Alitalia May Be Next to Quit AEA as Rift Over Gulf Rivals Grows

Alitalia SpA may follow British Airways parent IAG in quitting the Association of European Airlines as a rift widens over the competitive threat from Gulf carriers, which are the biggest shareholders at both companies.

“A strong signal is needed and other airlines have already done that,” Alitalia Chief Executive Officer Silvano Cassano, whose Rome-based company is 49 percent owned by Etihad Airways PJSC, said in an interview. Alitalia will weigh “pros and cons” and take a decision on membership within days, he said.

The AEA hit out at the expansion of Abu Dhabi’s Etihad, Dubai-based Emirates and Qatar Airways, which owns almost 10 percent of IAG, as long ago as 2011, echoing concerns at Air France and Deutsche Lufthansa AG, which have lost high-margin long-haul transfer traffic to Gulf airlines. The body said today that it hasn’t commented on the matter in recent months.

Etihad bought a stake in Alitalia last year, swelling a network of foreign airlines that help siphon flights between Europe, Asia and Africa via its own home base at the expense of European hubs such as Paris Charles de Gaulle and Frankfurt.

In the U.S., Delta Air Lines Inc., American Airlines Group Inc. and United Continental Holdings Inc. are leaning on their government to limit the expansion of Middle Eastern rivals, which they say have received more than $42 billion in illegal subsidies over the past decade, funding the surge in growth.

‘More Liberal’

Gulf carriers are “helping a more liberal approach to business, better competition” and “investing a lot of money,” Cassano said. “That’s good for the marketplace.”

An Alitalia decision to exit the Brussels-based AEA would split Europe’s airlines into two camps divided by their view of Mideast growth after International Consolidated Airlines Group SA carriers British Airways and Iberia said left on March 31.

“Our position on some important policy issues is not aligned with some other AEA legacy airlines,” IAG said in a statement. “In particular, we believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matter.”

IAG reiterated that it favors the “abolition of ownership and control rules” which it says stifle competition. European Union regulations mean that carriers from the bloc can be no more than 49 percent owned by outside interests, while the U.S. applies a cap of 25 percent for foreign holdings.

Qatar Airways became the largest shareholder in IAG earlier this year, when it bought a 9.99 percent stake. IAG CEO Willie Walsh had backed the expansion of Qatar long before the deal, acting as its sponsor for joining the Oneworld alliance.

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