Introduction
Italy’s second-largest airline, known as Neos, operates long-haul and medium/short-haul services and features its headquarters in Milan Malpensa airport. The airline operates a fleet comprising 16 aircraft (6 Boeing 787s and 10 B737s), for further information please visit the blog’s article related to the carrier by clicking the following link:
Market opportunities from Milan
Over the last few years, Neos proved to be a pioneer in launching new long-haul services from Italy, as the carrier began to fly both to popular destinations such as New York and Toronto and to niche markets such as China, India and Kazakhstan. The airline successfully intercepted the existing traffic flow and drained passenger demand thanks to its reputation and brand awareness.
The following paragraphs analyse three additional markets (featuring both leisure and legacy passenger demand) that Neos may consider to expand its long-haul network further.
a) Florida
Considering Neos’ main base in Milan Malpensa, it is noticeable that since the outbreak of the Covid-19 pandemic, there is no longer a direct service between Milan and Miami. Until early 2020, two airlines operated the route: Air Italy and American Airlines. While the first carrier ceased operations in 2020, the second airline did not restore the Miami to Milan flight due to aircraft shortage.
The following table shows some data regarding previous operators:
| Airline | Weekly operations | Aircraft employed | Seats offered (Winter 2019-2020) | Seat demand (in 2019-2020) according to IATA data |
| Air Italy | 5 flights per week | A330-200 (C24; Y228) | 1.260 per week | a) Yearly passengers: 160.344 b) Estimated weekly passengers: 3.083 |
| American Airlines | 7 flights per week | B777-200ER (C37; W24; Y212) | 1.911 per week |
The data shown above reveal strong passenger traffic between Milan and Miami in the 2019-2020 period and following the 2023-2024 worldwide air transport recovery, it can be assumed that there is a consistent margin for a direct service between Milan and Miami.
Besides, considering that there are no limitations in terms of operational rights, as the Open-sky agreement is in place between Italy and the United States, Neos would only need to assess slot availability at the departing and arrival airports.
Furthermore, Neos could intercept both passengers directed to Miami and those heading to Fort Lauderdale. The service could be sold both to individuals through the carrier website and to tour operators and cruise organisations operating in Florida.
b) California
As a seasonal service, in 2019 Air Italy operated flights from Milan Malpensa both to Los Angeles and San Francisco during the Summer period. Following the airline’s closure in early 2020, these destinations did not feature any longer direct flights to Northern Italy.
The following table shows some data regarding the previous operator:
| Destination | Weekly operations | Aircraft employed | Seats offered (Summer 2019) | Seat demand (in 2019) |
| according to IATA data | ||||
| Los Angeles | 4 flights | A330-200 (C24; Y228) | 1.008 per week | a) Yearly passengers: 131.183 |
| per week | b) Estimated weekly passengers: 2.522 | |||
| San Francisco | 4 flights | 1.008 per week | a) Yearly passengers: 87.134 | |
| per week | b) Estimated weekly passengers: 1.675 |
As in the case of Florida, there is no limitation in terms of flight rights, as the Open Sky agreement is in place.
Neos could operate either a combined flight from Milan to San Francisco and Los Angeles or fly to both destinations with dedicated flights, as from the data shown above emerge that there is enough demand for a direct service between Milan to California.
c) Brazil
South America represents one of the most unserved destinations in Northern Italy, in particular, Milan Malpensa features only a direct flight to Sao Paulo operated by Latam up to 5 times a week. Therefore, there is space for a second carrier operating flights to Brazil from Milan, either to the highly inhabited areas of Sao Paulo and Rio de Janiero or to seaside destinations such as Fortaleza.
In 2022 Neos requested and obtained by Enac the flight rights to operate a weekly flight from Milan to Sao Paulo, thus the carrier already assessed the market potential.
However, this report focuses only on Rio de Janiero and Fortaleza (the latter previously connected with Rome by Alitalia with B777-200ER), because of the lack of direct flights from Milan to these two destinations.
The following table shows some data related to 2019 to support the report hypothesis:
| Destination | Weekly operations | Aircraft employed | Seats offered | Seat demand (in 2019) |
| according to IATA data | ||||
| Rio de Janeiro | 2 flights | B787-9 (W28; 331Y) | 718 per week | a) Yearly passengers: 31.894 |
| per week | b) Estimated weekly passengers: 613 | |||
| Fortaleza | 1 flight | 359 per week | a) Yearly passengers: 24.794 | |
| per week | b) Estimated weekly passengers: 476 |
Based on the data shown above, it can be assumed that there is a potential demand for a direct flight from Milan to Brazil either combined with other Italian airports (such as Rome or Verona) or between two Brazilian airports (Fortaleza and Rio de Janeiro or Sao Paulo).
Feedering destinations
With the development of its long-haul network, Neos implemented over the last few years a flight connection system between services operated by the airline itself and other partners (including Ita Airways for flights departing from Rome Fiumicino).
On the Neos website, some connecting options are already available, such as flying from Almaty to both New York and Miami. Nevertheless, the carrier should increase the options and adjust their operations to increase the feeder flights that can support their long-haul flights. For instance, Neos flies to Cairo but due to the current schedule is not enable to fly from Cairo to either Canada or the United States via Milan Malpensa. If the airline aims to develop its long-haul network in Milan, it needs to widen its feeder portfolio, especially to existing destinations such as Cairo from where several passengers could fly to North America.
Bottom line
The air transport industry proved that economy of scale is essential for airlines to boost their operations, reduce fixed costs and eventually overcome traffic crises (IAG, Lufthansa Group and Air France-KLM are clear examples of this reality in Europe). Thus, Neos should take advantage of the current air traffic growth period, and relatively low fuel costs to expand its network and fleet. The Italian carrier already proved to open new horizons in the Italian air transport system and should continue the path commenced
Flymoreandbetter 