In Germany, the Nazis held power from 1933 to 1945. Their allies included Italy, which was ruled by the dictator Benito Mussolini. With his strong encouragement, Italy built on earlier achievements and became a significant power in the world of aviation.

With a population of more than 40 million during the 1930s, Italy had a well-developed aviation industry that numbered some 18 companies, along with other firms that built engines. The planebuilders included Fiat, which became renowned for its motorcars. Leaders in the industry included the firm of Savoia-Marchetti, which had been formed in 1915. It took its name from Umberto Savoia, a founder of the company and one of Italy's earliest aviators, having taken his first flying lesson from Wilbur Wright, and from the chief designer Alessandro Marchetti, who came to the company with a design for a high-speed biplane.

Marchetti had joined that company in 1922, in the same year that Mussolini seized power. He quickly showed his technical strength as his first design, the SM-51 racing seaplane, set a speed record of 174 miles per hour (280 kilometres per hour). In 1925 he introduced the first version of the SM-55. This was a long-range flying boat with twin hulls like those of a catamaran. The arrangement made the plane stable in heavy seas—and provided ample room between the hulls for mines or torpedoes.

The SM-55 became one of the airplanes that crossed the Atlantic before Lindbergh's flight in May 1927. This happened in February of 1927, when Francesco de Pinedo took one named Santa Maria to Pernambuco, Brazil, with stops along the way in Morocco and Dakar, on Africa's west coast. In contrast to Lindbergh's Spirit of St. Louis, the Santa Maria could land safely on the water. It came equipped with a seawater distiller, a life raft, and fishing equipment.

Mussolini's air marshal, General Italo Balbo, soon was flying the Atlantic not with single airplanes but with entire fleets. Again these were SM-55s, which could refuel en route in the Azores. In 1930, Balbo led 12 of them on a 6,500-mile (10,461-kilometer) flight from Rome to Rio de Janeiro. Then, in 1933, he took 24 of these flying boats on a triumphant mission that arrived in New York and in Chicago when Chicago was hosting a world's fair. In the course of its career, the SM-55 held 14 world records for speed, altitude, load, and distance. It also proved rugged enough to survive being towed for 200 miles (322 kilometres) across open sea to the Azores, when one of them had to set down in mid-ocean.

Another of Marchetti's designs, the SM-64, also set distance records. In 1928 it covered 4,764 miles (7,667 kilometres) along a closed course that resembled a big racetrack while staying aloft for over 58 hours. This was a warm-up for a nonstop transatlantic flight to Brazil a month later. When French aviators took the world closed-circuit distance record, the Italians were not dismayed. Using another SM-64, they won back the record by covering 5,088 miles (8,188 kilometres) in 1930, taking 67 hours.

In 1934, the firm of Macchi brought out its MC-72 racing seaplane. Fitted with two engines set back to back that together produced 2,800 horsepower (2,088 kilowatts), it set a speed record of 440.5 miles per hour (709 kilometres per hour), which stood for five years. In 1935, Mussolini hosted an important conference on aeronautics. The attendees included Germany's Adolf Busemann, who proposed that swept wings would permit flight beyond the speed of sound. Italy also built one of the world's first supersonic wind tunnels, near Rome. Its director, Antonio Ferri, emigrated to the United States in 1944 and rose to leadership in the field of high-speed propulsion.

Savoia-Marchetti's prestige flights brought lustre to Mussolini's regime, but he was a man of war and he wanted bombers. As a prelude, Savoia-Marchetti built the three-engine SM-73 transport, which carried 18 passengers. Entering production during 1934, it established the three-engine layout that became standard for the bombers.

The first such bomber, the SM-81, served as a front-line weapon until it gave way to the more capable SM-79, beginning in 1937. The SM-81 particularly helped Mussolini during the mid-1930s, when he invaded Ethiopia. He did it because he wanted to build an empire, and in an era when most of Africa was ruled by the British and French, Ethiopia was one of the few territories that had held its independence. Flying out of Italy's colony of Eritrea, SM-81s used wings that were painted with bold red stripes to make these planes easy to spot from the air when they went down in desert.

Following his conquest of Ethiopia, Mussolini intervened in the Spanish Civil War. This was a prelude to World War II, with Germany and Italy supporting the victorious Nationalists, who defeated the Republicans that were allied with the Soviet Union. The Italians flew in Spain with both the SM-81 and -79. As the latter became available in substantial numbers, it emerged as Italy's main bomber in that war.

The historian Walter Boyne writes that the SM-79 compared well with wartime twin-engine bombers such as Britain's Bristol Blenheim and Germany's Heinkel He 111. It had a top speed of 270 miles per hour (435 kilometres per hour), a range of nearly 1,250 miles (2,012 kilometres), and a bomb load of 2,750 pounds (1,247 kilograms). The Regia Aeronautica, the Italian Air Force, quickly adopted the SM-79 as its principal bomber. When Italy entered World War II, in June 1940, it held nearly a thousand bombers. Close to 600 of them were SM-79s.

Boyne describes it as "probably the best torpedo bomber of the war, in any Air Force." Italy thus used it to good effect against Allied convoys. Still, while Mussolini had won easy victories in Ethiopia and Spain, he now faced the far more formidable armed forces of Britain and America. His men fought gallantly, flying SM-79s against such heavily defended targets as Malta, a key British naval and air base in the Mediterranean. By then, however, Italy was sending warplanes dating to the 1930s against enemy aircraft that were considerably more modern. Italy surrendered as early as 1943, and thereafter stayed in the war only through direct support from Germany.

The end of the war also brought an end to Italy's independent aviation industry. Savoia-Marchetti stayed alive for a time by building trucks and railway coaches, but went bankrupt in September 1951. The firm emerged from bankruptcy two years later and began crafting light aircraft, often in partnership with other firms. After 1977, this company worked increasingly on helicopters in association with the firm of Agusta. In 1983, Agusta took it over as a subsidiary, erasing its name a few years later. Even so, as part of Agusta, it continues to remain in business.