American Airlines CEO Doug Parker sat down with Business Insider to discuss why Air Italy is viewed as such a threat.
First, let me say that I am so tired of rehashing this issue over and over. But as misinformation continues to be spread about Air Italy and Qatar Airways, I see no choice but to correct it. I would do the same thing if Qatar was unfairly attacking American or Delta. My allegiance is not to an airline, but to reporting the truth.
So let’s turn to what Parker said.
The facts are those two countries, the UAE and Qatar have put subsidies into the three airlines, unlike anything we’ve ever seen before. The result of that is those three carriers fly routes without any regard to profitability, and that’s a concern for those of us who do have to produce profits on our flying.
This canard has been debunked over and over again. We see that Emirates and Etihad have cut back on routes that are not profitable and are not in business to lose money. As the losses continue to mount, we may well see the demise of Etihad or its folding into Emirates.
That’s an enormous threat to commercial aviation and the United States. And therefore we’re really concerned about it, and we’ve expressed that for quite some time now.
Yes, but yelling something over and over does not make it true. See below for a link of articles I’ve written in the past looking beyond the propaganda.
> Read More:
- Dense, Dimwitted Logic From A Deliberately Deceptive Delta CEO
- U.S. Airlines Pandering To President Trump In Gratuitous New Ad
- Delta’s Victory Lap Over a Meaningless Agreement
- Qatar vs. Delta – Who Really Won?
- A Dishonest Smear in the Fight Over Gulf Subsidies
- 10 Ways Taxpayers Subsidize U.S. Airlines
- Exposed: Shameful Double Standards on Airline Subsidies
When the USA, Qatar, and the United Arab Emirates struck and agreement in January 2018, both sides thought they had won. But when Qatar followed through on its 2017 plan to invest in Meridiana and rebrand it Air Italy, American and Delta cried foul. At the heart of the agreement was a gentlemen’s agreement (according to U.S. airlines) that the Gulf Carriers had no immediate plans for new Fifth Freedom flights. U.S. airlines viewed the investment in Air Italy as skirting the deal. Parker added:
Those side letters were important, it gave the US government the comfort it needed to move forward, only to find out that Qatar had gone and acquired a certificate of some bankrupt Italian airline and it acquired 49% share but was clearly in control and was going to take its airplanes and put them into that airline and have them fly from Europe to the United States.
Look at the landscape. Alitalia…always in trouble. Meridiana…troubled. Qatar Airways saw an opening to invest and build a carrier that could be profitable and become a better flag carrier in Italy than Alitalia. It saw potential and set out to make money, which it still hopes to do. That’s why Qatar invested in British Airways and Iberia as well…to make money, not lose money.
That didn’t seem within the spirit of the agreement; it seems like an absolute violation of the intent of the agreement.
“Seem” and “spirit of the agreement” are weasel words. Qatar had every right to add their own Fifth Freedom routes, let alone take a minority stake in a company that was already serving the USA.
So what is the solution? For Parker it is total surrender:
Where it should end is with everyone participating in the spirit of what they agreed to, and that would be that airline also doesn’t have any flights from outside the Gulf to the United States.
He’s talking about Air Italy here…amazing…
CONCLUSION
What is so sad to me is that Parker distorts Qatar’s investment in Air Italy, failing to even entertain the possibility that Qatar Airways is simply trying to make a smart investment. We’ve seen Air Italy already scale back operations in India, Thailand, Canada, and the United States. The carrier is not operating to lose money…but it does offer a better soft product than American ever will. That’s the true threat to American Airlines.
> Read More: Qatar Airways Blasts U.S. Lawmakers For Air Italy Criticism
It’s strange you deny that the ME airlines are heavily subsidized. It’s obviously true. They are an extension of their government. US carriers have a right to cry foul.
However, the bigger issue to me is the wisdom in entering into open skies agreements with countries like UAE. Having such an agreement does nothing for the US interests, but enables the existence of mega hubs in tiny countries where the overwhelming majority of their traffic is just transiting through. It is a completely one sided agreement, and doesn’t benefit the US at all. We should only have open sky agreements with countries that represent a significant amount of direct traffic to/from the USA. We need to renegotiate these horrible agreements.
Where do I deny they are subsidized? Do you have a beef with U.S. airlines being subsidized through tax breaks and other federal, state, and local programs? Please don’t be a hypocrite.
@WR2: Flew as a Boeing – Airbus Captain w/ “Drunken Dougweiser” as ‘supposed’ CEO at America West, USAirways and AmeriKan…what an ignorant bean counter and over imbiber of adult beverage…always a clown car with ‘Drunken Dougie’ at the wheel….scumbag, Bill Franke was his mentor…long live the ATSB, for these managers to survive on the backs of the employees
Soon he will add American to his tits up mangment portfolio.
@WR2: Ask Fedex if the US has no interest in open skies with the UAE. Or JetBlue and Alaska for that matter.
@WR2: “US interests” include MUCH broader consumer/traveler interests rather than simply the interests of airline pilot and flight attendant unions. Air Italy’s presence in the market makes lower fares, better customer comfort, and higher service quality available to a wider variety of US consumers and should be encouraged for the greater public good (and not the good of narrow lobbies with a loud voice).
@WR2, The US airlines are also heavily subsidized through subsidies to Boeing for aircraft development via military spending. Through subsidies and tax breaks and other incentives by cities and states for airport and maintainence site development, Through the FAA and Government ATC. Through artificially cheap JetA.
But whevs, when ME do this it is unfair competition.
Typical government Controlled capitalist response.
The double standard is glaring!
Parker keeps focusing on (the wrong) competitors instead of customers. It’s no ownder the operation lags and so does their revenue. That has nothing whatsoever to do with limited Italy service or low yield passengers from India and Pakistan.
Isn’t the “spirit of the agreement” that we call Open Skies that any inclusive airline can fly wherever they want pretty much at will for passenger service? I was always led to believe that that was also the letter of the agreement. Parker sounds like he’s desperately trying to somehow convince himself that what he’s spouting is actually true when he knows better.
You should have told him why customers HATE AA. Maybe he never heard that before. As @Gary Leff said he focuses on pointing fingers to others rather than looking at his own tail.
AA (Delta and United) clearly can’t compete with the service and product of the ME3 and this is their preferred way to stiff the competition. Thanks for calling them on it.
Thanks for bringing this up Matthew. Mr. Parker should criticize Chinese airlines and Air India (which are also subsidized) next time – but I don’t think he has the guts.
You should add that AirItaly is competing directly with US carriers only on the Milan-New York flight. All the other flights are to cities without a direct flight from Milan (SFO, LAX, MIA). Not sure for the other cities, but there’s a strong demand for an SFO-MXP based on personal experience…
They basically found an underserved route and they started filling the demand. Isn’t it that the definition of savvy business?
Indeed. I’ve highlighted this in other posts and is a very strong argument in favor of Air Italy.