ORAC
28th Jun 2019, 18:52
From the Financial Times. Trade wars ahead with the USA?
https://www.ft.com/content/82a82f8c-99c1-11e9-9573-ee5cbb98ed36
Turbulence as Brussels warns US over Air Italy ban
American airlines claim company is unfairly subsidised by Qatar
A small Italian airline has become the latest source of tension in the increasingly frayed relationship between the EU and the Trump administration, after officials in Brussels warned Washington not to stop Air Italy flying in and out of the US.
Large US airlines have been lobbying (https://www.ft.com/content/8e3d3d12-039c-11e9-99df-6183d3002ee1) the US government to prevent the Italian carrier flying what they see as unfairly-subsidised routes, which they say are being underwritten by Air Italy’s Qatari owners and undercut their own services.
The European Commission has written to the US state department warning that any action against Air Italy would constitute a violation of the US-EU Air Transport Agreement. In the letter, seen by the Financial Times, Henrik Hololei, the director-general for transport at the Commission, warned Manisha Singh, assistant secretary at the state department, that Europe would take “all necessary steps” to defend its rights.
Mr Hololei said: “Any measure to curtail or end the rights of Air Italy to serve the US would constitute a clear and serious violation of the ATA. Such action would be unprecedented and would put into question the most fundamental principles under which our aviation relations have so successfully developed over more than 10 years.”
Mr Hololei’s strongly-worded warning comes as the Trump administration weighs whether to take action against either Air Italy or Qatar Airways, which owns 49 per cent of the Italian airline’s shares.
The three largest US airlines — American Airlines, United Airlines and Delta — argue the Italian company would not have been able to expand into the US without the help of its Qatari shareholder, which they say is itself subsidised by the Qatari government. Scott Reed, managing partner for the Partnership for Open & Fair Skies, which represents the three airlines, said on Friday: “Qatar Airways’ actions regarding Air Italy are designed to serve as a loophole to undermine last year’s agreement with the Trump administration.”
Air Italy is now running services from Milan to New York, Miami, San Francisco and Los Angeles, which the US companies argue violates an agreement signed last year by the US and Qatar to adhere to “market consistent conditions as far as possible”.
They have garnered support in their efforts from Peter Navarro, an adviser to US President Donald Trump and a noted trade hawk, as well as senior members of Congress. But people close to the situation say Mr Navarro is being resisted by some in the state department, who worry that taking action against Qatar Airways risks alienating a potential ally in the Gulf at a time when tensions are escalating with Iran.
A state department spokesman said it was “committed to levelling the playing field and ensuring American companies have the opportunity to succeed globally. We also seek to maintain the Open Skies framework of US international aviation policy. Our goal is to provide beneficial results for as many US stakeholders as possible, and we believe diplomacy is delivering results.”
The US airlines are continuing to lobby heavily, though they say they want the administration to take action against Qatar Airways and not necessarily Air Italy itself. “Qatar is responsible for these massive government subsidies and Qatar needs to be held accountable,” said Mr Reed.
Qatar Airways denies the claims against it. Earlier this year, Akbar Al Baker, the company’s chief executive, told the Financial Times the claims were “entirely off base” and that US-Qatari agreements “contain no mention of any kind, let alone prohibition, of cross-border airline investments”.
https://www.ft.com/content/82a82f8c-99c1-11e9-9573-ee5cbb98ed36
Turbulence as Brussels warns US over Air Italy ban
American airlines claim company is unfairly subsidised by Qatar
A small Italian airline has become the latest source of tension in the increasingly frayed relationship between the EU and the Trump administration, after officials in Brussels warned Washington not to stop Air Italy flying in and out of the US.
Large US airlines have been lobbying (https://www.ft.com/content/8e3d3d12-039c-11e9-99df-6183d3002ee1) the US government to prevent the Italian carrier flying what they see as unfairly-subsidised routes, which they say are being underwritten by Air Italy’s Qatari owners and undercut their own services.
The European Commission has written to the US state department warning that any action against Air Italy would constitute a violation of the US-EU Air Transport Agreement. In the letter, seen by the Financial Times, Henrik Hololei, the director-general for transport at the Commission, warned Manisha Singh, assistant secretary at the state department, that Europe would take “all necessary steps” to defend its rights.
Mr Hololei said: “Any measure to curtail or end the rights of Air Italy to serve the US would constitute a clear and serious violation of the ATA. Such action would be unprecedented and would put into question the most fundamental principles under which our aviation relations have so successfully developed over more than 10 years.”
Mr Hololei’s strongly-worded warning comes as the Trump administration weighs whether to take action against either Air Italy or Qatar Airways, which owns 49 per cent of the Italian airline’s shares.
The three largest US airlines — American Airlines, United Airlines and Delta — argue the Italian company would not have been able to expand into the US without the help of its Qatari shareholder, which they say is itself subsidised by the Qatari government. Scott Reed, managing partner for the Partnership for Open & Fair Skies, which represents the three airlines, said on Friday: “Qatar Airways’ actions regarding Air Italy are designed to serve as a loophole to undermine last year’s agreement with the Trump administration.”
Air Italy is now running services from Milan to New York, Miami, San Francisco and Los Angeles, which the US companies argue violates an agreement signed last year by the US and Qatar to adhere to “market consistent conditions as far as possible”.
They have garnered support in their efforts from Peter Navarro, an adviser to US President Donald Trump and a noted trade hawk, as well as senior members of Congress. But people close to the situation say Mr Navarro is being resisted by some in the state department, who worry that taking action against Qatar Airways risks alienating a potential ally in the Gulf at a time when tensions are escalating with Iran.
A state department spokesman said it was “committed to levelling the playing field and ensuring American companies have the opportunity to succeed globally. We also seek to maintain the Open Skies framework of US international aviation policy. Our goal is to provide beneficial results for as many US stakeholders as possible, and we believe diplomacy is delivering results.”
The US airlines are continuing to lobby heavily, though they say they want the administration to take action against Qatar Airways and not necessarily Air Italy itself. “Qatar is responsible for these massive government subsidies and Qatar needs to be held accountable,” said Mr Reed.
Qatar Airways denies the claims against it. Earlier this year, Akbar Al Baker, the company’s chief executive, told the Financial Times the claims were “entirely off base” and that US-Qatari agreements “contain no mention of any kind, let alone prohibition, of cross-border airline investments”.