Italy ‘flying in wrong direction’ on price caps says FT – English

(ANSA) – ROME, AUG 24 – The Financial Times has taken a new
swipe at the government of Premier Giorgia Meloni, on Thursday
claiming it is “flying in the wrong direction” with its plans to
cap air fares on popular domestic routes and limit the use of
algorithms to set prices.


   
“If Italy’s prime minister Giorgia Meloni thinks a cap on prices
is the way to lower the fares of trips to the summer hotspots of
Sicily and Sardinia, she is mistaken — and not just because such
a move could contravene EU law,” writes International business
editor Peggy Hollinger.


   
“Any price cap will almost certainly lead to higher fares across
the year,” she continued, adding that “the move to limit
profiling algorithms also presumes that the aviation industry is
more technologically sophisticated than it really is”.


   
“Very few airlines are remotely close to having the intelligence
required to personalise pricing for those not in their loyalty
programmes,” insists Hollinger, saying that artificial
intelligence isn’t the answer either.


   
“The government may be cynically tapping into this general
discontent (with airlines) to win a few headlines” but ministers
“know (the measures) are impossible to implement,” she
concludes.


   
Earlier this month the government approved a decree banning the
use of algorithms if applied to connections to Sicily and
Sardinia; if applied to peaks in demand linked to seasonal
factors; and if they lead to the price of tickets or
accessory services being 200% higher than the average price.


   
Last week the trade body Airlines for Europe (A4E) called on
Brussels “to clarify with Italy that this intervention impacts
the free and deregulated air transport market in Europe”,
arguing that it could “set a precedent and lead to a domino
effect”.


   
Limiting fares would “violate” the rights of companies to
‘”compete wherever possible, set prices and define services as
they see fit”, the trade body added.


   
Ryanair CEO Eddie Wilson has also blasted the measure and called
for it to be scrapped.


   
“It’s ridiculous, illegal and interferes with the free market,
according to European law,” Wilson told ANSA last Wednesday.


   
“It must be cancelled.


   
“If it isn’t, there will be an impact on Ryanair’s ability to
operate in Italy,” he added.


   
The European Commission subsequently said that it has asked for
clarifications from Rome, adding that price capping is rarely an
effective means of achieving affordable prices.


   
“The commission supports measures to promote connectivity at an
affordable price in line with EU internal market rules,” said
Commission spokesperson Adalbert Jahnz.


   
“Sustainable competition with free price setting is usually the
best guarantor of affordable prices in the EU’s highly
successful and liberalised transport market,”
he added. (ANSA).