HOW STATES ARE SUFFOCATING THEIR NATIONAL AIRLINES

October 15, 2022?

It didn't drag on in Italy. As soon as the elections brought to power a new majority led by Ms Giorgia Meloni, the future of the national airline ITA was again turned upside down. Its chairman Alfredo Altavilla was removed from his post while negotiating the entry of new private shareholders into the Italian company. He had not hidden his preferences for the MSC group backed by Lufthansa while the government was leaning towards an entry of the Air France/KLM group supported by the Certares fund. The reason? the German/Swiss group wanted to take over the entire company while Air France/KLM only wanted to acquire a very large minority. This would have left a big door for the Italian government to influence the strategy of its carrier and incidentally to appoint some good friends to the command posts. According to the latest news, the new government is simply considering not selling its company. Basically, why not? ?Let's wait for the new twists.

Only it is not clear how a company as exposed as ITA can survive the incessant back and forth of Italian politics. It has only been operational for a year since it began operations on October 15, 2021 and it has already lost its president and undergone two important negotiations, both of which would have led to totally different strategies. Now a third is being proposed. How under these conditions a company can market itself knowing that contracts with large companies and tour operators are made once a year. On what basis to negotiate? And with whom? It is clear that the new government will also appoint other officials to key positions.

Basically, the Italian situation is only the culmination of a policy followed by a number of small and large states. Clearly, states do not want to part with their airline because it is both a great tool to export the image of their country, and then, let's say it frankly, it is also the practical way to give comfortable positions to friends, whether they are competent or not. In exchange they are ready to make every effort to support their carrier when it is in difficulty, with massive injections of money. The consequence of this mode of conduct can be seen in the management of the national airline. Knowing ?that it is protected by its state and this, whatever the political tendency of its government, it does not make the necessary efforts to reform itself and meet the economic conditions that alone allow its sustainability. Moreover, when company managers want to pursue a strategy solely related to the interests of their company, they are systematically replaced. And this is how the general management of the companies fluctuates according to the political alternations.

In other words, the rulers say to the leaders of their national carriers: "do not make waves, accept certain appointments that we suggest to you, open or close a line if you are asked because it reinforces our foreign policy and, in exchange, we will protect you, even if you have financial or economic difficulties". And the means of the states are not small. Apart from the purely monetary aspect of their support, there is the granting of traffic rights that may or may not be allocated according to the interests of their national airline. I would add that, in the case of large countries, there is also control of access to airports by administrative limitation on the number of movements authorised.

The examples are numerous and they are not limited to the African continent where, with the sole exception of Ethiopian Airlines which, although 100% state-owned, has managed to fiercely preserve its independence, carriers are in the hands of states. The latter impose on them a strategy that is not always, alas, in line with the interests of the airline. In Europe, although the stranglehold of governments is less strong than in Africa, the weight of the state is still very much felt. Admittedly, the IAG group has gradually freed itself from it and Lufthansa is in the process of doing the same. This is not the case in other countries. The French and Dutch authorities, for example, keep a close eye on the airline group and key appointments must be approved. So in the case where the political positions of governments diverge, it is the company that pays the price.

The situation in the Gulf is unambiguous: airlines belong to the states and are clearly one of the essential instruments of their policy. Depending on the case, this can very well happen, I am thinking of Emirates, or much worse if we refer to the disastrous strategy of conquest imposed in its time on Etihad.

The media long under state control have found their independence. This is not yet the case for air transport... And that's a shame.