Meet the new boss, same as the old boss. With Republicans in control of the US House of Representatives they had Bill Shuster (R-Airlines for America) to do their bidding. He was dating a top lobbyist from the airline industry. His Chief of Staff was married to another top airline industry lobbyist. And he hired an airline industry lobbyist to run the Transportation Committee.
Now with Democrats regaining control of the House Pete DeFazio of Oregon isn’t missing a beat. He’s already picking up the mantle of the latest campaign by Delta, United and American to pick consumers pockets and redistribute money from passengers to airline shareholders.
The Democrat who will head the House of Representatives committee that oversees aviation has lashed out at Qatar Airways for allegedly subsidising Air Italy and giving it an unfair advantage as the Italian carrier increases its routes to the US.
Peter DeFazio of Oregon, who will chair the transportation committee when Democrats take control of the House in January, said he was concerned that Qatar Airways, which has a 49 per cent stake in Air Italy, was engaging in anti-competitive practices to help the Italian airline fly to new destinations in the US.
The two largest sectors donating to DeFazio’s congressional re-election were US airlines and transportation unions. Delta was his second largest donor.
Anyone thinking that Democrats in the House would be less aligned with or beholden to cronyist policies to use the power of government to skew the economy towards big business need a wake up call. DeFazio is willing to align himself with economic nationalists in the Trump administration like Peter Navarro to benefit big US airlines at the expense of consumers.
US Airlines are Hypocrites
Qatar’s 49% stake in Air Italy is the same as Delta’s stakes in Virgin Atlantic and Aeromexico, with Delta effectively controlling those foreign carriers. Yet it objects to Qatar’s perfectly legal arrangement because they’re investing in the airline to compete with Delta’s partner Alitalia and expend into the U.S.
Delta only minds subsidies when those subsidies aren’t being given to Delta. Subsidies that benefit Delta they’ll lobby for.
Delta had no problem sharing revenue across the Atlantic with Alitalia when it was controlled and being subsidized by Gulf carrier Etihad. There subsidies originating in the UAE were just fine because they were putting money in Delta’s pockets. Since Etihad stopped subsidizing the airline it went into reorganization and has survived on subsidies from the Italian government. There was talk of Delta acquiring a stake in Alitalia and now of Alitalia continuing as part of an anti-trust immunized revenue-sharing joint venture with Alitalia.
Qatar Airways is the largest owner of British Airways and Iberia, which American Airlines shares revenue across the Atlantic with. So that’s viewed as fine — it puts money in American’s pockets. Qatar Airways also owns a stake in LATAM, also fine because American is pursuing anti-trust immunity and revenue sharing with LATAM.
American Airlines received a US federal government subsidy for its very first aircraft order. Like Delta, corporate predecessor US Airways had billions in pension obligations removed from its books and moved onto the books of the federal Pension Benefit Guaranty Corporation. All major US airlines receive subsidies for specific routes they fly. Airports in the US are administered by governments. The federal government protects US carriers from foreign competition on domestic routes entirely.
Delta owns a stake in the most subsidized Chinese carrier, China Eastern. That benefits Delta and is also ok.
Meanwhile Delta generally buys its aircraft from Airbus, eschewing Boeing, and trots out the mantle of American jobs — which are supported by opening up routes that weren’t in existence like Milan to Chicago and the West Coast, the way Air Italy is doing.
There’s Not Even a New Issue in Air Italy’s Flights
Air Italy is primarily operating routes that aren’t even served by US airlines like Chicago O’Hare – Milan and San Francisco Milan.
Qatar’s investment in and plans for Air Italy were known to the world, to US airlines, and to the US government when they settled their dispute with the US and everyone agreed to put this unpleasantness behind us. It was so obvious that Air Italy was the mechanism for flights between the US and Europe at that time that I even wrote it in my coverage of the settlement. It’s absurd to be shocked, shocked now that Air Italy, minority-owned by Qatar, is launching increased service to the U.S.
And it’s particularly ironic that Delta, United, and American are running to the government for protectionism claiming that it’s unfair that there’s too much involvement in aviation by the Qatari government.
How Does Delta Keep Tricking American to Go Along With Them?
