Italian Valeria Rebasti is a well-known figure in the Italian market. She has been working with Spanish low-cost Volotea from its inception in 2012, managing the local market that, for the airline, is one of utmost importance.
Aviacionline talked with her by phone this Saturday, where we addressed the airline’s latest developements, especially winning the run for serving Sardinia’s continuità territoriale essential service, subsidized routes, one that generated outcry from segments of the travel trade and unions.
Aviacionline: I’m very interested that Volotea is entering the territorial continuity market because it’s not something that low costs usually do. So why did you accept this challenge in the first place?
Valeria Rebasti: First of all at Volotea we like challenges. We started flying in 2012 launching over 85 routes in 54 cities and no one believed we could do it. Over the years we have been changing a bit our model: when we started operating we were connecting small and medium size airports, now we also fly from bigger airports and hubs. Last summer we started operating from Milan-Linate and Paris Charles de Gaulle, for instance: we fly from Madrid, we have a base in Athens, we’ve been flying from Vienna, Prague, etc.
I mean, we still remain focused on connecting small and medium sized cities, but now we have a look at bigger airports too, and in the evolution of our company it was also the right time to start considering the [Public Service Obligations]. We had never done a big one like this in Italy. We’re particularly close to Sardinia, I don’t know if you are aware but our first flight was a non-commercial flight – operated on the 5th of April 2012 – and it was from Venice to Olbia in Sardinia. So we also feel emotionally close to this region, and being an island, flights are fundamental.
We participated in the first tender and I’m not sure if you’re familiar with what happened – we presented the best offer, the lowest one by giving the highest percentage of discount – but because we didn’t have our ID in the offer they excluded us. We feel that this is not fair. When they excluded Alitalia and created the new tender for a procedura negoziata, we decided to participate and gave an even better offer. We did once again the best offer; we’re very happy and proud about this.
AL: Well, so you further lowered the price from the first to the second offer: but at the same time you started to sell [tickets] yesterday and the flights started today [Friday]. So I’m sure you are losing tons of money in this first couple of days, right?
VR: First of all, we are operating for the first three days only a reduced number of frequencies because we needed more time to implement all the flights. Surprisingly for us, we put flights on sale on Thursday 14th and after 24 hours the first flights were filling up, and we are flying on some routes with over 90% LF.
AL: Yeah, so people already know you, right?
VR: Yes, people do know us in Italy. In Sardinia they know us very well. The only market where they don’t know us much is Rome Fiumicino as we have never flown from there. But on these routes there is a lot of VFR [Visiting Family and Relatives traffic] so word of mouth will help us in Rome. From Cagliari there are a lot of businessmen too, so these people were waiting to book the flights. Being the fares capped, people can book very last minute as the fare won’t change.
AL: The variety of passengers is big: For these continuity flights, do you do more direct sales or via agencies?
VR: We don’t know yet what channel will sell most, we have been on sale for only over 48 hours so far. We have always been working with all the trade partners: since day one we’ve been selling through the GDS – we are on Amadeus, Galileo, Sabre and Worldspan. So I can’t really tell you right now the percentage of sales which will be done through these segments but I tend to think that it will be high.
AL: You are facing some trouble with the travel agencies. Gian Mario Pileri, the president of the Fiavet [Italian Federation of Travel and Tourism Companies] in Sardinia was very incisive [about] you and I saw on a newspaper yesterday that he said – and I will read it in Italian – «we’re very worried, Volotea will make increased damage to us and to all people of Sardinia». What’s your answer to it?
VR: I don’t know where that comes from. I can say that we are sure that we will offer a very good service. We managed to start flying after less than 36 hours from winning the tender and we did indeed a sort of miracle: we have created a new base in Alghero, re-opened the one in Olbia and reinforced the one in Cagliari. Having managed to do this, I’m sure that everything from now on will work well. We still need to fix some technicalities on our website in order for it to be fully compliant with the continuità territoriale product.
I think he was referring to the fact that over the past [Summer] period we cancelled some flights. I would like to remember everyone that the last two years have been exceptional years, in which we’ve all experienced a worldwide pandemic, so we’ve been forced to cancel flights here and there but this is not the case with continuità territoriale, on the contrary, we are ready to add more flights if necessary. Before [the] pandemic, we had a very low rate of cancellations, so we are back to that trend therefore I can assure we will satisfy all the demands and requirements of this PSO.
AL: Do you think that all this fuss from the travel agents and from the unions is because Volotea pays the travel agents less than Alitalia did?
VR: We work with the trade since our start and we have agreements with the travel agency networks, we do work with them. Of course, we’re a low cost carrier. We are selling cheaper fares, even now we are on [a] promotion.
Our margins are not so high; therefore we cannot give the same type of incentive that traditional carriers usually provide, but we do give incentives to our top partners and above all, a good service: we have created a dedicated number just for [the] continuità territoriale, we work with the trade both on GDS and on the website, we have a group department. We are ready to offer a great product.
AL: There was also this thing that, you know, they were saying “oh, they’re Spanish. They are not Italian and [yet] they’re providing a service for Italians”. How do you see that? Because you’re Italian; so how do you show the trade that you are not Spanish [and that] you are Italian also.
VR: We are Spanish as we have our office in Spain, but our main markets are Italy and France. In Italy we have seven bases: we have local people. I am the country manager for Italy and Southeastern Europe and I’m Italian.
I’ve been in this market for a very long time, I know it quite well. Since we started operating we have been visiting clients and partners, and we have been available for the trade. So actually we’ve always felt local; we’ve always been part of the country.
AL: So you think that it’s possible to build a better relationship with the trade as the time goes on?
