September 21, 2023

Taylor Daily Press

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Italy wants to cap air ticket prices: ”The Soviet Union of 1927”

Italy wants to cap air ticket prices: \”The Soviet Union of 1927\”

Tensions arose between Ryanair and the Italian government. The latter wants – and unless there is a reversal, will – a cap on airfares between the islands (Sicily and Sardinia) and the mainland. The European Commission will look into this matter.

Why is this important?

Within the European Union, free competition determines the price of many services, including air tickets. By putting an end to these, Italy could set a precedent.

In the news: Despite Ryanair’s anger, Meloni persisted.

  • This week, the Italian government approved a measure to reduce prices for flights between the Italian islands and the mainland.
  • Eddie Wilson, president of Ryanair, the airline most affected by these flights, is furious.

Even at Hogwarts, they understand how the market works.

details: What does the scale look like?

  • During peak periods, Ryanair has a habit of dramatically increasing airfares between Sicily, Sardinia, and the Italian mainland. Up to 830 percent above average, according to a recent calculation he made Corriere della Sera. A practice that Meloni’s government does not like.
  • To prevent the low-cost carrier from continuing with this policy, the Italian government approved a measure on Monday to reduce the price of these tickets. It should be done by banning the use of algorithms that allow Ryanair to change its fares based on the number of Internet users requesting information about flights during certain periods.
  • The goal is to prevent Ryanair from raising fares for the most popular periods by more than 200 percent over the average fare. like Policy Note, however, that the method for calculating the “average price” remains relatively obscure at present.
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reactions: Ryanair’s chief was surprised.

  • In recent days, Ryanair’s CEO has been very critical of this measure. In a statement, Wilson called it “illegal”.
  • According to him, the procedure would have “unexpected consequences.” in La Republica He explained that a ceiling would lead his company to reduce the number of flights between the Italian islands and the mainland and to search for other destinations. He warned that “fewer flights and fewer seats in airlines will lead to higher prices, not lower prices.”
  • The angry Irish community leader also used careless similes to describe Meloni’s government.
    • “You know who tried to fix prices instead of following the market? The Soviet Union in 1927. And it didn’t work. Even at Hogwarts they understand that the supply of a product has to be increased in order to lower prices.”
    • As for the algorithms Ryanair will use, he called it “a conspiracy theory based on the imagination of people who don’t have enough work.”
  • Italy’s Industry Minister responded on Thursday.
    • Adolfo Urso said in TgCom24recalling that the low-cost carrier has been fined 11 times by the competition authority in recent years.
    • He also confirmed that his government’s measures are in line with European regulations.
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Brussels requests additional information

And now: The Italian Parliament…and the European Commission.

  • Now that Meloni’s government has approved the measure, the Italian Chamber has two months to give the green light, after putting forward possible amendments.
  • At the same time, this issue will nevertheless be examined by the European Commission. Its spokesperson indicated on Thursday that it had asked Italy for more information about the measure.
    • While Brussels generally “supports measures to promote affordable connectivity, in line with EU internal market rules,” “sustained competition with free pricing is generally the best guarantee of affordable prices,” he said.
  • In theory, the European Union allows government agencies to regulate the prices of some flights. Usually these are flights to rather distant destinations. With hundreds of flights during the height of the summer season alone, Sardinia and Sicily just don’t seem to fit this picture.
    • However, according to Meloni’s government, there is no “appropriate alternative market” for flights to and from Sicily and Sardinia. She asserts that the European rules stipulate that “the state intervenes when a citizen is exposed to work that does not abide by the rules of the market.”
    • It remains to be seen whether Rome’s rationale will convince Brussels. (ash)
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