History: In 1928, ten years after the Great War, Austria signs a co-Neutrality Pact with Switzerland, stating that should conflict ever arise again, both powers would work together to remain neutral. And in that same year the Österreichische Luftstreitkräfte is formed, it's sole purpose to defend Austria from harm.
So, the Austrians did operate the Fiat C.R.32 in reality and the same goes for this AU, although a lot earlier:
These were supplemented with Gloster Gladiators:
In 1938 the Österreichische Luftstreitkräfte, started modernizing as fast as it could afford to, after rebuffing Hitler's attempts to unite with Nazi Germany. Declaring Swiss style neutrality, Austria hoped to stay out of the coming conflict, but prepared to defend it's boarders. Aircraft bought during the modernization included the Fiat C.R.42 Falke, the Avia B-534, the Fokker D.XXI, PZL P.11c, PZL P.24F & G, Morane-Saulner M.S.406 and orders were placed for the Hawker Hurricane, which wouldn't arrive till shortly before the "Phony War" in 1940.
(Place holder for PZL P.24)
(Place holder for MS.406)
With the war going on around Austria and Switzerland, and with Hitler invading several neutral countries in the north, and Italy driving its way down the Balkans. Austrians felt very nervous and so ordered from their Swiss neighbors, the Morane D-3800, and arranged to have their M.S.406's upgraded to D-3800 specs, fearing that Hitler would invade them any day. With America entering the War in late 1941, it was only a matter of time before Hitler struck at Austria, his home, to "protect it" from invasion of non-Germanic peoples. The Österreichische Luftstreitkräfte, started emphasizing their Neutrality by painting yellow bands around the tail and nose of their aircraft.