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UNIVERSITA’ DEGLI STUDI DI PADOVA DIPARTIMENTO DI SCIENZE ECONOMICHE ED AZIENDALI “M.FANNO” CORSO DI LAUREA MAGISTRALE IN BUSINESS ADMINISTRATION TESI DI LAUREA “Management in the national airlines: a step back in time to the Alitalia case” RELATORE: CH.MO PROF. Gianfranco Tusset LAUREANDO: Nicholas Sansone MATRICOLA N. 1181567 ANNO ACCADEMICO 2018 – 2019 Il candidato dichiara che il presente lavoro è originale e non è già stato sottoposto, in tutto o in parte, per il conseguimento di un titolo accademico in altre Università italiane o straniere. Il candidato dichiara altresì che tutti i materiali utilizzati durante la preparazione dell’elaborato sono stati indicati nel testo e nella sezione “Riferimenti bibliografici” e che le eventuali citazioni testuali sono individuabili attraverso l’esplicito richiamo alla pubblicazione originale. The candidate declares that the present work is original and has not already been submitted, totally or in part, for the purposes of attaining an academic degree in other Italian or foreign universities. The candidate also declares that all the materials used during the preparation of the thesis have been explicitly indicated in the text and in the section "Bibliographical references" and that any textual citations can be identified through an explicit reference to the original publication. Firma dello studente _________________ Table of contents Introduction ................................................................................................................................ 1 Chapter 1 .................................................................................................................................... 2 The Italian civil aviation: from the history of public participation to the current business models ......................................................................................................................................... 2 1.1 The birth of Italian civil aviation ........................................................................................... 3 1.1.1 The alignment with European competitors ........................................................................... 5 1.1.2 Government collaborations and the economic recovery ...................................................... 8 1.2 Economic liberalizations in the European market ............................................................... 10 1.3 Short insights about the State-owned enterprises .............................................................. 12 1.3.1 The intervention of IRI for the aircraft industry: Alfa Romeo case ...................................... 13 1.4 ENAC: Italian civil aviation authority .................................................................................. 14 1.5 Evolution of airlines business models ................................................................................. 18 Chapter 2 .................................................................................................................................. 21 Alitalia: history and understanding of its management, from its birth to current events ......... 21 2.1 The history ........................................................................................................................ 22 2.2 Alitalia: history of its management .................................................................................... 24 2.2.1 The management before the 1957 merger .......................................................................... 25 2.2.2 The years after the merger .................................................................................................. 26 2.2.3 The geographical management of air routes and the development of the intercontinental network ......................................................................................................................................... 29 2.2.4 The management during the crisis ....................................................................................... 31 2.3 Recent results of the bad management and new challenges for Etihad ............................... 33 2.4 Politics and relations with trade unions ............................................................................. 35 Chapter 3 .................................................................................................................................. 36 Critical aspects of civil aviation: discussion and analysis of the Italian scenario .................... 36 3.1 Difficulties and challenges in civil aviation .......................................................................... 36 3.1.1 The difficulties in the Italian scenario .................................................................................. 37 3.1.2 The situation of Alitalia ........................................................................................................ 39 3.2 Analysis and comparison of Italian operating airlines ......................................................... 40 3.2.1 The analysis .......................................................................................................................... 41 3.2.2 The comparison .................................................................................................................... 47 3.2.3 Final considerations ............................................................................................................. 51 Chapter 4 .................................................................................................................................. 52 The evolution of civil aviation and M&A strategies ................................................................ 52 4.1 Government interest in civil aviation ................................................................................. 53 4.1.1 Changes in airline profitability ............................................................................................. 54 4.2 Evolution of the civil aviation market ................................................................................. 54 4.2.1 The first historical changes ................................................................................................... 55 4.2.2 Technological evolution ....................................................................................................... 56 4.2.3 Safety evolution ................................................................................................................... 58 4.2.4 Evolution of the services offered ......................................................................................... 60 4.3 Merger, acquisition and alliance strategies ........................................................................ 62 4.3.1 Codesharing and virtualization............................................................................................. 64 4.3.2 Benefits and drawbacks of the M&A strategies ................................................................... 65 Conclusions .............................................................................................................................. 69 Bibliographical references ........................................................................................................ 71 Sitography ................................................................................................................................. 74 Introduction This thesis aims to discuss about management, difficulties and changes that have affected the civil aviation industry. The analysis of the management of the airlines starts from a historical analysis, ending with the current challenges that the civil aviation industry has to face, with specific focus on the situation of Alitalia and on the Italian aeronautical scenario. After reading of this thesis is possible to understand what were the difficulties faced by the airlines that have operated on this market, what are today's difficulties of this sector and how evolutions have led airlines companies to find new strategies for defend against the tough competition. The difficulties in the management of these airlines will be discussed by examining historical, political and economic aspects that have led to a radical change in the habits of both airlines and passengers, who have been able to verify a change in their habits thanks to evolutions occurred in the aeronautical sector, market that, as you can already guess, is really dynamic. The discussion will begin by arguing in the first chapter the birth of Italian civil aviation, highlighting immediately the governmental interest that was had in that historical context regarding the civil aviation market. After the historical point of view we will find a brief discussion about the evolution of aviation business models before moving on to the next chapter, where it is possible to read about an in-depth analysis of Alitalia's history, discussing how the Italian flag carrier was managed throughout its history, arguing then about today's economic challenges and its relationship with the unions. Dwelling on the Italian scenario, is possible to find in the third chapter a discussion of the challenges encountered by Alitalia and other airline companies operating in the Italian market. The chapter will end with a comparative analysis of some of the Italian airline companies still operating in the area. The discussion of the thesis concludes with the fourth chapter in which we will find a discussion about the evolution of the entire