The 11 US senators against Air Italy: used by Qatar to violate the agreements

No comments

[Translated from Italian to English]

Request to Washington to investigate the expansion of the carrier to 49% of Qatar Airways. From Doha they reject the accusations: we do not use Air Italy to fly to the USA

Air Italy is a Trojan horse from Qatar Airways in the American market. Eleven US senators – all Republicans – ask the White House to investigate the airline partner born from the sundial Meridiana with 49% in the hands of the Doha carrier. In a letter sent last December 3 to Mike Pompeo (US Department of State), Elaine Chao (Transport) and Wilbur Ross (Commerce), the senators headed by Ted Cruz invite the Trump administration to shed light on the operations of Air Italy.

The agreements

Operations that, according to the representatives, seem to violate the agreement between the United States and Qatar at the beginning of this year and which establish among other things the renunciation by Qatar Airways not to have flights in fifth freedom, therefore to recur only to direct connections and not to those with a stopover in Europe, as is the case for Emirates with the Dubai-Milan-New York and Dubai-Athens-New York routes. For the eleven American senators, Qatar Airways would be circumventing that constraint by financing the routes of Air Italy between Malpensa and the US.

The reply

An accusation reminiscent of that of Doug Parker, CEO of American Airlines. “There is a Persian Gulf carrier who is using his investment in another company to fly to the US, which is something that needs to be solved,” Parker said a few weeks ago. Accusation that is rejected by the leaders of the Doha carrier. “On this point I want to be clear: Qatar Airways does not use Air Italy as an alternative way to take passengers from Doha to the US,” said Akbar Al Baker, from the Gulf company, to Corriere in a conversation in May immediately after delivery of the first Boeing 737 Max 8 at Air Italy. «We do not even have codeshare flights with them over Europe and we have not even thought about it.

The accusations

The Republican senators think otherwise. The Milan-New York flight of Air Italy is boiling as “questionable from the commercial point of view, considering that there are already five companies (United, Delta Air Lines, American Airlines, Alitalia, Emirates)”. The reason why the eleven believe that “entry into an already crowded market” is in line with the Qatar Airways strategy “to add flight seats with state aid to markets where demand is already well served”, write in the letter.

The routes

As a pet “that offered domestic flights and some international seasonal connections”, Meridiana then became Air Italy according to the American representatives went with launching regular flights to the USA. Markets in which Air Italy, they continue, “would have had no access without Qatar Airways money, as it would not have been possible for Qatar Airways without the direct support of the Qatari government”. So the request for investigation and verification of the respect of the treaties of January 2018 between Doha and Washington. Request that started two days before the announcement by Air Italy of two new direct routes , in April 2019, from Milan to Los Angeles and San Francisco.

Originally Published on Corriere della Sera.

americans4fairskies2015The 11 US senators against Air Italy: used by Qatar to violate the agreements
read more

Is Air Italy a Wolf in Sheep’s Clothing? Lobby Group Says Qatar Airways is “Disrespecting” U.S. President

No comments

Back in February, the State of Qatar announced that it had reached an important agreement with U.S. authorities over a long-running dispute involving its government-owned national airline, Qatar Airways.  A little over two weeks later and a little known Italian airline going by the name of Meridiana Fly revealed a big strategic change just months after Qatar Airways had taken a 49% stake in the carrier.

Initially, the Qatari investment wasn’t entirely surprising – Qatar Airways has taken stakes in a number of airlines, including the owner of British Airways and Iberia as well as South America’s LATAM Group and Hong Kong-based Cathay Pacific.  More recently, Qatar Airways even attempted to buy a stake in American Airlines although decided not to pursue that idea after its advances were rebuffed by the airline.

But it soon became clear that Qatar wasn’t merely making a passive investment in Air Italy’s parent company AQA Holding.  Along with a complete rebranding (the first thing to change was the Sardinian airline’s name as it rebranded to Air Italy) came a complete change in strategy as it transformed from being a mainly regional carrier – moving its operating base from Olbia to the industrial Italian heartland of Milan.

Air Italy’s fleet would be bolstered by the addition of five Airbus A330-200 long-haul aircraft – all of which would be borrowed from Qatar Airways.  The fleet would also gain the latest generation Boeing 737 MAX 8 aircraft – again, belonging to Qatar Airways but delivered new to Air Italy.  With the addition of new aircraft, Air Italy would also expand its route network – to Bangkok in the East and to New York City and Miami in the United States.

By 2022, the airline wants to have grown its fleet by as many as 50 aircraft and has plans to start taking delivery of brand new Boeing 787 Dreamliner’s next year.

So far, the two events that occurred earlier this year seem fairly unrelated.  Now, however, some lawmakers in the United States say Qatar’s investment in Air Italy, as well as its major shift in business strategy, is an attempt by Qatar to subvert the agreement it reached with the U.S.

For the past few years, the three biggest airlines in the United States – American, Delta and United Airlines – have been locked in a bitter dispute with the so-called Middle East Three or ME3.  These are the three largest airlines in the Middle East and comprise Emirates, Etihad Airways and Qatar Airways.

These three airlines have been accused of receiving billions of dollars in illegal State-funded subsidies and in turn capacity dumping with loss-making fares in an effort to force other airlines out of the market.  The U.S. carriers were unhappy with the rapid expansion of Persian Gulf airlines into the United States and wanted the government to take action.  A lobby group called the Partnership for Open and Fair Skies that they funded claimed failure to act would result in the loss of thousands of American jobs.

