Alitalia-Air Serbia to give up slots

New airline to launch Rome - Belgrade flights

The European Commission has given the go-ahead for Etihad Airways to buy a 49% stake in Italy‘s Alitalia, but said the two carriers, as well as Air Serbia, must allow competitors to fly between Rome and Belgrade. The deal, inked in June, will reinforce Etihad‘s presence in Europe, where it already owns minority stakes in the Serbian carrier, Air Berlin and Aer Lingus. Italian authorities have expressed hope that it will end Alitalia‘s longstanding flirt with bankruptcy. "The Commission examined the competitive effects of the proposed acquisition and concluded that on all affected routes, with the exception of the Rome - Belgrade route, the transaction does not raise any serious competition concerns", the European Commission wrote in a statement.

The European Union‘s executive body feared that a monopoly on flights between Rome and Belgrade "could lead to higher prices and a loss of service quality for passengers". It says, “To dispel the Commission's competition concerns on the Rome - Belgrade route, Alitalia and Etihad submitted commitments to release up to two daily slot pairs at Rome Fiumicino and Belgrade airports to one or more interested new entrants. Alitalia and Etihad also committed to provide further incentives, such as the possibility for a new entrant to acquire grandfathering rights after a fixed period of time. Furthermore, Alitalia and Etihad committed to offering a special prorate agreement, a fare combinability agreement, an interline agreement and access to their frequent flyer programme to new entrants, to make entry more likely”.

Alitalia and Air Serbia hold a duopoly over the Rome - Belgrade route and codeshare on each other’ flights, making it unclear which other airline could step in to take the conceded slots. Late last month, easyJet terminated its three weekly service between the two capital cities due to poor ticket sales. The budget airline is not the first to suspend flights between Rome and Belgrade. In 2012, Wizz Air cancelled the same route citing high seasonality. In its conclusion, the Commision says, “These commitments adequately address the competition concerns identified by the Commission and should facilitate new entry on the Rome - Belgrade route”. Alitalia, plagued by decades of mismanagement and political meddling in its affairs, has not turned a profit since 2002. Ahead of the deal, Alitalia CEO, Gabriele Del Torchio, said Etihad would invest 560 million euros in the ailing airline. However, he also said at the time that more than 2.200 jobs would have to be slashed - almost a fifth of the workforce.