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Etihad restores confidence and pride to Alitalia… and it works!

The column of Jean-Louis Baroux, air transport expert


Jean-Louis Baroux, former president of the APG and creator of the World Air Forum, explains in this column the participation of Etihad in Alitalia, and the strategy put in place by the Abu Dhabi company to give momentum to the Italian transporter.



Indeed, Etihad gave itself the means of succeeding, without formally detaining the majority of the company since European law opposes that. No doubt, however, that the Abu Dhabi transporter makes the orders. But it had the skill of flattering the Italian ego and reinforce the Italian flair of the company - Photo Wikipedia DR
Indeed, Etihad gave itself the means of succeeding, without formally detaining the majority of the company since European law opposes that. No doubt, however, that the Abu Dhabi transporter makes the orders. But it had the skill of flattering the Italian ego and reinforce the Italian flair of the company - Photo Wikipedia DR
It did not take long. The investment of Etihad in the previously moribund CAI, meaning Alitalia, only dates back to November 2014, or a little over 6 months, and already the revolution is underway.

Indeed, Etihad gave itself the means of succeeding, without formally detaining the majority of the company since European law opposes that. No doubt, however, that the Abu Dhabi transporter gives the orders. But it had the skill of flattering the Italian ego and reinforcing the Italian flair of the company.

In turn, this was executed through the choice of management. First of all, Luca Cordero di Montezemolo as the President. And it surely was not easy to get the services of this eminent face of the Italian “high society.”

Former president of Ferrari and Fiat, former president of the employers’ association, good looking and elegant, there’s no one better placed to embody the values of his country.

He is assisted by the CEO, the operational leader, Silvano Cassano who worked with him as the financial director of Fiat after having done part of his career at Benetton.

Etihad did not hesitate to recreate the image of the national company

But that couldn’t suffice. It was time to help revive the company and restore the employees their pride of working for it. And that wasn’t going to be easy.

For that, Etihad did not hesitate to recreate the image of the national company by emphasizing strongly on the Italian “elegance.”

And the attempt seems to be successful, even though the new interior design of the cabins stops at the business class. We’d like to see what the alliance of Etihad and Alitalia could bring in first class. This may be for later.

Actually, the challenge for Etihad is to render profitable a company that has been going from deficit to loss for much too long. The causes were known to everyone: a perpetually changing management due to alternating political powers, an overly powerful union body, social regulations that would discourage any entrepreneur, and finally, a lack of vision: should it associate with KLM, Air France, Lufthansa, or even Aeroflot?

All of the scenarios were imagined except for one: why not try to make it out alone? After all, the Italian market is the third one in continental Europe and the inhabitants care about their national company.

Yet, this last idea needs to live up to their expectations.

Bet on quality rather than mediocrity

It seems that the right path has been taken. Of course, a lot of time will be needed to reconquer a clientele discouraged by the highly mediocre services of past times, this will certainly require other important investments, but the management is making efforts: the company has bet on quality, because Etihad built its image on excellence.

Finally, it is quite nice to see that instead of “gulf-ing” the Italian transporter, like we could have expected, its referent shareholder chose to base itself on the values of the country, while adding its high quality imperative.

We could have bet on Etihad having to make ends meet each month for the Italian company until forever, but that’s not so sure anymore.

All through a clearly stated strategy: progressively cut the bridges with a group of aging European companies by stepping out of the AEA, that, in parentheses, risks not recovering from the departure of the IAG group and Alitalia.

But also bet on quality rather than mediocrity, basing itself on the most developed gulf zone in terms of air transport while reinforcing the Italian imprint, Alitalia made a clear choice.

It would be very satisfying to see these efforts bear fruit. They would prove with evidence that the only rescue remedy is not to imitate “low cost” companies when traditional companies have an expense structure that is incompatible with this model.

It is also important to recover quality and imagination in the product since it is the only way to attract the high-end clientele, the only one capable of bringing sufficient income to cover the costs of European “legacies.”

Written by Jean-Louis Baroux translated by Joséphine Foucher the 20/06/2015
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Tags : Alitalia, Etihad

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