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Qatar Airways: Investment in Air Italy “Fully Compliant” With Open Skies Agreement

Qatar Airways: Investment in Air Italy “Fully Compliant” With Open Skies Agreement

Qatar Airways: Investment in Air Italy "Fully Compliant" With Open Skies Agreement

Qatar Airways has defended itself against accusations its investment in Air Italy “runs directly counter” to a landmark one year deal that the State of Qatar reached with the United States over its Open Skies agreement.  At a Senate Foreign Relations Committee, the U.S. Secretary of State, Mike Pompeo said he was “looking very closely” at the investment to see if it breached the agreement.

Secretary Pompeo told the hearing on Tuesday that he was “personally engaged” on the matter and planned to hold talks with parties on the matter this week.

“Following recent false accusations relating to Qatar Airways’ shareholding in Air Italy, such baseless statements and consistent inaccuracies need addressing as a matter of urgency,” the Persian Gulf airline said in a statement on Thursday.

“Qatar Airways’ investment in Air Italy, and operations to the United States, are fully compliant with the U.S.-Qatar Open Skies Agreement, the January 2018 U.S.-Qatar Understandings, and a side letter that accompanied the discussions.”

“Unfounded claims that Qatar Airways’ investment in Air Italy violates the Understandings are entirely false,” the statement continued.

Last year, the State of Qatar agreed to greater financial transparency over claims its government-owned airline has received billions of dollars in State subsidies.  As part of the deal with the Trump administration, Qatar Airways also said it had no plans to open any Fifth Freedom flights to the United States.

Photo Credit: Air Italy
Photo Credit: Air Italy

Critics, including Delta Air Ways, claim the investment in Air Italy breaches that agreement and that the airline is simply a proxy for Qatar Airways which is also being bankrolled through Qatari government subsidies.

“Qatar Airways holds a 49% stake in Air Italy’s parent company, AQA. This minority investment is at the same level that Delta holds in both Virgin Atlantic and Aeromexico and that Etihad held in Alitalia, ” Qatar Airways said in response.

The decision to invest in AQA and the then branded Meridiana Fly airline was actually announced in July 2016, with the transaction finally closing in September 2017.  Several months after Qatar reached the agreement with the United States, Meridiana Fly announced it would be rebranding as Air Italy.

Qatar Airways has invested heavily in Air Italy and the carrier has made a push for expansion into North America with new route openings to New York JFK, Miami, San Francisco and Los Angeles.  The airline has also started flying to Toronto but has postponed an anticipated route launch to Chicago.

Air Italy is currently using a fleet of Airbus A330 aircraft that have been loaned from Qatar Airways for its international long-haul operations.  The carrier intends to start taking delivery of brand new Boeing 787 Dreamliners next year – all of which are funded by Qatar Airways.

But Qatar Airways says that last year’s agreement with the United States did not mention or “prohibit cross-border investments of any type.”  The airline goes onto say that foreign investments were never brought up in talks with U.S. authorities and that Qatar Airways doesn’t codeshare on any flights with Air Italy and has no plans to do so either.

“The “Big 3” U.S. carriers have consistently demonstrated their hostility to new entrants into the U.S.-Europe market, and their attacks on Air Italy based on the identity of its minority shareholder are just another manifestation of this hostility,” the airline said in apparent reference to the biggest North American airlines – American, United and Delta Air Lines.

“Air Italy, the carrier the “Big 3” cite as a major “threat” to their survival, has a fleet of just 15 aircraft and only serves one U.S. city – New York – with a daily service while other routes, Miami, Los Angeles and San Francisco are operated at a lower frequency.”

While true, you can’t help but think that Qatar Airways is being ever so slightly disingenuous.  After all, the issue at stake here is whether Qatar Airways and Air Italy are acting as true commercially-minded businesses or are dumping capacity to harm rival carriers with the help of government subsidies.

That being said, Qatar Airways makes a very good point in highlighting the benefits it’s business has brought the United States.  As a loyal and big spending customer of Boeing and General Electric, the airline has actually supported thousands of U.S.-based jobs rather than harmed them as critics claim.

Whatever the case, it’s highly unlikely that this latest statement is going to bring this dispute to an end anytime soon.

 

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