Italy hasnt exactly been at the forefront of the radical changes civil aviation has undergone in recent years. Nevertheless, things have moved gradually and Wanted in Romes readers will have sampled the benefits, in terms of cheap flights from Ciampino and other medium-sized airports.

Although the nations home-grown low-cost carrier (LCC) Volare has not been successful the airline is currently under court administration European pioneers Ryanair and easyJet made sure the Bel Paese did not miss out on the no-frills revolution.

Many cheap-and-cheerful foreign operators have followed their lead. The winners are passengers and the provincial airports the LCCs tend to favour, such as Pisa, Milan Bergamo, Treviso, Naples and Bologna.

The main loser has been Italys flag carrier Alitalia, which from one side has been squeezed by these new lean competitors and from the other by soaring fuel prices and its own inefficiency. Alitalias situation has improved recently with the arrival at the helm of former Trenitalia boss Giancarlo Cimoli, who has pushed through a recapitalisation and a restructuring programme, involving redundancies. But the airline remains vulnerable and talk of bankruptcy never stops for too long.

In the United States or Great Britain the authorities would probably keep their hands off. However, the Italian government is keen to help Alitalia for a number of reasons. Firstly, the state is the airlines biggest shareholder, so it wants to protect its investment. Secondly, the flag carriers failure would inevitably lead to the political nightmare of large-scale unrest and worker protests. And, with the Italian economy at a low ebb, Alitalias demise would also be a further blow to the nations industrial self-confidence.

However, the governments room for manoeuvre is limited by European Union competition rules banning aid to national champions (Italy has helped Alitalia in the past, and had to work hard earlier this year to get European Commission approval for the restructuring programme, which featured state involvement in the recapitalisation).

What it can do, however, is help Alitalia indirectly by lending a hand to the whole airline industry. It has decided to do this by slashing the fees airlines must pay to the airports. Once upon a time, the airports might have accepted this with a stoical shrug of the shoulders. But changes have also been taking place in the management of Italys runways. While most of the companies running the nations airports are still owned by local authorities, a handful have been put into private hands and there are plans to privatise others. Australias Macquarie Airports Group has 44.68 per cent of Aeroporti di Roma (ADR), which owns Leonardo da Vinci airport at Fiumicino, Italys biggest airport, and Ciampino, and has stakes in Genoa and several airports in South Africa. The British Airports Authority (BAA) has a controlling stake in Naples airport company GESAC. BAA is also one of the favourites to buy the 33 per cent of SEA, the company that runs Milans Linate and Malpensa airports, which the Milan city council is planning to sell.

Sensing their profits are in peril, the airport companies have raised howls of disapproval at the proposal, accusing the government of shifting Alitalias woes onto them.

The decree will have a massive effect on our revenues, said the head of SEA, Giuseppe Bencini. It will cost Italys airports 200 million, while Alitalia will receive only 40 million, with the rest going to its foreign competitors.

Alitalia is a ball and chain at the feet of Italys airports, said Enrico Marchi, the chair of SAVE, the company that runs Venices Marco Polo airport.

SEA claims it may have to make as many as 1,600 redundancies as a result of the decree. ADR said it will have to fire 448 workers in Rome, and 500 more jobs may go at airports in the capital if the government proposal to cut landing fees is approved by parliament.

All of which is somewhat ironic given that passenger numbers are growing and are forecast to keep going up. Fiumicino and Ciampino played host to 30.7 million passengers last year, a 9.2 per cent increase on 2003. ADR expects passenger numbers to double at Ciampino from four million this year to eight million by 2013.

Tourism is a key industry for Italy, and it needs the support of modern infrastructure, including efficient, well-staffed airports with good ground services, shops and transport links. Big investments are being made but, as anyone who has tried to get to or from Ciampino on public transport knows, Italy still has lots of work to do.

So perhaps this is the area the government should be focusing on, instead of looking for increasingly creative ways to prop up Alitalia. It is a short-sighted policy that takes resources away from the countrys infrastructure system, said Marchi. Margherita party chief Francesco Rutelli agreed: Impoverishing Fiumicino airport amounts to tourism suicide.