December 18, 2018 / 8:28 PM / 6 months ago

UPDATE 1-Air Italy flights to Chicago risk rekindling row with U.S. carriers

(Adds comment from rivals)

By Giulia Segreti and Alberto Sisto

ROME, Dec 18 (Reuters) - Air Italy will start flying to Chicago next year, a move likely to revive a dispute between its minority shareholder Qatar Airways and U.S rivals trying to squeeze Gulf operators out of their domestic market.

Formerly known as Meridiana, Air Italy is the country's second-largest airline, behind ailing Alitalia, and state-owned Qatar Airways holds a 49 percent stake in it.

Air Italy will fly to Chicago three times a week from Milan Malpensa airport starting from May 14, 2019, Chief Operating Officer Rossen Dimitrov told Reuters.

Since 2015 the largest U.S carriers -- Delta Air Lines , American Airlines Group and United Airlines -- have argued their Gulf rivals are being unfairly subsidised by their governments, distorting competition.

Gulf airlines have always denied those accusations and in May the companies reached a voluntary agreement, saying they would not add new flights to the United States.

However, Air Italy has been flying to New York and Miami since June and will start serving San Francisco and Los Angeles from April 2019.

That has drawn criticism from an alliance of U.S.-based airlines grouped in the "Partnership for Open & Fair Skies", that Qatar Airways is using Air Italy to offer additional flights between the U.S. and Europe, despite the agreement.

"Once again, Qatar is using Air Italy as a Trojan horse built from subsidized cash to avoid its commitments to the Trump administration and launch new ... routes," said Scott Reed, campaign manager for the Partnership for Open & Fair Skies.

In an emailed statement, Reed called on U.S. President Donald Trump to intercede on the behalf of U.S. airlines.

Dimitrov tried to dismiss any suggestion that Air Italy was acting improperly, noting that Qatar Airways was a minority shareholder.

"They do not dictate what we do and where we go. They do not manage us," he said.

He added that he would be happy to work with the U.S airlines under code-share agreements, from which both sides would benefit, "rather than spending time and money fighting each other".

The opening of the Chicago route next year is part of a wider plan, announced in May, in which the airline aims to grow its fleet and passenger numbers fourfold by 2022. (Reporting by Giulia Segreti and Alberto Sisto Editing by Keith Weir and Crispian Balmer)

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