Alitalia cancelled all promotional fares within Europe on 11 February after the European Commission (EC) warned that it would reconsider its approval of the carrier's state aid unless there was immediate action.

The state aid package was finally cleared by the EC in mid-1997 after a lengthy investigation, but transport commissioner Neil Kinnock threatened to restart the process after evidence of breaches in the terms attached to approval.

Among the main complaints was that Alitalia was "price leading" on key routes with low promotional fares. The airline has now returned to its standard price list and will not offer any further promotions until March, giving competitors time to re-adjust their price levels.

Domestic operators Alpi Eagles and Air One led the pricing complaints, and are understood to have been joined by British Airways and Lufthansa, although Alitalia says that the bulk of its European operations were run within the rules.

Separate complaints had also come from carriers which had been unable to secure traffic rights to set up new services out of Italy, mainly on tourist routes. Air Europe (Italy) has been battling to set up services to Mauritius and Lauda Air Italia has asked for routes to the Dominican Republic, while new start-ups have also emerged.

The EC demanded that all outstanding route applications should be granted, where feasible, by 10 February. This was expected to see immediate new rights granted for destinations such as Kingston, Jamaica, with other destinations following pending bilateral negotiations with the countries involved. Future applications will have to be judged without any bias towards Alitalia.

On 6 February, Kinnock finally lifted the threat of a renewed investigation, after receiving last-minute assurances from the Italian Government that it would meet the conditions.

Source: Flight International