Delta v. Air Italy’s “Mysterious Benefactor”
Jeff Edwards December 24, 2018
The cold war between U.S Airlines and Gulf carriers over what legacy carriers in the U.S. consider unfair government subsidies benefiting state-run airlines in the Gulf region, has heated up once again. This time, Delta CEO Ed Bastian is fuming over accusations of hidden Qatari subsidies allowing struggling Air Italy to undercut the competition.
After years of bickering back and forth and even resorting to personal attacks, it was just starting to seem as if a de facto détente was emerging between airline executives in the U.S. and their Gulf carrier counterparts. If the latest op-ed from Delta Air Lines CEO Ed Bastian is any indication, however, the peace will be short-lived.
In a fiery opinion piece, the Delta chief railed against what he claims is an unfair and prohibited state subsidization of losses at Air Italy by the government of Qatar. Bastian has famously complained that airlines such as Qatar Airways rely on government funding to undercut competing airlines, Now, he says the Gulf state is using its ownership stake to gain an unfair advantage by propping up struggling Air Italy.
“Despite its financial hemorrhaging, the airline suddenly has a fleet of brand new jets, and has announced a major global expansion of flights between Milan and North American cities including New York, Miami, Chicago, Los Angeles, San Francisco and Toronto,” Bastian said of Air Italy’s stunning moves in recent months. “It doesn’t take Sherlock Holmes to solve this particular mystery. The airline’s benefactor is Qatar Airways, the government-owned airline of Qatar, which recently acquired 49 percent of Air Italy. Even though Qatar’s recent financial statements (which remain opaque) show that it is one of the worst performing airlines in the history of the airline industry with over $2 billion of operating losses over the past three years, Qatar has been giving its new acquisition billions of dollars’ worth of new airplanes, including Boeing 787 and 737 jets, with plans to deploy larger Boeing 777 and A350s as well.”
Earlier this year, Bastian had nothing but praise for Trump administration officials and representatives in the government of Qatar, following an agreement to help level the competitive playing field. “Today’s agreement by the State of Qatar is a strong first step in a process for commercial transparency and accountability, and we remain committed to working with the administration to address the harmful trade violations by the United Arab Emirates as well,” the Delta CEO said at the time.
Now, the powerful airline executive is singing a decidedly different tune.
Bastian asserts that the Qatari airline is using the virtually bankrupt Italian flag carrier to skirt a promise to not add so-called “Fifth Freedom” flights to provide non-stop service between Europe and North America in direct competition with U.S. airlines. He then all but demanded that U.S. officials step into the fray.
“Qatar is back to their old tricks, thumbing its nose at the Trump Administration with its clumsy scheme to get around its promises,” Bastain goaded. “These Italian routes, already highly competitive and well-served by existing carriers, are simply not economically viable without Qatari subsidies. By flooding these markets with subsidized capacity and dropping prices far below cost, Qatar is launching another assault on U.S. airline employees and travelers, and disrespecting the Administration.”
[Photo: Shutterstock]
Cheaper fares and good service is what counts for the US consumer. And Delta's partner Alitalia has lived from handouts for years in addition to Delta that was saved by the US consumer.
DL rails against Qatar, smacks the Atlanta Fox theatre by ceasing its financial support for hosting the "Welcome to ATL' bash when Qatar first came to ATL all the while buying mostly Airbus product rather than home-grown Boeing. DL- shut up.
The entire US airline industry was propped up by the US government from the 1930's till President Carter eliminated the Civil Aeronautics Board. The regulatory period during this time while highly prescriptive, was also very generous to the airlines, allowing them to set and have approved high fares between routes that guaranteed them profit. During the period the CAB was in effect, only 1 airline declared bankruptcy in 50 years in the US. This system not only provided management with a rigged system of operating profitably but also provided then with sufficient funds to order large blockbuster aircraft orders (for the time anyway) with Boeing, Lockheed and McDonnell Douglas. The net result was a airlines having built their infrastructure and balance sheet strength due to the benefits received from US government. Once the CAB disappeared and deregulation came in full force, well we know what happened then. Point is, even Delta received the benefits of government intervention albeit indirectly for decades upon decades , which helped them become who they are today, so this is like Bastian forgetting Delta's own history and the pot calling the kettle black.
Oh boo-hoo: The head of one of the 3 US airline cartels is complaining about unfair competition. Stick a sock in it Bastian.
If this silly crybaby is worried about making money while flying 30 year old MD80s, 757s and 767s, then he really has a problem. Delta's average plane is over 16 years old, or twice as old as the average JetBlue and Alaska plane, neither of whom they've been able to hurt financially. But as they say at Atlanta HQ, if you can't beat 'em, start whining like a pathetic fool.