A transatlantic war of words has broken out between a small Italian airline and the giants of U.S. aviation
Air Italy – a minnow in the global aviation industry with a fleet of just 16 aircraft – announced in early December that it was preparing to launch new services to Los Angeles and San Francisco from Milan Malpensa airport, starting in April next year.
It marked a doubling of the carrier’s route network into the U.S., adding to its services to New York and Miami it had launched earlier in the year.
Airlines launch new routes all the time without any fuss. But not this time. A group called the Partnership for Open & Fair Skies, a coalition that includes American Airlines, Delta Air Lines and United Airlines, issue a strongly-worded statement calling for the U.S. government to step in.
“We expect the Trump administration will take strong action and stand up for American workers in response to these violations,” the group said.
Its issue isn’t with the idea of an Italian carrier launching flights to U.S. cities though; it is with Air Italy’s second biggest shareholder.
Partnership for Open & Fair Skies was set up to campaign against what it says is unfair competition from the three big Middle East airlines: Emirates, Etihad Airways and Qatar Airways. The last of these owns 49% of Air Italy.
According to the lobby group, the Italian airline’s new services amount to a violation of the commitments made by Qatar in January 2018 that Qatar Airways would not launch any more so-called “fifth freedom” flights to the U.S. (in other words, flights between two foreign countries).
“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,” said Scott Reed, campaign manager for the Partnership for Open & Fair Skies. “Qatar has demonstrated a stunning lack of respect for President Trump and Secretary of State Pompeo.”
Some U.S. politicians have added their voice to the criticism, with a group of senators calling for an investigation into Qatar Airways.
If all that was meant to cower Air Italy, it has not worked. On December 18, Air Italy said it was going to launch a non-stop service from Milan to Chicago O’Hare International airport from mid-May. Chief operating officer Rossen Dimitrov said the new route “reflects the importance of the North American market to us.”
Dimitrov has also denied that his airline was being unfairly aided by Qatar. “We are registered in Italy and not subsidized by Qatar Airways, who are minority stakeholders,” he said at a recent event in Delhi to launch new services to India. “They do not manage us.”
The U.S. might struggle to find any reasonable grounds to stop these flights. In January, Qatar and the U.S. held discussions over civil aviation links and reached a set of understandings to address the concerns that U.S. carriers said they had about unfair competition. According to that political agreement, Qatar Airways committed to issuing audited financial statements and, within two years, to start disclosing any significant transactions with state-owned enterprises and “take steps to ensure that such transactions are based on commercial terms.”
On the issue of additional flights, the wording of the agreement was particularly vague. Qatar merely made an assurance that it had “no current plans” for Qatar Airways to operate fifth freedom flights to the U.S. At the time, both sides were able to claim victory. Now, however, the weakness of the pledges is becoming all too apparent to the U.S. airlines.
A follow-up meeting between U.S. and Qatari officials was penciled in for early 2019, although it is unclear at this stage if that will go ahead.
Air Italy will have gained some useful publicity from the episode, which will do it no harm at all as it pushes ahead with a significant overhaul of its operations. In March 2018 it changed its name from Meridiana as part of its revamp. Since then it has added new domestic and international routes, including long-haul services to Bangkok, Delhi and Mumbai, as well as the U.S. destinations.
The airline has a small fleet of ten Boeing 737s, one Boeing 767 and five Airbus A330s, but is aiming to operate 50 aircraft by 2022. The new long-haul routes are being served by the A330. The fleet expansion program is being aided by Qatar Airways, which has given Air Italy the five A330 jets from its own fleet.
Qatar Airways’ investment in the Italian airline also plays into its fierce rivalry with the two UAE carriers. Emirates already operates a fifth freedom service between Milan and New York with one of its own planes. Etihad had previously invested heavily in Alitalia, the national carrier of Italy, although it could not prevent it slipping into administration in May 2017
More Info: forbes.com