As Alitalia, which is wading through bankruptcy and courting buyers, waits to see how its long-term future will look, it has turned to corporate travel as one of the key factors of its turnaround.
This year, the Italian carrier reorganized its sales structure, chief business officer Fabio Maria Lazzerini said. Previously, heads of sales for each the home and international markets oversaw all types of sales for their regions. Now, Alitalia has a head of sales for corporate and travel management company business and another for leisure, he said. "We were treating every passenger more or less the same," Lazzerini said. "If you were traveling with your family, by yourself, for leisure or for business, there was no segmentation. One of the very first things we did was to segment the market and to decide which segments we are going to focus on."
In particular, Alitalia is building up corporate and individual leisure business instead of lower-yielding group leisure business. The carrier also has been building new products for the corporate side. It introduced TravelPass, a package of prepaid vouchers designed for business travelers who frequently take the same route. It also introduced BusinessConnect, a rewards-based program for small and midsize enterprises. It's based on miles traveled but will shift to being based on revenue next year, Lazzerini said. About 18,600 SMEs are registered in the program.
Some new physical products have been developed with corporate travelers in mind, as well, including a catering product Alitalia introduced in October and a lounge that opened this year at Rome-Fiumicino International Airport.
Alitalia's bankruptcy proceedings preclude it from acquiring new aircraft, but "we are increasing the utilization of the aircraft and are more efficient in using them," Lazzerini said. "We opened some new routes and ended those routes."
One of the new routes targeting business is service between Rome and Washington, D.C. It will begin in May and mark the first time the carrier has connected the two capitals, Lazzerini said. It began service to Johannesburg this year and plans service to Tel Aviv next year. On the leisure side, Alitalia has added service to Mauritius and the Maldives.
The new structure has preserved some routes. The carrier, for example, had considered ending its services to Tokyo because they were not profitable. However, they also were running near full capacity, Lazzerini said. The team realized that leisure group sales were buying up the seats at low fares early on, leaving less room for corporate customers to get their tickets closer in, so it has adjusted that balance. By next year, its routes to Japan will be "completely profitable," Lazzerini said.
On the whole, Alitalia this year has seen its mix of corporate and leisure business from an Italian point of sale move from 20 percent corporate to about 40 percent, Lazzerini said. Corporate contracts have increased this year by 300 to about 960 total, and use of its corporate rates for January through November rose 72 percent year over year.
Passenger revenue increased 7.1 percent year over year during that period, the first time in six years the carrier has seen passenger revenue recover, and the average fare is up 6.7 percent, he said. Operations have remained solid, and Alitalia stands as Europe's second-most punctual carrier; its on-time arrival rate is 83.1 percent, and it has a completion factor above 99 percent.
Alitalia still expects to see a loss this year, but that loss will decrease 80 percent from last year, Lazzerini said. Some of its cost-saving measures, particularly aircraft leases it renegotiated this year, will have more of an impact next year, he said.
The balance sheet improvements have made Alitalia more attractive as it seeks a partner to bring it out of its restructuring, Lazzerini said. In November, Italian commissioners approved a purchase offer from Italian rail company Ferrovie dello Stato, but that offer is contingent on Alitalia finding an airline partner to help with the turnaround. Reuters has reported that FS is courting both Delta and EasyJet, both of which were reported to be interested bidders.
In the meantime, Alitalia is working to remain a part of its joint venture with Delta and Air France-KLM and has worked to align with Delta's corporate recognition program, Lazzerini said.
Next year, Alitalia plans to launch a platform based on the International Air Transport Association's New Distribution Standard, as well. It will not push for direct connections with corporate customers but instead will focus on increasing ancillary revenues, according to Lazzerini.