American Airlines, Delta, and United don’t want Air Italy flying to the U.S. They argue the small Italian airline, with 15 planes and 49% owned by oneworld member Qatar Airways, is making an end run around an agreement Qatar made last year in response to U.S. pressure.
- Qatar said that though a treaty the US signed gives them the right to fly between the U.S. and Europe, that they didn’t have current plans to do so.
- The big US carriers say that since Air Italy is flying to the U.S. from Italy, and Qatar is injecting funds into the carrier, that breaks the spirit of the agreement.
- Even though Air Italy’s plans were well known to the airlines and the U.S. government (and readers of this blog) before the statement was made.
With Delta partner Alitalia a ward of the Italian government, surviving on continued subsidies and thus far unable to find a buyer (after successive failures by Air France and Etihad to turn around the airline), Air Italy sees an opportunity to grow into Italy’s major airline. That seems like a dubious investment, but so does Delta potentially infusing cash into Alitalia.
Delta of course has a 49% stake in Virgin Atlantic (combined with investments by Air France KLM taking joint control to 80%) along with stakes in Aeromexico, Gol, and other carriers.
Air Italy flies from Milan to New York, Miami and seasonally to Los Angeles and San Francisco (cities with no other non-stop service on the route).
American, Delta, and United have found a sympathetic ear in the U.S. government willing to let them pick the pockets of U.S. consumers (higher fares, fewer flight choices including requiring U.S. passengers to connect on some routes) in order to subsidize their own bottom lines. According to the Financial Times the Trump administration’s primary trade agitator Peter Navarro is interested in taking this on.
Navarro, who believes that trade wars are good and easy to win is facing pushback from the State Department which recognizes it is unwise to abrogate treaties that the U.S. has signed, especially when Europe is warning the U.S. not to do it.
The European Commission has written to the US state department warning that any action against Air Italy would constitute a violation of the US-EU Air Transport Agreement.
In the letter, seen by the Financial Times, Henrik Hololei, the director-general for transport at the Commission, warned Manisha Singh, assistant secretary at the state department, that Europe would take “all necessary steps” to defend its rights.
Mr Hololei said: “Any measure to curtail or end the rights of Air Italy to serve the US would constitute a clear and serious violation of the ATA. Such action would be unprecedented and would put into question the most fundamental principles under which our aviation relations have so successfully developed over more than 10 years.”
The campaign by U.S. airlines for trade subsidies from the federal government could backfire, because if the U.S. violates its treaty obligations and Europe then sees the treaty as non-absolute, United, Delta, and American could face their own challenges with operating rights in Europe.