Subsidies do not violate Open Skies agreements. The US-Qatar Open Skies agreement refers to fair competition in the context of not standing in the way of either country’s flights, not clamping down on subsidies. When Delta called for restrictions on Qatar’s flying to the U.S. they were calling for an abrogation of the treaty.
The Obama administration flatly rejected this call, which is why Delta pinned its hopes on economic nationalists in the Trump administration and started making ugly racist appeals. The matter was finally resolved with Qatar agreeing to publish financial statements in accordance with world standards, and stating they didn’t intend to launch their own flights between the U.S. and Europe.
- Qatar used to operate ‘fifth freedom’ flights between the US and Europe – that was over a decade ago, before they had aircraft which could fly non-stop from Doha to the U.S.
- They don’t need to fly Qatar Airways planes between the US and Europe. They are the largest owner of British Airways, Iberia and Aer Lingus. And they are the largest owner of Air Italy, Italy’s second carrier, which is taking on Delta partner Alitalia, a perennial basket case that is currently living on Italian government subsidies.
It isn’t Italy’s subsidies for Alitalia that Delta is complaining about. Since Delta benefits from an anti-trust immunized revenue-sharing joint venture with Alitalia, those subsidies are met with silence.
Instead Delta’s CEO Ed Bastian has an op-ed this morning complaining about the smaller Air Italy which is 49% owned by Qatar Airways (by the way Delta owns 49% of Virgin Atlantic and up to 49% of Aeromexico).
Since Bastian has no legitimate complaint that Air Italy, or Qatar, is acting against US law or policy he has to resort to deceptive and disingenuous claims in calling for “the Trump Administration to examine this situation and send a strong message to the Qatari government.”
- Air Italy’s expansion is “putting thousands of American jobs at risk.” Delta cares deeply about American jobs which is why they have over 280 Airbus aircraft on order and fewer than 20 planes ordered from Boeing. Meanwhile US airline jobs are at a peak, the US unemployment rate stands at 3.7%, and new service from Air Italy on routes not served by any US airlines adds jobs.
- Qatar is operating unfairly because it has racked up “over $2 billion of operating losses over the past three years.” Delta has lost over $2 billion in a single year (2005). When the federal Pension Benefit Guaranty Corporation took Delta’s pilot pension obligations off its hand its $3 billion underfunding was the sixth largest government takeover in history.
- We don’t need Air Italy because the routes they are flying are “already highly competitive and well-served by existing carriers” of course their new services — Los Angeles, San Francisco, and Chicago O’Hare – Milan — had no non-stop service at all.
The notion that new service shouldn’t be permitted on routes that are ‘well-served’ by incumbents is anti-consumer — we shouldn’t allow more choices, or innovation in products and services. It calls for government planning (pre-deregulation this is a standard the Civil Aeronautics Board used to decide whether to approve new routes) which is incredibly ironic in mounting a claim against a competitor that there’s too much involvement from their government.
- Qatar is “disrespecting the Administration” and “thumbing its nose at the Trump Administration” because Air Italy is flying from Italy to the U.S. when Qatar Airways said they themselves had no plans to do so. It is no coincidence that Bastian uses this rhetoric twice in a 594 word piece. There is nothing whatsoever illegal or improper about Qatar’s flights so the only refuge Delta has is trying to play on the President’s insecurities. Delta’s best chance of winning here is Jared Kushner’s close relationship with the Saudis which are leading the regional blockade of Qatar.
- Bastian says his “No. 1 job is taking care of our 80,000 employees” which is why he’s lobbying the government to limit consumer choices and raise fares — former Delta CEO Richard Anderson was explicit that their goal in attacking Qatar Airways and other Mideast carriers was government rules against lowering prices. Of course he couches this in terms of employees (obviously a claim that this is taking care of customers would be on its face absurd) but he doesn’t explain that what he’s lobbying for is redistributing money from US consumers to Delta shareholders.
Is anyone actually fooled by Bastian’s table pounding other than the incoming Chairman of the House Transportation Committee, bought and paid for by airlines and their unions, and Ted Cruz?