The US carriers believe some Middle Eastern airlines are unfairly competing with them. Specifically, they complained about Qatar Airways, which recently bought a large stake in an Italian airline and expanded its flights to the US, reported the National Review.
The U.S. carriers believe this violates the letter and spirit of the Open Skies agreement, which regulates which airlines get to enter another country’s territory. The goal is to benefit consumers by providing open entry, unless a government-subsidized carrier is using an artificial advantage to unfairly compete with private carriers.
At issue is whether Qatar can use a form of trade “transshipment” — the method that China uses to avoid tariffs by rerouting much of its steel and aluminum exports through Malaysia or Vietnam before they reach the U.S. — to evade a 2018 agreement with the US not to launch flights between Europe and the United States.
Qatar Airways denies its recent explosive growth is being subsidized by the natural-gas rich government of Qatar. But the rest of the aviation industry doesn’t believe that. In fiscal year 2017, Qatar’s government injected $491 million into the flagship carrier.
It’s probably not a coincidence that was the same year that Qatar Airways bought a 49 percent stake in a failing carrier called Air Italy, which previously had flown only regionally in Europe along with a couple of seasonal flights to the US.
Two days after Qatar Airways bought a stake in it, Air Italy began an expansion that now has it making nonstop flights from Milan, Italy to New York and Miami year-round. It also flies from Milan to Los Angeles and San Francisco in the summer.
Its bargain rates are clearly designed to poach passengers from US carriers. It can count on Qatar-government subsidies to make up any losses while it builds market share.
United Airlines CEO Oscar Munoz calls Air Italy “the Italian version of Qatar” and he told President Trump at the Oval Office meeting they fly in the face of existing air service agreements.