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Qatar Airways announces Air Italy expansion

Qatar Airways announces Air Italy expansion

2018 02 20

2018 02 20

Italy has a new airline this week, one that hopes to challenge flag carrier Alitalia’s position as the leading operator in the country. Air Italy officially was introduced by Qatar Airways Global CEO Akbar Al Baker in Milan. It is a rebranding of Meridiana, the small Italian carrier in which Qatar Airways picked up a 49% ownership stake last year, completing a process started in mid-2016.

The carrier has a handful of planes today, focused mostly on service to its hub in Palermo, Sicily. Meridiana also operates a couple flights to the United States on older twin-aisle aircraft. The new Air Italy will fully replace the fleet in just three years, mostly from the Qatar Airways order book.

Some 20 737 MAX8 planes are due for delivery; these aircraft will be leased by Qatar Airways to Air Italy “at market rates” according to Al Baker. These new planes will focus on regional service within Europe. Another five A330 aircraft will also be moved to the European carrier to bolster long-haul operations. These fleet moves are not new but were reconfirmed in today’s briefing. The company did confirm that the 737 MAX8 aircraft will carry a 2-class cabin layout and offer PED-charging points inside; the initial deliveries are slated for April 2018.

Today’s announcement also includes mention of some 20 787s joining the Air Italy/Meridiana fleet, also from the Qatar Airways order book. This move will create a Milan-based airline with potential for a massive long-haul operation, though it is unclear how well Milan will serve as either a source of originating traffic or a connecting hub to fill these 25 twin-aisle aircraft with feed.

Qatar Airways currently operates 30 of the -8 variant and holds a 30-frame order announced in October 2016 for the -9 type. The -8s are generally seen as less economically compelling and Qatar Airways likely prefers to keep the newer aircraft in its home fleet. This move could let it shed some of the -8s under favorable economic conditions.

The company previously indicated that New York and Miami routes would be part of the new, Milan-based long-haul operation. With five A330s committed to the Air Italy fleet, and eventually the 787s, further destination announcements are expected soon.

The shifting of significant aircraft orders to the Italian operation gives Qatar Airways a relatively lower-risk means to bring these planes into service without risking the core operation in Doha. The airline faces continuing challenges from neighboring GCC countries with respect to commerce and access to commercial air space. Those efforts significantly hampered the carrier’s growth, slashing nearly a third of the ASMs from its network as the United Arab Emirates and Saudi Arabia blocked all flights from Qatar.

This outlet for aircraft utilization means that the relatively slow growth in the Gulf can be offset with a rapid expansion of a new operation in Europe. Of course, there is plenty of competition in that market as well, but for the short term the aircraft will appear as revenue-positive on Qatar Airways’ ledger rather than requiring new routes and destinations to operate from Doha.

All of these moves come against a backdrop of Alitalia’s ongoing bankruptcy proceedings and a general election slated for next month. That ballot will, among other things, help determine the future of the oft-beleaguered Rome-based carrier.

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