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Innovate 2016 2016-09-27 8 0 am New York Marriott
St. Regis Houston - October 30, 2019
San Francisco Marriott Marquis - November 5, 2019
Teetering on the edge of bankruptcy, Alitalia
last year sold a 49 percent stake to Etihad, and now the Italian
national airline is back in investment mode—expanding routes, improving its
distribution technology and preparing for a complete fleet overhaul. Silvano
Cassano, who became CEO at the beginning of this year in conjunction with the
Etihad deal, spoke with BTN transportation editor Michael B. Baker at
the carrier's New York office. An edited transcript follows.
What are you focusing on now?
We're undergoing a major renovation plan. We're going to
invest $800 million in the next three years, half of which is a fleet upgrade.
The new configuration will be business-class seats, reclining seats, Wi-Fi,
in-flight entertainment and great superior food service and catering throughout
the flight. We are developing new routes, especially to Asia. The North
American market is the most important market for us. Certainly, the strong
dollar will mean that many more Americans will fly to Europe, and most of them
want to come to Italy, so we're happy about that. Our numbers are growing. We
fly from Miami, New York, Boston, Chicago, Los Angeles and Toronto, and we're
going to open up in San Francisco. South America also is very important because
… many there are third-generation Italians. Thanks to our relationship with
Etihad, we're developing the Asian market, which is very important from a
business point of view. We're going to fly directly to Shanghai, Seoul, Tokyo,
Beijing and three dailies to Abu Dhabi from Milan, Rome and Venice. Via Abu
Dhabi, you can go to India, Australia, the Seychelles and all of Southeast
[Asia]. So, if you combine the traditional strength of Alitalia from North and
South America, plus the opportunity of linking our customer in the Asian
market, they're a great combination.
We have a unique opportunity also to upgrade and put our people in a position to give better service by spending a lot of money on training. We have 11,000 employees, all of them are very strongly attached to Alitalia and the key element in satisfaction is passion and service, so we make sure that everybody even in Abu Dhabi or in Rome receives training to give better service. There is a ranking done with Skytrax, which ranks all the airlines. Today, Alitalia is a three-star airline out of five. We want to become a five-star airline by making all the right investments and being focused on customer service.
Were you doing much business in Asia before?
That was the key weakness of Alitalia, and that's
why the relationship with Etihad is so strong. There was no overlap, and that's
beautiful. Alitalia started flying to Tokyo in '62, but basically, that was it.
It takes a lot of time and money to develop long-haul routes. We've been very
aggressive in opening new routes already: Shanghai, Beijing and Tokyo. Our
three dailies to Abu Dhabi will become five because on top of Milan, Rome and
Venice, we'll offer Bologna in the center of Italy and Catania in Sicily. It
means we can offer our customers origin to destination. In the past, it was
point to point, but that's not enough any longer. That's also why we need much
more sophisticated software. The customer wants a seamless solution. The
relationship with Etihad will allow us to have better purchasing power so we
can save more money to invest in the marketplace.
What is timing on the new routes?
Most of [Asia will be] this year. In South
America, we're looking at Santiago, Bogota and Mexico City. So anywhere where
Alitalia can be present, we will deploy. That's the name of the game. San
Francisco will be probably the end of '16 or early '17 maximum.
What about on the technology side?
We're spending $120 million, roughly, on
technology. We've signed three major deals with IBM, Sabre and SAP because we
need to be a smart carrier. Business is moving very fast, so we need a better
solution. Distribution is vital. Alitalia did not invest in the last few years,
and we have a major deal with Sabre where all the market analysis, [global
distribution system] approach, the benchmarking and yield management would be
done by Sabre. We need to be in a position where we know we have the best
approach to the market in terms of strategic pricing and positioning. On top of
this, we're developing applications for younger people. We have a team today in
Mountain View, [Calif.], working on a strategic project with Google because you
need to be at the forefront.
What will the fleet improvements entail?
We're going to spend $400 million. The first new
planes will arrive in June with the new standards. We're going to redo
everything, both economy and business class. It will start in June and will be
over by the first quarter of 2017. … We'll maintain the DNA of Alitalia but
upgrade and update it to feel more contemporary.
Since Etihad came on board, have you seen
corporate market share grow?
In the last 18 to 24 months, especially in
Europe, Alitalia went through some rough periods, with the issue of whether we'd
be able to survive independently. That is all behind us now. We're recontacting
all the corporate accounts throughout the world. I'm spending most of my time
traveling—Brazil, Japan, here—to make sure that we meet the top trade and
corporate accounts. We have an aggressive media campaign, and we will not allow
anyone to take market share away from us. We'll do whatever it takes to protect
our market share. We do that by developing longer routes, which is a more
profitable part of the business, and within Europe, we'll take some very
aggressive pricing action against the low-cost carriers when we see it's
beneficial to our business. In terms of deployment, we'll have fewer
narrowbodies and more widebodies. Competition is fierce. In the States, we have
a strong relationship with Delta and we are a part of SkyTeam, and Etihad is
helping us in Asia.
Are the LCCs in Europe courting corporate
business more aggressively?
They're trying in Europe. EasyJet is trying. It's
difficult, but they need to work very hard to make sure they're delivering
service. It's a free market, and it will be much more difficult for them. We
see an effort to go that direction, but they need to change their nature, which
is very complex.
How does Etihad's partnership network fit in
with your SkyTeam membership?
It's not in competition with SkyTeam. It's a
different concept. Etihad has chosen the path of investing in selected airlines
as minority shareholders. They have Airberlin and Jet Airways as the
most prominent airlines [to us]. We're going to work very closely with
Airberlin to develop intra-Europe traffic against Lufthansa, which is our major
competitor. Jet [Airways] is vital because India is a booming market, and we
can connect together via Europe. There are no [overlap] issues like with Emirates
from Milan to New York, and we don't see any conflict with that.
What do you think of the unfair-competition allegations
against the Gulf carriers?
I understand the philosophical issues, but to be extremely pragmatic, there are no 'Gulf carriers.' Emirates and Etihad are very strong competitors. Etihad has chosen a different strategic path to growth, whereas Emirates is organic and is trying to fly anywhere in the world. That is a very sensitive issue. I understand that, but we're focused on what's right for Alitalia.
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