Lufthansa goes fishing in Italian waters

 - October 8, 2008, 10:22 AM

When the Italian government put ailing Alitalia up for sale last winter, Lufthansa was not interested. However, the German group’s Italian regional subsidiary, Air Dolomiti, is stepping up efforts to hook passengers in northern Italy. The company announced plans to base six new Embraer E195s in Milan to enhance its intra-European flight offerings starting in the first half of next year.

Air Dolomiti is a wholly owned subsidiary of Lufthansa. Established in 1991 by Italian entrepreneurs, it became a Lufthansa partner in 1994. Nine years later, the German flag carrier bought all shares of the Italian regional, which was then integrated into the Lufthansa Regional business unit. Air Dolomiti operates a fleet of six 46-seat ATR 42s, eight 64-seat ATR 72s and five 99-seat BAe 146-300s. The six new E195s are scheduled for delivery during the first half of next year and will enter service simultaneously at a date to be announced. Air Dolomiti has signed an agreement with SEA, the company that operates Milan Malpensa, to base the new aircraft at that airport. While the new Embraers will be operated by the Italian subsidiary, Lufthansa has not decided yet whether they will feature Air Dolomiti colors, the Lufthansa Regional paint scheme or the Lufthansa mainline livery. 

Air Dolomiti’s network radiates from Lufthansa’s Munich hub, linking 10 northern Italian towns, including Milan and Turin, with Munich, and in some cases with Frankfurt. Air Dolomiti is the third largest operator at Munich and the largest operator based outside Germany. According to Lufthansa, the new E195s will not replace any aircraft in the Air Dolomiti fleet but, rather, be used to establish direct links between northern Italy and European destinations other than Germany.

The time is ripe for a new airline to offer flights from Milan, as cash-strapped Alitalia urgently needs to reduce costs. Since sales talks failed with Air France, the Italian flag carrier announced it would abandon Milan as a hub, leaving Rome as its only hub, with an increased number of feeder links with Milan. Lufthansa denies that it is taking advantage of this situation to channel more Italian passengers into its network with the help of its regional subsidiary, but notes that there is strong demand for European destinations from Milan. Since Europe is a single market, nothing prevents the German flag carrier from extending into Italy. A question that remains open at this juncture: will Air Dolomiti become a mainline carrier operating out of Milan, or will it remain a regional airline?