciucci has suggested that Alitalia could be placed on the market by the end of the year.