Alitalia Airline Company’S Marketing
Alitalia Airline Company’s Marketing Report
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Alitalia is one of the largest airways in the world and is at present ranked 18th when it comes to fleet size and the quantity of countries that it at present services. From an operations perspective, the company currently services both the home market inside Italy as well as a number of locations within Europe, Asia and the Middle East (Stefania and Chiara 2010). Do note that since 2008 the corporate has been undergoing a considerable degree of restructuring given its previous debt obligations in addition to points associated to the correct administration of the company. In 2008 the corporate was really close to bankruptcy if it was not for the intervention of a bunch of Italian buyers that absorbed Alitalia into the “Compagnia Aerea Italiana” (CAI). Since then, the company has skilled a considerable quantity of shortfalls related to management issues, decline in profitability as well as numerous issues associated to its viability as a enterprise (Alitalia – Compagnia Aerea Italiana S.p.A. SWOT Analysis 2013).
In reality, by 2013 the corporate was once once more facing potential bankruptcy with Eithad Airlines probably moving into to take a position into the corporate to reserve it. Upon examination, the first cause behind Alitalia’s monetary issues can be traced to a substantial discount in its net working revenue by €119 million (Alitalia – Compagnia Aerea Italiana S.p.A. SWOT Analysis 2013). This was as a result of declining number of passengers that chose the airline in addition to the current proliferation of finances airlines that have far cheaper prices as compared to Alitalia. Overall, when taking the current financial position of Alitalia into consideration, this report assumes that it might not be a viable investing for Etihad in the long term despite the potential the deal has for enabling the Middle East based mostly airline to increase into Europe.
Based on latest data inspecting the kind of customers that Alitalia targets, it was famous that enterprise class prospects were the primary shopper group that the airline was after.
Issues with Alitalia
Simply put, the Italy based airline has not been a viable supply of revenue for its owners since its 2008 chapter restructuring since it is discovering itself in the exact same scenario a couple of years later. In order to resolve such a difficulty, the company is making an attempt to sell a portion of itself to Etihad airways, nonetheless, some of its creditors are hesitant if not outright towards a debt restructuring deal (Barnard 2014). Combined with the varied calls for of Eithad in the form of assurances from the Italian government involving potential financial help, profitable labour agreements in addition to a bunch of other assurances that may justify investing into the struggling airline (Sparaco 2013).
What should even be taken into consideration is the fact that this is not the primary time that the airline has needed to almost declare chapter and restructure its debt obligations. This creates a substantial amount of threat since it creates the potential that the identical downside might happen again in a couple of years time (Sparaco 2013). One of the reasons behind that is related to the getting older fleet of Alitalia combined with the increase in the quantity of low cost airlines which are presently in Europe and are in effect eroding the market share of the corporate (Dunn and Clark 2014).
There are 2 forms of carriers inside the European aviation market that: legacy carriers and low cost carriers. Legacy carriers inside Europe could be classified as some of a few of the oldest airlines inside the European Aviation business today or are a results of mergers and acquisitions by regional airlines (ex: Alitalia, British Airways, and so forth.) (Alitalia – Compagnia Aerea Italiana S.p.A. SWOT Analysis 2013). Low value carriers then again have actually come about somewhat lately and are outlined by their no frills, low value, and above all lean enterprise fashions that emphasize financial savings for passengers. Alitalia may be categorized as an LC (Legacy carriers) which continues to be the dominant type of journey, nevertheless, LCCs (low cost carriers) have been noted as persevering with to eat away at their market share as a result of recent trends in consumer purchasing behaviour which focus on the idea of affordability over amenities and companies (Alitalia – Compagnia Aerea Italiana S.p.A. SWOT Analysis 2013).
LCs similar to Alitalia have tried to answer this shift by growing their very own low value various as seen in its Classica collection passenger tickets, nonetheless, this methodology of market positioning did not be aggressive enough compared to LCCs since they were nonetheless underneath the enterprise model of LCs and thus were topic to the same spiralling prices (Alitalia – Compagnia Aerea Italiana S.p.A. SWOT Analysis 2013). Since Alitalia focuses on brief and medium haul flights within Europe and low price carriers are focusing on the same type of market, Alitalia simply can’t compete with the low costs of its LCC rivals (Alitalia – Compagnia Aerea Italiana S.p.A. SWOT Analysis 2013). The airline has attempted to fight this by providing more amenities in the form of larger baggage weights and extra leg room; however, it has not been effective.
