In Sardinia, I learned a Bit More About Alitalia

Last night we had dinner in a monastery on Sardinia, and at the table was an executive with the Eurofly Airline. He used to work for Air France and had an encyclopedic knowledge of the airline business. Across the table as we sipped the wonderful dry Sardinian wine, I asked him to tell me about how he thinks the Alitalia mess will resolve itself.

"Alitalia is the primary driver of tourists to Italy," he explained. Many visitors who fly Air France are heading somewhere else, they might stay in France a few days, but then leave for other countries. But Alitalia brings 85% of travelers to Italy and they stay here. It's a vital part of the tourism infrastructure, because it's more than just an airline.

He told us about the five planes that the airline has for cargo...and that there are 360 pilots who fly just these five planes. How the pope has several Alitalia liners always ready, always gassed up and waiting, in case his holiness wants to go somewhere. He told us that the airline has been used by politicians and big government honchos as a sort of private shuttle. The unions are the killer here, he said....and KLM is never going to make another offer.

But he defended all the money that the government pours into Alitalia, explaining that other flag carriers do the exact same thing, despite EU rules to the contrary. "They pumped money into British Air, Lufthansa, Air France, they all do it, because of how those airlines are more than just companies, they are national carriers with lots of government duties as well.

Anyone Want to Buy a Debt-Ridden Italian Airline?

It's a busy day at the GoNOMAD Cafe, a traveler's haunt where people come to check their email, drink lattes and eat breakfast sandwiches. It was here that I got a chance to catch up with the travails of Italy's flagship airline....which was recently described by their chairman as 'comatose.' The Wall Street Journal had a story by Gabriel Kahn about the ongoing efforts to sell Alitalia before it goes belly-up.

It seems nobody wants to buy this debt-ridden, strike-prone state carrier. Lufthansa bowed out last year, and at one point Aeroflot, Russia's horrible airline had an interest but was rebuffed. Now the world's largest airline by revenue, Air France KLM, is taking a look. But the pride of Milan isn't exactly a winner these days. In fact the bids that the company is considering weigh most heavily on how much a suitor would invest in Alitalia, not how high the bid is. Another possible buyer is tiny Air One, which flies about a quarter as many routes as Alitalia in Italy. The small advantage here is that an Air One purchase would keep the owners in Italy, which is a big deal to Italian politicians.

I have flown Alitalia several times to Italy and have never been impressed. The flight attendants wear silly, unflattering uniforms in the Italian colors of green, red and white, and don't seem to care much about passenger comfort. The food, compared with the offerings at the destination, was never very good .The wine was junk and you couldn't lie down in business class.

The problem with Alitalia, like many European economies, is that the workers rule the roost. "Job security guaranteed by the government ownership has sapped the carrier's competitive edge," said the story. Air France would likely cut down operations in Milan, and concentrate in Rome, and the smaller carrier would maintain both hubs. Sounds like a bettor would stake a claim on the David instead of Goliath winning this bid.