Alitalia & Etihad Cargo – Making a Go of it?

A couple of months have passed since the final agreement was reached between Alitalia and Etihad Airways whereby the latter took a 49% stake in the ailing Italian national carrier.
The deal, although inked by both carriers has still to be officially ratified by the European Commission.
The Italian Minister of Infrastructure and Transport, Maurizio Lupi is quoted as saying that the deal should be up and running as of 1. January 2015.

Time to look a little as to what progress has been made with regards to the planned joint cargo alliance between both carriers.

Back in its heyday, AZ Cargo was operating five of its own MD-11 Freighters to destinations around the world, as well as marketing and filling the Italian carrier’s belly holds.
This all changed in early 2009 when after the demise of the Cargoitalia setup, Air France / KLM as part of their 25% holding deal, took over as the sales and marketing arm for Alitalia.
The Franco/Dutch airline has had enough troubles of its own during the past years and trying also to get Alitalia, not just the cargo arm, back in line were almost insurmountable.

Now it’s up to Etihad
At the moment it is difficult to fathom out how Etihad plans to restructure AZ Cargo, an airline arm without its own freighters.
The Italian cargo market remains very important in Europe and one which carriers such as Cargolux and Lufthansa have invested quite some time and money in.
Where then today, is there a future for the combined AZ/EY cargo operation?

Etihad admittedly has quite a strong cargo operation of its own which apart from its ever growing passenger aircraft fleet also consists of eight pure freighters.
The freighter capacity will be increased to nine with the introduction of a Boeing 747-8F planned to be on long term ACMI lease from Atlas Air.
This will be the second aircraft from Atlas in the EY fleet. They already operate a B747-400F on lease from Atlas since 2012.
The rest of the freighter fleet consists of three B777Fs, three A330-200Fs and a B747-400ERF still on lease from KLM.
It could be that this aircraft will go back to KLM in the near future; however that decision may be postponed until the Abu Dhabi based carrier finally decides on plans for the Italian cargo market.

There is enough combined cargo capacity
Plenty of aircraft, both freighters and belly capacity.
But how can EY put some life back into Alitalia’s cargo business?
One way would be to take over the complete sales and marketing as both AF/KL once did.
But, would this work at all?
EY certainly has enough experienced cargo managers on its payroll who could roll up their sleeves and get things moving.
The small problem is that hardly any have enough knowledge of the Italian cargo market as well as trust or feel for the AZ cargo staff still on hand.
Many might say that you need an Italian to convince an Italian!
Who, then would come into question as a possible (and effective) cargo CEO?

Etihad Cargo “was not born yesterday”
They have been quick to realize that if they are to do it properly, they must concentrate on Milan as the Italian hub and put their efforts and fleet into that airport.
Milan could work as a major hub with feed into and out of the north Italian city into EY’s own ever growing cargo network.
This could especially apply for business to and from the United States of America as well as Asia.
Alitalia still have lucrative rights across the North Atlantic which Etihad could use to build up its market share on the other side of the pond.
Regular freighters from Milan to its hub in Abu Dhabi would be a lucrative enhancement of the Arab carrier’s services to and from the Far East.

Etihad’s other investments over the past couple of years in Air Berlin or Aer Lingus, do not by far give them the opportunity to expand in the world air cargo market, as does that of their hook up with Alitalia.

To do it properly they will still need the full support of the AZ cargo management still on hand as direct competition has grown steadily these past couple of years with both CV and LH putting direct freighter flights through Milan.

It’s an interesting development and one well worth following in the near future!

John Mc Donagh

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