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Air Italy goes into liquidation – no more Avios earning or redeeming possible

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Air Italy, the Italian airline which was 49% owned by Qatar Airways, has been placed into liquidation.

Air Italy was an Avios partner, and indeed used Avios as its loyalty currency.  We didn’t talk about it much on Head for Points because it was NOT part of ‘Combine My Avios’.  Air Italy members could not move Avios to or from British Airways Executive Club, or vice versa.

You COULD redeem your BA Avios for Air Italy flights, however.

We wrote a couple of articles on redeeming Avios on Air Italy, such as this one.

Availability was good, but flights came with BA’s crazy surcharges attached.  A business class return redemption from Milan to San Francisco came with £588 of taxes and charges, for example.

Air Italy was, unfortunately, a bit of lost cause for UK residents looking to spend their Avios.

Where did Air Italy come from?

In late 2017, Qatar Airways acquired a 49% stake in Italian airline Meridiana.  Meridiana was a slightly bizarre airline, to put it mildly, being part-owned by the Aga Khan and having a weird route network primarily flown by old McDonnell-Douglas aircraft.

Qatar Airways rebranded Meridiana as Air Italy, using the typical Qatar Airways colour scheme, and moved its hub from Palermo to the more practical choice of Milan.  Qatar Airways provided it with some A330 aircraft to launch long-haul routes which included:

  • New York
  • Chicago
  • Los Angeles
  • Miami
  • San Francisco
  • Toronto
  • Bangkok
  • Accra
  • Lagos
  • Delhi
  • Mumbai
  • Dakar

What went wrong with Air Italy?

There seem to have been four factors which led to the demise of Air Italy.

The first was the inability to fund continuing losses.  Whilst Qatar Airways was happy to put more money into the business, it was not allowed to own more than 49% under EU legislation.  The Aga Khan, who owned the remaining 51%, was not willing to put further money into the company.

The second issue was the insistence of the Italian Government to keep Alitalia alive at all costs.  I have lost count of how many ‘final’ bailouts Alitalia has received over the years, or how much money it has lost.  With the Government refusing to let it die, it continued to sap passengers and revenue from other carriers which had a better chance of long term success.

The third issue was the Boeing 737 MAX crisis.  Air Italy had received a small number of aircraft but was still waiting for the bulk of its order.  This impacted its ability to run a full network of feeder flights for its long haul operation.

The fourth issue was the ‘angled lie flat’ 2 x 2 seating on its A330 aircraft which was increasingly uncompetitive.  That said, feedback on the food and service was positive.

Air Italy goes into liquidation

What happens next?

Air Italy has closed with immediate effect.

Its aircraft will continue to fly under contract for the next two weeks to repatriate as many customers as possible.  Beyond 25th February, passengers will be routed onto other airlines.  Full refunds are also on offer, so there is clearly some money left in the company.

Closer to home, IAG will take a hit as the sale of Avios to Air Italy ends.  It remains to be seen what will happen to Avios sitting in Air Italy accounts.

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Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.

Category

Qatar Airways and Privilege Club

Comments (23)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • kiran_mk2 says:
    11 Feb11 February 16:20

    Can’t believe Alitalia is still hanging on. The ‘final’ deadline for bids seems to keep getting pushed back and it’s clear no-one beyond the Italian government wants to keep it going as is – more likely other airlines want to pick at the carcass. EU is apparently close to a verdict on whether the last bailout was illegal state-aid. Would be unfortunate if Italy lost two airlines within a few months.

    • Lady London says:
      11 Feb11 February 16:30

      I think I saw somewhere that Ryanair is the biggest airline in Italy now?

  • will says:
    11 Feb11 February 16:25

    With 3 737 MAX delivered and 17 on order and Qatar 787’s unavailable due to delivery delays they may well find themselves in a strong compensation position with respect to Boeing if they can make the case that they folded due to faulty/delayed aircraft deliveries.

    • Callum says:
      11 Feb11 February 20:33

      I would say ceasing to exist means they’re actually in the worst possible place to get a compensation package from Boeing!

