The nastiest feud in the airline industry is back

Air Italy Airbus A330 200

  • Air Italy announced on Wednesday that it plans to launch new routes to Los Angeles and San Francisco.
  • Representatives for American, Delta, and United along with members of the Senate have complained that Air Italy shareholder Qatar Airways is bankrolling the airline’s expansion with government subsidized money.
  • The US carriers believe this behavior is in violation of agreements between the US and the Qatari government.
  • US carriers have long accused Qatar Airways, Emirates, and Etihad of using more than $50 billion in government subsidies to tilt the field of competition in their favor.
  • The long-running feud between the carriers was thought to have been settled in May. 

On Wednesday, Air Italy announced plans to launch flights to Los Angeles and San Francisco from its main hub in Milan. 

„With the launch of these two new exciting gateways in California, our network will be expanding significantly, providing even more fantastic options for our equally rapidly expanding customer base,“ Rossen Dimitov, the airline’s COO, said in a statement.

However, reaction to the news from American, Delta, United, and nearly a dozen members of the US Senate was swift and negative. 

Air Italy, itself, isn’t the reason for the rancor. After all, it’s a small airline with a modest 15-aircraft fleet. It’s the presence of Air Italy’s second-largest shareholder, Qatar Airways, that has ruffled so many feathers.

With this development, the nastiest feud in the airline industry is back on. 

The feud is back

Here’s a quick recap of the dispute. 

For years, American, Delta, and United Airlines have complained that the Persian Gulf-based Emirates, Etihad, and Qatar Airways tilted the playfield in their favor by using more than $50 billion in government subsidies to fuel their international expansion. 

Qatar Airways Airbus A380The subsidies, the US carriers contend, are in direct violation of the „fair competition“ stipulated by the Open Skies agreements that govern air travel between the US and the United Arab Emirates and Qatar. 

The Middle Eastern carriers all deny the existence of subsidies and have accused US airlines of unfair attacks.

Read more: The nastiest feud in the airline industry isn’t over just yet.

In May, the governments of the United States and the United Arab Emirates agreed to settle their differences on air transport between the two countries. This agreement, along with a similar deal the Trump administration made with the Qatari government in January, looks to have effectively ended the long-running dispute.

Fast forward six months and here we go again. 

Here’s why US airlines are concerned about Air Italy?

Qatar Airways acquired 49% of Italian airline Meridiana in October 2017 and was rebranded as Air Italy in February. The newly christened Air Italy relaunched service using a fleet of new Boeing and Airbus jets acquired with assistance from Qatar Airways.

Air Italy Boeing 737 MAX 8For example, the airline’s new Boeing 737 MAX jets were leased by Qatar Airways for use by Air Italy. While the Airbus A330s used for its US routes all previously served in the Qatar Airways fleet.

Qatar Airways declined to comment on the matter and Air Italy chose to emphasize that it remains an Italian-owned and Italian-run airline.

In a statement to Business Insider, Air Italy said:

„As has been stated previously, Air Italy is an Italy based and Italy registered independent airline owned by AQA Holding with two shareholders, Alisarda which owns 51% and Qatar Airways which owns 49%, with investment reflecting the shareholders’ respective ownership levels.“

Alisarda is an air services, airport management, and tourism company based in Olbia, Italy on the island of Sardinia.

The opposition to Air Italy’s US expansion believes the airline’s growth is being bankrolled by Qatar Airways and is being used to bypass the deal signed by the US and Qatari government earlier this year. According to the Associated Press, the Qatari government indicated that it was not aware of any plans on the part of its national airline to launch new fifth freedom flights. The fifth freedom of the sky is the right to fly between two foreign countries on a flight that either begins or ends in one’s own country. 

Read more: The 10 best airlines in the world for 2019.

„With the announcement of new routes from Air Italy to the US, fueled by money from Qatar Airways, the government of Qatar has demonstrated a stunning lack of respect for President Trump and Secretary of State Pompeo,“ Scott Reed, campaign manager for the Partnership for Open & Fair Skies which speaks on behalf of American, Delta, and United, said in a statement.

„When the Trump administration negotiated an agreement with Qatar earlier this year to protect American jobs and restore fair competition to international aviation, the Qatari government agreed that its state-owned airline would not launch future ‘fifth freedom’ flights to the U.S,“ Reed went on to say. „By exploiting its investment in Air Italy to create a loophole and dodge this pledge, Qatar has violated this agreement and the trust of the United States.“

Air Italy Airbus a330In addition, Texas Senator Ted Cruz along with Senators from Texas, Georgia, North Carolina, Kansas, Utah, Idaho, North Dakota, South Dakota, and Oklahoma dispatched a letter this week to the Secretary of Transportation Elaine Chao, Secretary of State Mike Pompeo, and Secretary of Commerce Wilbur Ross to voice their concerns about Qatar Airways adding subsidized competition to the marketplace. 

Air Italy already operates flights to New York and Miami with its Los Angeles and San Francisco routes expected to launch in April. 

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Source: Business insider

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