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Air transportation system too fragile with only low-cost carriers' - Il Sole 24 interview Giulio De Carli

4th May 2017

Air transportation system too fragile with only low-cost carriers' - Il Sole 24 interview Giulio De Carli

English translation edited by One Works, original text by Giorgio Santilli

Fragmented air transport offer, set on low-cost foreign carriers for short-range and large legacy carriers for the long haul, would impact on the configuration of the facilities and airport services, with a reduction of quality that would cover the entire air transport system. On the new crisis of Alitalia, we must avoid superficial debates and know that a system based solely on low-cost-based carriers is a volatile system that does not guarantee long-term development." Giulio De Carli, Managing Partner of One Works, pocket multinational made of Italian transport infrastructure professionals, with offices in Venice, Milan, London, Rome, Doha and Singapore (just opened), is known in Italy as the father of the National Airports Plan that revolutionized, the beginning of the decade, the way we think about Italians airports and the connections between the ports and an integrated mobility system.

"The low-cost carriers - says De Carli - try everything they can to avoid paying airport fees and shift their offer on short-term expediency: this volatility prevents financing airport investment plans in the long run, something which we started to do and we need. I recently saw reassuring statements, but the Alitalia crisis, if not resolved quickly and well, will inevitably lead to a slowdown in investment and a fragile system. As we also said with the study that started the National Plan, if the strategic framework in which we move on both the sky and the land is not clear, the investment will not take off or slow down”.

If you ask De Carli what could be the future of Alitalia, he only says that "the alliance with Etihad was correct as strategic thinking, but did not work because of disastrous management, but the market space was there and was based on the attempt, first and only in Europe so far, to catch the developing market in the Middle East". There are not many other market areas different from that "strategic thinking". “All, shareholders, company, employees, unions, Government, should have understood earlier that there were managerial errors and revive that operation by making timely corrections to the business plan and adopt cost-cutting measures as other companies have done, avoiding the present situation that seems to be a dead end”.

We need to focus more on the role of a national carrier, "which has as its business purpose to connect the entire territory of the country to bring traffic on long-haul and bring incoming traffic to destinations far and then redistribute the territory. And it is one that works through the rates to support investment for the quality and development of services and infrastructure, precisely because this responds to its primary business purpose. This is what happens across Europe, where many national airlines operate. It is not at all obvious that this can be recognised in our country by foreign carriers, who have less interest in the territory."

The long Alitalia crisis has greatly affected the land component. "The system must develop harmoniously, in a balanced manner, as is the case throughout Europe, despite the complexity and difficulties in the sector. Capacity building and modernisation of infrastructure must take account of what is likely to happen in the market."

The airport system must be an active and not a passive 'actor' at this stage, it should make "its voice heard" and policy makers should take it into account. Also, because the stock market results show that, in the airline business - the airport industry is one in which investors believe in the most, after the concessions issue has been resolved and after the National Plan has initiated a critical solution of excess fragmentation ("Regions are beginning to understand") affirming the need of fast rail links with airports, predicted the development of the actual ongoing demand and has placed the theme of inter-modality at its core.

"It's hard now to think of a rapid transformation of Fiumicino as a second airport after Malpensa. There are not many successful airports in the world with high levels of fragmentation. Gatwick succeeds only because of Heathrow. The Berlin airport, whereby nearly 7 billion Euros are spent, is suspended in limbo with an inauguration postponed year after year and is one of the most prominent failures in the airport sector. It provides a lesson that we should not forget when we deal with the new Alitalia crisis: when a national – or based in the country – flagship carrier is missing flag carrier or based, the airport does not take off and the system suffers."