      • will says:
        11 Feb11 February 23:50

        The creditors (presumably Qatar and Aga Khan) will have a call on any remaining assets one of which should would be any compensation due to failed aircraft deliveries. I just wonder if the airline going bust would actually make a more compelling case for compensation?

  • Save East Coast Rewards says:
    11 Feb11 February 16:54

    Air Italy provided a great way for my Italian friends to make a dent in my Avios balance! They never had any issues with availability (at least if they booked 7 days out, they never had any short notice availability). Although I’ve not booked flights to SFO, taxes and fees from Milan to east coast USA were very reasonable so they were very lucky for a short while. Business class to the US for very cheap, they’d otherwise have been travelling economy so it didn’t matter that the seat wasn’t completely flat.

    So now I have a number of bookings for March and beyond booked with Avios on BA.com – as they’re BA tickets will BA have to arrange rerouting or can they just cancel without offering an alternative?

    My current thought is to wait a couple of days and then contact BA regarding the options. I imagine if I call today nobody at BA will know what to do.

    Also one of them is travelling MIA-MXP tomorrow and so my advice was be at the airport 3 hours before as Air Italy have taken all their online systems down and so presumably everyone will have to queue to check-in. I’m also worried that their flight will be cancelled so I’m keeping an eye on that. There’s an alternative AA flight they could use as it’s a BA ticket could they be placed on that space available?

    • IndiaCharlie says:
      11 Feb11 February 17:48

      If they are in liquidation I’ll be surprised if they fly tomorrow (think mon/tcx) as they won’t be able to incur further costs of fuel /landing fees etc. I’d keep an eye on the website and go early to airport but I don’t think that flight will happen. Perhaps preemptively call your insurer to check options so you can quickly rebook if canx?

      • IndiaCharlie says:
        11 Feb11 February 17:49

        Just reread your post – if BA ticketed flight then I would expect the onus to be on BA to reroute.

      • marcw says:
        11 Feb11 February 18:26

        They are going into liquidation on february 25. Until february 25, flights will operate.

  • ayearinmx says:
    11 Feb11 February 17:12

    i never did get my avios from the LIN-OLB flights in january…. i guess this explains why

    • Save East Coast Rewards says:
      11 Feb11 February 17:26

      There was no hint that they were on the verge of collapse. I had booked some Air Italy tickets using points just last week.

  • Bob says:
    11 Feb11 February 18:13

    Maybe another example of an airline who was doing well in their leisure business plan in sardinia.

    It should have stayed the sardinian airline.

    And it should not have been “forced” to have another business plan such as being an italian airline.

  • Andrew says:
    11 Feb11 February 20:36

    Late Bits… New offer just popped up on my Lloyds, Halifax & BoS Current Accounts.

    10% Fundsreturn on your next stay at any Crowne Plaza. Maximum reward £50. Offer expires 30th March.

    Potentially handy if you are going for the IHG 4X offer.

  • Jimmy says:
    11 Feb11 February 20:57

    OT. I recently had my Curve limits raised. For ATM it now shows £500 daily limit. £5000 monthly limit and £25k annual limit.

    Surely that can’t be right? I assume the £200 pm supercedes this? Anyone have any experience in this?

    • TGLoyalty says:
      11 Feb11 February 21:16

      £200 is the fee free limit. You can go above that to the thresholds listed and pay a fee

      Though in my past experience there has been no fee for more than £200 a month, it’s been a while since I did this though.

      • Jimmy says:
        11 Feb11 February 22:29

        Thanks. Yes I’ve gone over a few times but I’ve also missed some months so probably balances out. Just hope the seagulls stay flying high over the premium bs

  • Shoestring says:
    11 Feb11 February 21:44

    O/T we were talking about interest rates on deposits – Daily Mail has a good way to get 2.3% per annum on £10K fixed deposits

    • Brighton Belle says:
      11 Feb11 February 22:06

      Which day is it in. Looked by no see

    • Andrew says:
      11 Feb11 February 22:18

      By a regulated firm and covered by the FCS or not?

      My local Cooperative Society does 3.5% on £500 for 1 year, 3.75% for 2 years and 4.25% for 3 years on their “Develpment Bonds”.

      Obviously not covered by FCS!

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