Well here is my experiences with as the Italians, I decided to test something, in my Italy game, just to see if it was possible.
It's Winter 1939/1940. I have 4 main fleets.
1st Fleet - 12 Ships
2nd Fleet - 9 ships
3rd Fleet - 9 ships
4th Fleet - 9 ships
I have 3 Littorio Class BBs, 2 Super Dreadnought BBs (can't remember how to spell the class name), and 2 older BBs, as well as heavily upgraded destroyers, submarines (comparible to german subs in power, naval attack 10, etc), and lots of heavy Bolzano cruisers, they are the mainstay of my fleet, the backbone.
I decide to engage the Royal Navy head on, with everything I got, throw every fleet and numerous support forces at it intill I am, or it is destroyed.
The Germans have already had their go, as I can see their navy is now where to be seen. Lets see if I can put another dent in the RN.
First engagement happens between Campioni's 1a Naviglio[1st Fleet] and a large Aussie-British transport/destroyer/cruiser force. The Allies are slaughtered, I lose 1 Cadorna class light cruiser and they lose numerous destroyers and transports as well as a few solid british cruisers.
The second round of engagements is between me and the full might of the RN. Campioni and Denzi Amares' 1a and 3a Fleets engage the RN simultanously, they are cut down but the Brits suffer heavily as well. Out of the 11 and 9 ships that started, I have 4 and 4 respectively left. Then Iachino's 2a Naviglio engages a second powerful British-French force. Iachino's Italia BB routs the French and hammers the Hood down to the bottom, Iachino's force wins resoundly. Now I throw my supporting units into the fray. 6 Naval bomber squadrons, 7 sub flotillas and my Libia, Tyrennian and Ionian Squadrons hurl themselves at the various allied sea detachments. Results are iffy. my South Tyrennian and Libia squadrons run into Dutch and Aussie ships and both sides take ehavy losses. I manage to sink two British carriers although with ym naval bombers, a big blow to the brits. The Royal Sovreign also goes to the bottom when it gets ambushed by my subs.
The 2nd round of combat finds my naval bombers down to 4 flotillas and rebuilding, my subs annhilated and all three of my supporting squadrons destroyed. In about a month I have lost 2/3 of my navy, but I still have the newly combined GREAT FLEET under Campioni, remnants of my 1a, 2a and 3a Fleets and the untouched 4a Fleet. The 4a Fleet is strengthed by two new Abuzzi class cruisers and placed under da Zara's command. the 4a Fleet collides into a Dutch force of 12 ships which is re-enforced by 4 British BBs. The 4a Fleet is slaughtered, but the Dutch are nearly annhilated as well. Now the final round. As British troops overrun Libya due to my lack of attention, I wait intill March rebuilding my main fleet. My main fleet has all three Littorio class BBs, and an elder BB, as well as most of my heavy Bolzano cruisers. The leftovers of the 4a Fleet are added as well. This 20-25 odd ship force is sent to engage the RN. I hunt around the eastern med, beating up little british squadrons and using my naval bombers to raise general hell. I hope to lure the Brits into combat in the Aegean, where my naval bombers flying from Greece can be nearby for support. By god, those Brits come right at me with about 29 ships and boy is it a meat grinder. The Brits lose around 5 BBs, every destroyer, transport and about half their cruisers. I lose every ship.
My naval bombers which made several effective forays now attacks the British remnants, and sink a British carrier and damages a few ships. I use them to harass the British till they are almost annhilated. I throw my transports and their escorts at the Brits in around Sardinia, and manage to raise some hlel in British shipping lines, but Aussie-Dutch-French forces annhilate the remnants. I now don't have a single ship in my italian navy. And I have came to several conclusions about fighting the Royal Navy.
Point 1# - Land Based aircraft can be extremely effective to soften up fleets and beat them up after they finish off your ships, you can score some solid kills on weaken ships. Use them en masse with some escorts of Caproni Vizola F5s and your good.
Point 2# - A Well-Balanced Navy is Important. I've found a navy of nothing but BBs and heavy cruisers doesn't work too well. I found my fleets with more destroyer support did better, if anything they proved a buffer of damage for my larger ships. The light cruisers are also handy for quick sea passages to re-enforce the squadrons already engaged.
Point 3# - A Navy works Better at lower level organization. If you organize your fleet into more squadrons they tend to be able to maneuver and support themselves better. It can create a nightmare in organization, but using massive Fleets to sledgehammer your way forward gives you some heaevy stacking penalties, which can spell the end to your beloved BBs to some bloody British light cruisers.
Point 4# - Don't F*ck with the Royal Navy. There is a reason it dominated WWII, there is a reason why it is the most powerful navy in the world. I threw everything I had at it, and I only put a dent in its strength, although it was a pretty big dent. The Brits mainly were able to keep their strength up because for some reason they kept hurling Dutch, Norwegian, French and Aussie ships at me, they were cannonfodder and then their big babies, the carriers and BBs would come in and whip the floor with my ships. Just stay out of the water, its far too infested.
Point 5# - This is the best naval experience I've ever had. My brutal duel with the RN was great fun, although it lasted only about 2 months I saw my navy crushed under the weight of the RN and Inc. Those boys sure know what they were doing. The combination of air and sea forces provides much better results and smaller vessels can take on a life of their own. However, the naval war in CORE often forces you to push that little button called *pause* many times, to keep your chaotic naval way in some sort of organization. Your mod is hell on your nerves, but hell of a lot of fun.
Point 6# - I hate the RN. It can burn. The end. Damn Bloody Brits.