Speaking at an aviation summit in Dever, Colorado yesterday, Delta’s Executive Vice President Peter Carter made it perfectly clear that the Atlanta-based airline isn’t going to let its feud with Qatar Airways drop anytime soon. Specifically, Carter called out Qatar’s involvement with little known Italian carrier Air Italy, saying the way it had opened up new routes between Italy and North America was “cheating”.
Delta has been fighting Qatar Airways and other Persian Gulf airlines like Emirates for years. It accuses airlines like Qatar Airways of receiving hundreds of millions of dollars in state subsidies – in 2017 alone, Delta suggested its rival had received nearly $500 million in government handouts. Delta claims these subsidies distort the market and give airlines like Qatar Airways an unfair advantage over airlines that don’t have government backing.
There are obviously lots of airlines around the world that receive government funding but it seems that its the particularly aggressive expansion tactics of the Middle East airlines that upsets Delta so much. While, some critics of Delta’s campaign say it’s more to do with the fact that carriers like Qatar Airways have introduced real competition for the first time, improving the passenger experience while also driving down prices.
However, we all thought the dispute had been settled last January when the Trump Administration signed an aviation agreement with the State of Qatar. The agreement didn’t really promise much, although Qatar Airways agreed to publish accounts inline with international accounting standards, while also stating it had no current plans to open up fifth-freedom routes to the United States.
Despite being far from an entire rewriting of Open Skies agreements that carriers like Delta had been pushing for, the agreement between the United States and Qatar at least seemed like a good way to put the dispute to bed. Delta’s chief executive Ed Bastian said the agreement created a level playing field – it was the perfect opportunity to move on.
And then came Qatar’s involvement in a little know Italian airline called Meridiana which operated mainly regional services from its base in Sardinia. Qatar Airways had actually acquired a 49% stake in the airline’s parent company in 2017 but just a month after signing the deal with U.S. authorities, it unveiled grand plans to transform Meridiana into Air Italy.
With a significant financial injection, the relaunched Air Italy announced an ambitious strategy to have approximately 50 aircraft by 2022, including 20 brand new Boeing 737 MAX aircraft and Boeing 787-8 Dreamliner aircraft. In the short term, Qatar Airways would even loan it five Airbus A330-200 from its own fleet.
At a press conference, the carrier said its new strategy was “aimed at positioning itself as Italy’s leading airline” – pitting the government-funded Qatar Airways against the government-funded Italian flag-carrier Alitalia.
And boy Air Italy didn’t waste any time implementing its new strategy – it announced a slew of new North American destinations including Chicago, Toronto, San Francisco, and Los Angeles. While in Asia, the carrier opened new routes to Bangkok, Delhi and Mumbai.
Suddenly we were back at square one – Delta says Qatar is using Air Italy as a way to circumvent its agreement with the United States. Or as Parker describes it: “cheating”.
“We are big advocates and proponents of Open Skies, but we do think it needs to be fair,” Carter told yesterdays conference. “And what Qatar is doing is not fair,” he continued.
In reality, things haven’t quite gone quite to plan for Air Italy – it cancelled its Chicago route before it even started flying, while services to Bangkok, Mumbai and Dehli have all been axed as well. Does Air Italy really pose the threat that Delta thinks it does? Maybe…
There’s now the real possibility Delta could take a stake in Alitalia as part of a recue bif to compete head-on with Air Italy – the nastiest feud in the airline industry could be about to get really interesting.