Once again of course American is playing Delta’s Greater Fool here because the airline with the most to gain from cracking down on Italy’s number two airline Air Italy is Delta which partners with Italy’s largest airline.
How revolting. So much for change in favor of the consumer. Sigh.
OK, but look on the bright side — Pete DeFazio is also a big cycling advocate. He claims he is the only member of Congress to have worked as a bike mechanic and pushes a bunch of safe-cycling policies (https://bikeportland.org/tag/peter-defazio).
So maybe maybe maybe he’ll just do the bare minimum to advance Big Plane lobbyists’ interests while spending most of his time on his true two-wheeled passion. Would the status quo be so bad?
Thank you Peter DeFazio for standing up for the workers of America. Please put these bloggers out of business.
The Qatari government should award you a medal for your loyal support.
The US airlines are unhappy because there was a handshake agreement (that you refuse to believe exists) that the Middle East airlines weren’t going to add any more (highly subsidized) flights to the USA. And then Qatar does this. For obvious reasons, the US airlines and their supporters (aka, most Americans familiar with the aviation industry) don’t like it. Their position seems more than reasonable to me.
If the USA airlines were to object to all new foreign entrants, your position would be more logical. But instead they focus their objections on entrants who aren’t for-profit enterprises, or who are otherwise trying to skirt established law (like flying on a phony flag of convenience). Basically, they focus on unfair competition. If you were running one of these companies and didn’t object to these carriers, I’m pretty sure your board of directors would fire you. Because they should.
Shocking that you call him out, Gary!
After all, he is one of the most Liberal members of Congress!
Watch out that you don’t get banned by the thought police of the Left!
@George you’re so right. Pete needs to stand up for the American worker by funneling money to Delta so they can continue to buy Airbus jets (over Boeing)
Gary’s analysis is highly accurate. The hypocrisy of Delta, their asspuppets and their cheerleader, Chopsticks, is astounding.
Gary, then only thing I can fault you for is even believing for one second that passing the gavel from one party to the next in Congress would result in more ethical, responsible behavior. Shame on you. A monkey in a silk dress is still a monkey.
Gary,
Thanks for continuing to bring this hypocrisy to light, I hope you keep doing it.
I agree with JC. Americans are all mice being asked to choose between white cats and black cats.
Delta may own 49% of Virgin Atlantic and Aeromexico, but Delta is not giving their planes to these carriers, nor are they propping up an obvious money-losing venture the way Qatar Airlines is doing with Air Italy. Air Italy’s entire long haul fleet is made up of A330s that they so conveniently leased from Qatar. Delta does not farm out its fleet to Virgin Atlantic or Aeromexico. Even for Air Italy’s 737 MAX rollout, Qatar Airways executives and some of the sheikhs from the Qatari government were on hand at the Boeing factory because they helped to arrange the transactions.
Furthermore, Delta is owning part of VS and AM as a business decision with a goal of making a profit. Qatar Airways on the other hand is owning part of Air Italy as a way for the oil-fueled Qatari government to bankroll influence. Air Italy is willing to invest in routes that don’t make money because they are more interested in projecting soft power for Qatar. This is not about buying Airbus vs. Boeing. This is about taking the influence of foreign oil money out of the long-haul flights that touch down in our country. For that I say thank you Congressman DeFazio for standing up to the Qatari bullies.
Usually, subsidized competition, does not sustain itself. Does Air Italy compete with BA or Iberia, also owned by Qatar?
This may be too much to process. Has Norwegian Air been affected by Air Italy?
I assume that Air Italy subsidies reduce their ticket prices a lot so that Alitalia is flying half empty planes. Is Italian Gov concerned and would they be more concerned if Qatar just gave away Air Italy tickets?
There seems to be so much public information as to fuel costs, airplane costs, load factors between hubs, and ownership stakes, that with enough time and an excel spreadsheet, you could model the gross revenue received by each major carrier. Perhaps Delta has done that and would like to share their findings to support their position? Perhaps Congress has done this on behalf of the people and can share with us such information?
What is written regarding the facts are correct. There is clear hypocrisy with how the US airlines (especially Delta) has made their case.
If you are OK with how Delta does things, then the approval also applies to other companies.