Air Italy faces opposition to new US routes

Is it a legitimate expansion of flights for an Italian airline or simply a ruse, a loophole for evading a nonbinding pledge to curtail growth? Air Italy is under attack by the US3 carriers for planned expansion of its transatlantic service, with Los Angeles and San Francisco announced as new routes this week. The carrier is 49% owned by Qatar Airways and its current fleet refresh takes advantage of the large Qatari order book with Boeing and Airbus. But are they really new fifth freedom routes for Qatar Airways??

A strict reading of the agreements says that they are decidedly not. Air Italy is an Italian airline and the 51% ownership stake is Italian. Under the US-EU Open Skies treaty it can add routes between those two regions without limits. The carrier currently flies from its Milan hub to Miami and New York City, routes that morphed from its prior Transatlantic operations under the branding of Meridiana. So should its new minority owner preclude it from growth across the Atlantic?

Ultimately the question comes down to whether Qatar Airways truly is a minority owner or not. On paper that’s certainly the case but in practice His Excellency Akbar Al Baker appears active in the company’s PR efforts, if not the actual airline operations and strategic choices. Details are scarce on things like lease terms for the aircraft shifting from Qatar Airways to Air Italy. Are they are market rates or discounted? And does it really matter if the money that pays those leases all comes from Qatar anyways?

Read More: Goodbye, Meridiana; Hello, Air Italy!

There’s also a problem with the protests from Partnership for Open & Fair Skies, a trade group representing United Airlines, American Airlines, Delta Air Lines, most of their labor unions and Southwest’s pilots union. The group calls out an agreement between the US3 and ME3 that toned down the rhetoric substantially in recent months, an agreement whereby the ME3 would not add routes from Europe to the United States. The problem is that such an agreement is not necessarily binding. And even as it was announced the ME3 leaders hinted their intent was more about slowing the fight than giving up on growth. That now appears a real challenge to the market.

Separately, Air Italy launched service to Delhi this week, expanding its route network to the east from Milan. With growing connectivity in Europe and Northern Africa likely as part of the single-aisle fleet refresh underway the carrier will need to pull passengers from multiple regions to make the operation work. If westward expansion is completely cut off that could prove a challenge too difficult to overcome.