VR: We’ve always had a good one. It’s just over the past few months because of the pandemic that things got a bit ,turbulent, but we’ve always had a good one. I’m actually at a trade fair in Italy right now – TTG – and of course we talked to tour operators, to travel agency networks and they all say, «yeah, we’ve been facing some problems over the past few months» – over this last summer we had some problems with our call center at some point.
But we changed it and we provided training to the call center operators replying to travel agents, so they are now able to answer properly to trade questions – but they realize it’s because of the pandemic. We will prove them all that we are back in our best shape.
AL: Another thing that caught my attention on why are you going to this route is that you cannot revenue manage. The fares are fixed. Is it a problem for you?
VR: Only the fares for residents are fixed: the other ones can be changed. At the moment we have one fare type only because our system was not ready to have two. Therefore, right now residents and non-residents pay the same price, but we will change them. Basically it is a free market on the non-residents fares.
AL: Let’s talk about this Summer. Everybody [was] complaining and even Enac [Italy’s civil aviation authority] called your attention that you were cancelling a lot of flights. So tell me more about these operational difficulties this summer. What did go wrong and what did you do to fix it?
VR: We cancelled flights because we were in a pandemic situation in the countries and there was still a lot of uncertainty. I can tell you that our cancellations were in line with the ones from our competitors, and we have never cancelled under the 15 days required by the EU261 [regulation].
AR: But financially, though, as far as Italy goes, was it profitable?
VR: It was a discreet summer. Sales slowed down in July because of the Delta variant, which was on all the media here. Then every week there were changes in the regulations for travelling and in the color of the [Italian] regions, therefore the season was not as good as we expected, but we have flown with very high loads, with an average of 92% over the whole Summer – but to stimulate traffic we had to keep fares lower than usual.
AL: Could this [taking the PSO] also be a commercial stance for you to increase your footprint in Sardinia? Or are you already very big and known [there]? By operating these essential routes, everybody that needs to go from Olbia to Rome will need to fly with you, and when the guy needs to go, whatever, to Nantes or Toulouse, he will choose you. Did you consider this when you signed the contract?
VR: We are already quite big in Sardinia, with 2 bases, but we actually wanted to have more presence and we thought it was a good time to try and start. Just keep in mind that this tender is an emergency tender valid for seven months, so we will have the routes only until May 14. And the region is creating another tender that will take place from May 15th next year.
AL: Do you plan to take part?
VR: Who knows! We will have to see the tender first, as it will be new and right now we are concentrating on this one.
AL: So how many aircraft are you basing in Sardinia on it?
VR: For the PSO it’s 7 aircraft.
AL: Can you use these aircraft in other routes, are they allowed to go elsewhere?
VR: Yeah, if we wanted we could use them for other routes as well. The number of frequencies in Cagliari is very high though, so I doubt there is space there. In the other airports, if we wanted, we could use them.
AL: And are you seeing any opportunities?
VR: We haven’t evaluated that yet because as I said, it all happened in such a short time. I mean, consider that we signed the contract Wednesday night, on Thursday we put the flights on sale, on Friday we started flying and we still are fixing tech issues on the website. So we’re still focused on this.
AL: So I’m sure you’re not going to sleep this weekend.
VR: Yes, like I haven’t slept the past weekend also.
AL: Going elsewhere in Italy, you saw that Wizz Air and Ryanair are opening bases in Venice, which is a big deal for you. So what are your views on that? Are you worried or concerned about it?
VR: Of course, every time there’s a new competitor we check what they do. We already co-exist with them in other airports. I mean, Italy is a country where the low-cost carriers have opened many bases and conquered the market. We have a base in Naples and so do Ryanair, EasyJet and Wizz Air, for instance. So we compete in other airports. I’m sure everyone will find its own space.
AL: But do you try to compete directly with them, or is your strategy more like, «all right, I’m gonna do a monopolistic route here and there»?
VR: Well, as I said, when we started we were flying to small and medium-sized routes where we had almost no competition, as no one wanted them. Now in some cases we operate head-to-head with other carriers – and we keep on flying…
AL: Did you see your sales be affected by this new capacity addition? Or are you not really monitoring that?
VR: I think the Italian market over last summer had too much capacity because we were all flying on domestic routes – Italians were not too keen to fly abroad. So I believe next year there will be changes, above all the return of international flights, but let’s see what will happen.
AL: Volotea is also growing aggressively in Italy. So where do you plan to go next? I saw that you grew a little bit in Pisa this year, not very much, but where next? What is the next big city?
VR: We already fly from 24 airports in Italy, with 7 bases, so I think we have a good presence. Sardinia this year will certainly see a big traffic because with this tender, over the winter, it will become one of our main markets.
AL: This summer, which markets in Italy positively surprised you?
VR: Well, let’s say that in Italy last summer [it] wasn’t so surprising.
AL: Any negative surprises though?
VR: Not really, we were thinking that people would fly more everywhere, also to Greece, but we didn’t have huge negative surprises.
AL: Where do you see Volotea in Italy in the next five years?
VR: Well, we will keep on growing and gaining market share. We’re here to stay, we feel Italian. We had never flown to Fiumicino before and we entered a new market for us and who knows, maybe this may lead us to launch other routes out of Fiumicino in the future. I’m sure we will keep on growing in the country.
AL: By the way, how did you do to to get the ground personnel to operate in Fiumicino a day before?
VR: We managed to do it, everyone was very committed and even there people helped us.
AL: You say it was a miracle. Was it really a miracle that it all worked out?
VR: I say «a miracle» because we were positive and we truly believed we would make it. A miracle as I don’t think any other airline could have made it in such a short time. In fact, nobody else applied to the tender apart from us.
AL: Why not?
VR: Because timing was very tight to create everything. Because we already had a base in Cagliari and one in Olbia, so we had to create a new base in Alghero, but creating everything from scratch in 36 hours, it’s not so easy, it was a huge challenge.