The deal that the State Department struck with Qatar didn’t go nearly as far as the U.S. carriers had initially demanded – they basically wanted the Open Skies agreement which allows airlines like Qatar Airways to fly freely to and from the United States to be rewritten and effectively limit the number of flights the airline could operate – a little like rules imposed by the Canadian and Australian governments.

Instead, the final deal involved Qatar Airways agreeing to release fully audited financial results and within two-years publicly disclosing any significant new transactions with other state-owned enterprises.  A side note of the deal, which was seized on by U.S. carriers was a statement from Qatar Airways saying that, at present, it had no plans to open any so-called fifth freedom routes to the U.S.

The agreement seemed to draw a line under the dispute – the U.S. carriers, including Atlanta-based Delta Air Lines, claimed victory while business seemingly carried on as normal for Qatar Airways.  At the same time, lobbying from the Partnership for Open and Fair Skies stopped almost overnight – in fact, when we contacted the group earlier this year requesting comment about Qatar’s financial results, a spokesperson refused to be drawn on the matter.

Now, though, the bitter dispute has suddenly resurfaced and it’s been brought about by yet another route expansion by Air Italy into the United States – this time to Los Angeles and San Francisco.  While some see the new routes as a boon for passengers that offer direct flights on currently underserved routes, the Partnership for Open & Fair Skies has a very different opinion.

“With the announcement of new routes from Air Italy to the U.S., 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,” claims Scott Reed, who’s a  campaign manager at the Partnership for Open & Fair Skies.

The full statement from the lobby group continues:

“Qatar Airways has received over $25 billion in documented subsidies from its government owner, in violation of the Open Skies agreement with the U.S.”

“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.”

“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. What is now clear is that Qatar Airways has no intention of playing by the rules and of working cooperatively with the American government. We expect the Trump administration will take strong action and stand up for American workers in response to these violations.”

Interestingly, Air Italy has has just inaugurated a new service to Delhi and will soon begin flying direct to Mumbai.  The flights will allow the Indian diaspora to travel seamlessly from these two cities to the United States via Milan.  Three of Air Italy’s four U.S. destinations are in the Top Five cities of U.S. metropolitan areas with large Asian Indian populations.

The new connectivity afforded by Air Italy’s route network is likely to have infuriated Delta who only recently announced plans to restart services between the United States and Mumbai – a market it said had long been “impacted by government-subsidized Middle Eastern airlines.”

Meanwhile, one of Qatar Airway’s largest passenger markets has always been India – especially in connecting Indian citizens between their mother country and the West through its Doha hub.  It’s entirely possible to think that Qatar Airways could be using Air Italy as a proxy for its own expansion plans.

Who’s in the right and who’s in the wrong pretty much depends which side of the fence you sit on.  There are strong arguments and opinions on both sides and while Air Italy’s expansion is definitely a good thing for passengers, it’s not hard to understand why U.S.-based carriers are aggrieved.


What side of the fence are you on?

Originally Published on Paddle Your Own Kanoo.

americans4fairskies2015Is Air Italy a Wolf in Sheep’s Clothing? Lobby Group Says Qatar Airways is “Disrespecting” U.S. President
read more

Planned Milan To LAX And SFO Flights Mean Qatar Airways Violates Deal, U.S. Airlines Say

No comments

The big three U.S. airlines and most of their labor unions say that planned new flights from Milan to California’s two key airports violate a deal they made with Qatar Airways just ten months ago.

Qatar owns 49% of Air Italy, which said Wednesday that it will begin service from Milan to Los Angeles and San Francisco in April. Both flights will operate four times weekly aboard an Airbus A330-200 seating 252 passengers in two classes, according to press reports.

The long dispute over whether the subsidized big three Mideast carriers’ aggressive U.S. expansion violates Open Skies agreements had seemed to have ended this year in settlements, first with the government of Qatar in late January and then with the governments of the United Arab Emirates in May. Emirates and Etihad operate hubs in Dubai and Abu Dhabi, respectively.

The dispute has focused on two areas, opaque accounting that seems to hide the subsidies to the carriers and flights operated under the airline industry’s fifth freedom rights, which enable carriers to fly between two foreign countries.

On Monday, eleven Republican U.S. senators led by Ted Cruz (R-Texas) raised the fifth freedom issue in a letter to three cabinet members. The letter noted after Qatar Airways acquired 49% of Air Italy’s parent company last year, Air Italy began service from Milan to New York and to Miami. Also, the letter said, Qatar Airways is providing aircraft to Air Italy.

It appears that either the senators had learned of the planned California service or Qatar is responding to the letter.

“With today’s news of new routes from Air Italy to the U.S., 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, said Thursday in a prepared statement.

The partnership represents American, Delta, United and most of their labor unions, as well as the Southwest Airlines Pilots Association.

“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 said.

“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,” he said. “We expect the Trump administration will take strong action and stand up for American workers in response to these violations.”

Qatar Airways declined to comment. In a January letter to the U.S. government, Qatar said it had no plans to launch fifth freedom flights to the U.S.

Originally Published on Forbes.

americans4fairskies2015Planned Milan To LAX And SFO Flights Mean Qatar Airways Violates Deal, U.S. Airlines Say
read more