A potential ban stopping Emirates Airline flying between Milan and New York opens up a lucrative gap for Etihad’s new equity alliance partner Alitalia to fill with the launch of more long-haul flights to the US, analysts said.
Emirates awaits a final judgement on the operation of its Milan-JFK route before the end of this year, after the Rome-based Lazio Regional Administration Court moved to block the route in April.
The route is an example of usage of the “fifth freedom”, which dates back to the 1940s “Freedoms of the Air” agreed by the industry in Chicago. The fifth freedom is the ability for a carrier to fly between two foreign countries on a flight originating or ending in one’s own country.
Currently Emirates operates about 15 of these routes, mainly in Australia and Asia.
However, the flights are also subject to the agreement of the local authorities — in the case of the Milan-JFK route, both Italy and the US would need to approve it.
The court in Lazio ruled that a non-EU carrier cannot operate to a third destination from Milan — especially if the airline does not originate from the point of departure or the point of destination.
The Milan-New York route is important for both business and economy travellers. Around 70,000 passengers have booked to travel on this route between April and August, according to Emirates.
The carrier had identified it as a potentially lucrative route as many passengers are connecting via another European destination and Emirates is also able to offer the only true first class cabin.
However, analysts expect that Etihad could leverage this opportunity if Emirates can no longer operate the route thanks to the Abu Dhabi carrier’s €560 million (Dh2.75 billion) investment in debt-laden Alitalia this month.
“I think it would be naive to believe that Etihad wasn’t going to try and synchronise feeding traffic to the Milan hub,” said Peter Morris, the chief economist at Ascend Flightglobal Consultancy, an aviation firm.
“Various innovative operating or franchise arrangements on long haul might be developed between the two airlines to fulfil the important EU-US Open Skies regulatory criteria,” Mr Morris added.
Will Horton, a senior analyst at Sydney-based Centre for Aviation (Capa) said: “Etihad via its [49 per cent] Alitalia stake could potentially benefit.
“But the market Emirates is targeting is more Milan-New York local and not originating from the UAE.”
Etihad’s investment in the Italian carrier included a three-year plan to turn Alitalia’s operations around to focus on long-haul flights. Ten long-haul routes will be introduced as part of the Italian carrier’s five-year plan, which will seek to develop Rome’s Fiumicino Airport as an intercontinental hub, while Milan’s Malpensa Airport will get more long-haul flights.
But Mr Morris warned of potential hurdles that could face carriers flying to the US, referring to the case of Norwegian Airlines, which faced a ban flying to the US after operating on a licence from Ireland.
“It is notable that Norwegian [Airlines], seeking a flexible type of arrangement for Ireland based operations, have so far ended up frustrated by a law change by the House of Representatives, under pressure from US airline interests,” said Mr Morris.
The US airline industry is facing tough competition from foreign carriers including from Europe and the Middle East.
Any flights operated out of Italy including to the US via Etihad’s equity alliance with Alitalia would not be classified as fifth freedom routes. Currently, Etihad operates only a small number of such routes, including flights from Singapore to Brisbane and Beijing to Nagoya.
0 comments:
Post a Comment