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Italy’s government has pulled back from a plan to cap air fares on certain routes, instead giving the country’s competition authority new powers to police ticket prices following fierce resistance from airlines.
Prime Minister Giorgia Meloni’s government outlined a decree last month for price caps on flights between mainland Italy and the islands of Sicily and Sardinia after ticket prices soared this summer.
But industry minister Adolfo Urso said on Tuesday the government would submit an amendment that will scrap the original plan to cap fares during the high season at 200 per cent of average prices. Instead, Urso said the government would give “specific and greater powers” to the country’s competition and transportation authorities to monitor air fares on certain routes and to intervene if they consider that prices have jumped too high during peak periods or unforeseen events such as natural disasters.
“There won’t be a ceiling, but the reference to +200 per cent remains, as an indicative element . . . so that the competition authority can take action, if it considers it [necessary],” Urso said.
The changes represent the latest apparent policy U-turn from the Meloni government, which partially backtracked on a bank windfall tax that spooked markets and drew criticism from the European Central Bank.
European airlines had strongly opposed the original proposals to cap fares, which were described as “illegal” under EU law by Ryanair, Europe’s largest airline.
Airline bosses had also questioned how the price caps would work in practice, including how the government would define an “average” fare in an era of algorithmic pricing that regularly changes according to supply and demand.
Urso said the changes would “overcome the obstacles” in the original plan, and would “achieve the same goal” of controlling high air fares.
Airlines for Europe (A4E), a trade body, said the changes were “both welcome and timely”.
“It safeguards the EU’s single market, which has successfully served European consumers for three decades. It underscores the importance of EU rules and why they must be respected by all, including all national governments,” A4E said.
The trade body had written to the European Commission and called on Brussels to step into the row to protect competition in the single market.
The focus on air fares comes as ticket prices have risen sharply this year, with high demand for travel after the Covid-19 pandemic coming amid a shortage of aircraft. Airlines have also been passing on their own higher costs to consumers, including fuel and labour.
Rome said last month that ticket prices for flights between the mainland and Sicily and Sardinia had risen 70 per cent.
