Milan Malpensa Airport News

No Risk For Milan Malpensa

Malpensa Airport Press Release

The announcement by Lufthansa Italia represents the end of a journey that has been complicated by the impacts of the economic crisis on the aviation industry and the subject of talks between Milan Malpensa Airport and Lufthansa over recent months.

In relation to Lufthansa’s decision to adopt a new strategy for Italy, Milan Malpensa Airport makes the following points:

Lufthansa Italia represents only one of 110 carriers present at Malpensa airport.

The destinations currently served by Lufthansa Italia are already covered by one or more other carriers, which also have higher occupation rates. The destinations reached directly from Malpensa today number 180, of which 97 extra-EU.

In 2010 Lufthansa Italia represented around 3% of group turnover, carrying around 1.2 million of the 18.7 million passengers for the year. This volume can easily be absorbed by other carriers operating the same routes without requiring any particular change in Milan Malpensa Airport,s commercial strategy.

In the last 3 years 38 new carriers have begun operations out of Milan Malpensa offering 42 new connections of which 21 intercontinental, confirming the appeal of the Malpensa Airport’s catchment area. Among the new routes recently activated are Seoul, Hong Kong, New Delhi, Beijing, Addis Ababa, which have immediately shown high occupation rates even in premium segments with higher average yields (average unit income per passenger) than other major European airports.

In the first four months of 2011 Malpensa grew by 9% in passengers carried and by over 12% in cargo transportation.

Milan Malpensa Airport will continue to pursue its existing growth plans which include the hub model option in the medium-long term. The innovative ViaMilano project is designed to further this end, connecting two or more routes operated by different airlines for around 2,000 possible travel combinations and permutations.

Malpensa SEA Group’s business model is based on multiple competing carriers in both passenger and cargo transport and today remains a winning strategy.

Introduced following the de-hubbing of Alitalia which led to the immediate loss of more than 10 million passengers at Malpensa, today largely recovered—the strategy has enabled SEA to anticipate market trends and operate to full capacity independent of the decisions of individual carriers.

Lufthansa Italia to close Milan Malpensa

Lufthansa have announced that it will be closing down its Lufthansa Italia subsidiary basd at Milan Malpensa. The airline launched Lufthansa Italia in 2008.

The subsidiary, which was launched to fill the gap at Malpensa left by Alitalia’s concentration on Rome, will close down its operations on 29th October 2011. The A319s presently operated by Lufthansa Italia will be utilized elsewhere on the Lufthansa network.

Some of the routes presently operated by Lufthansa Italia will be taken over by Air Dolomiti, another Lufthansa subsidiary. Some other routes will be connected via Lufthansa’s present hubs. Lufthansa cites commercial reasons for the closure.

At the same time, Lufthansa foresees double-digit growth in its offering to Italy, which it already serves frequently from its Frankfurt and Munich hubs. Air Dolomiti will also increase flight frequencies to Germany in its route network, which focuses on connecting the major economic centres in Northern Italy with Lufthansa’s Munich base. Together, Lufthansa and Air Dolomiti currently serve 19 destinations in Italy.

Lufthansa CEO and Chairman Christoph Franz: “Bundling our services under the Lufthansa and Air Dolomiti brands will give us a clearer and more streamlined presence in the Italian market. When we launched Lufthansa Italia three years ago, we filled a gap that had emerged in Milan following Alitalia’s withdrawal from Malpensa and the end of our cooperation with Air One. Our service is highly appreciated and the response from passengers in Italy is excellent. However, given the slump in prices on European routes and the competition, it was extremely difficult to establish a profitable European network under a separate brand. It therefore makes sense to focus the Lufthansa Group’s offering on connecting the connecting the Italian market to the Group’s hubs.

Management Changes for Lufthansa Italia

Lufthansa is making significant changes to its management structure in Italy naming Michael Kraus, currently managing director of Lufthansa’s Italian regional affiliate, Air Dolomiti, as head of the entire Italian business, including the unprofitable Lufthansa Italia operation.

Kraus is tasked with trying to turn around Lufthansa Italia. If he fails to do so, the unit may face shutdown in the medium term. The affiliate started operating in early 2009 but has suffered from the economic downturn and fierce competition from EasyJet at its Milan Malpensa Airport base.

In other news, Meridiana Fly, the airline born from the merger of Meridiana and Eurofly one year ago, is becoming a potential target of Lufthansa.

Meridiana, which is listed at the Milan stock exchange, has formally denied that any decision has been taken, but has confirmed that discussions are ongoing. The strategy is consistent with the course CEO Massimo Chieli, who has been steering the privately owned airline since May 2010, has been on while discussing commercial or strategic alliances or integration with other groups. This is also in line with the current consolidation trend of medium-sized airlines.

The airline has a 16% share of the Italian domestic traffic, and would be a great asset for Lufthansa, which has already a strong foothold in Italy with the fully owned Air Dolomiti and Lufthansa Italia.

A merger with Lufthansa would create a real competitive threat to Alitalia, which is controlling no more than 50% of the domestic market, contrary to what is the case for Lufthansa or Air France/KLM in their own domestic markets.