Access to New Customers
When analyzing the viability of Alitalia and as an investment opportunity for Etihad, you will need to study the present problem with the airline passenger market within Europe. Based on the analysis of Fusari (2013), it was proven that European client spending is at an all time low as a result of present day economic downturn inside the region. This is in part due to the debt disaster that occurred 2 years in the past but the area remains to be feeling the after effects (Fusari 2013). Unfortunately, the inherent problem with the present scenario is that it creates a vicious cycle whereby low shopper spending results in companies reducing varied elements of their operational capability (i.e. manufacturing of products, low level employees and so on.).
The result’s that whereas Europe does have one of many largest passenger markets on the planet, the very fact stays that the regional airline passenger market does not replicate this. Evidence of this may be seen when Alitalia was almost dealing with chapter in 2013 which Valentini and Romenti (2011) explains was a direct results of fewer passengers per flight, high gas prices, landing fees as well as the proliferation of low cost regional airways which adversely impacted Alitalia’s shopper market share (Valentini and Romenti 2011). Since a majority of Alitalia’s passenger market is located inside Europe and that this current market is focused on low price flights, this shows that Alitalia is solely not in a good place to draw new shoppers especially when considering the age and type of its fleet.
After analyzing the assorted elements related to Etihad and Alitalia, this paper has developed the notion that investing in the firm would be ill-advised given the current issues surrounding the European airline market. The truth is that Alitalia’s potential bankruptcy in 2013 was in part as a result of wasteful operational prices associated to storage, utilities, taxes, employee salaries and employee advantages. The present client market inside Europe is solely under no circumstances conducive towards sales. It is thus the advice of this paper that one possible avenue of method that would be possible for Etihad is to shift assets in the direction of overseas markets which have not been as adversely affected by the present financial downturn and focus efforts there instead of in problematic European markets.
Asian markets corresponding to those within China, Japan and the A.S.E.A.N (Association of South East Asian Nations) introduced themselves as viable consumer markets as a result of the fact that despite the slowdown of various western economies, japanese economies have really grown on average by 5 to eight % yearly. This is due to the fact that because the expense of doing business inside western nations rises corporations begin to shift their manufacturing operations to different international locations with far lower operational expenses.
Other legacy carriers corresponding to Singapore Airlines, UAL, Cathay Pacific, Qatar Airways and different such carriers have targeted more on enterprise and firstclass passengers who take worldwide flights to numerous destinations inside Asia (notably China and Japan) as a result of larger fees derived from such clients. It is based on this that when comparing the cathartic native markets in Europe where Alitalia is predicated with the increasing markets of Asia, it becomes instantly obvious where Etihad should invest as an alternative. Simply put, Alitalia isn’t an excellent investment provided that the current rate of growth momentum for the airline business is in Asia and never in Europe.
Overall, when taking the present financial position of Alitalia into consideration, this report assumes that it will not be a viable investing for Etihad in the long run regardless of the potential the deal has for enabling the Middle East based mostly airline to increase into Europe.
‘Alitalia – Compagnia Aerea Italiana S.p.A. SWOT Analysis’ 2013, Alitalia SWOT Analysis, pp. 1-8. Web.
Barnard, B 2014, ‘Etihad Close to Deal for Alitalia Stake’, Joc Online, p. 2. Web.
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Fusari, S 2013, ‘‘A miracle. Madonna!’: Irony within the representation of Alitalia’s privatization by the Italian, British and American press’, Discourse and Society, vol. 24, no. three, pp. 315-333. Web.
Stefania, R, and Chiara, V 2010, ‘Alitalia’s crisis in the media – a situational analysis’, Corporate Communications: An International Journal, vol. 15, no. 4, pp. 380-396. Web.
Sparaco, P 2013, ‘Alitalia’s Swan Song?’, Aviation Week and Space Technology, vol. a hundred seventy five, no. 35, p. 20. Web.
Valentini, C, and Romenti, S 2011, ‘Blogging about crises: The function of online conversations in framing Alitalia’s efficiency during its disaster’, Journal Of Communication Management, vol. 15, no. four, pp. 298-313. Web.