Did A US Airline Lobbying Group Just Condemn US Airlines?

The Partnership for Open & Fair Skies is one of the major lobby groups In the battle between the “big three” US carriers and the “big three” Gulf carriers. The organization is supported by American, Delta, and United, as well as several airline unions. Today the Partnership for Open & Fair Skies put out the following press release, which leaves me scratching my head:

In response to a new ad in POLITICO Morning Transportation from the Embassy of the United Arab Emirates on its country’s purchase of Boeing planes, the Partnership for Open & Fair Skies released the following statement:

“Note to Ambassador Yousef Al Otaiba: U.S. carriers are Boeing’s largest customers. But more importantly, Boeing is at the forefront of challenging foreign government subsidies exactly like those given by the United Arab Emirates to Emirates and Etihad,” said Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies. “We agree with Boeing – foreign government subsidies are antithetical to free and fair trade. They kill American jobs; they don’t create them.”

A couple of points to start:

With that in mind, I’m not sure Delta’s lobbying group is paying much attention to what’s going on in the industry at the moment. Let’s look at that last quote in their statement one more time:

“We agree with Boeing – foreign government subsidies are antithetical to free and fair trade. They kill American jobs; they don’t create them.”

The biggest subsidy debate going on at the moment is between Boeing and Bombardier, and in turn, between Delta and Bombardier, since Delta is the only one of the “big three” US airlines to order the Bombardier CSeries aircraft. Delta has 75 of these planes on order, and is supposed to take delivery of their first such plane in the spring of 2018. However, Boeing has filed a complaint with the US Commerce Department, asserting that Bombardier is getting illegal subsidies from the Canadian government and dumping its product into the US market. The Trump administration sided with Boeing, and proposes a 220% duty on purchases of this plane.

So the “big three” US carriers are all for defending American jobs and battling subsidies, except when it benefits them. And that’s exactly what’s going on here. Delta’s CEO hasn’t argued that these subsidies to Bombardier aren’t happening, but rather has called the decision to add such a duty “absurd.”

AJC.com quotes Delta’s CEO, Ed Bastian, as saying the following:

“We will not pay those tariffs, and that is very clear,” Bastian said. “We intend to take the aircraft. I can’t tell you how it’s going to eventually work out. There may be a delay as we work through the issues…. There’s various other plans that we’re also contemplating and looking at alternatives.”

Bastian said he believes Delta will take the planes “at the agreed contractual price.”

He said he believes “there’s not a case to be made” that Boeing was harmed by the Delta order, because it does not make a similarly-sized airplane.

It’s interesting that there’s not a case to be made, since they’re arguing Boeing wasn’t harmed because they don’t make a similarly sized plane. Couldn’t the same argument be made with the Gulf carriers not harming US carriers because they don’t serve the same routes? In the same way that Bastian says that Delta would fly to India if it weren’t for these “illegal subsidies,” maybe Boeing would make a plane around this size if it weren’t for “illegal subsidies?”

Anyway, I’m getting off track here, but I couldn’t help but laugh at this statement from the Partnership for Open & Fair Skies. They agree with Boeing, that foreign government subsidies are unethical, and kill American jobs. I suspect Delta feels differently here…

 (Photo credit for header image to Delta)

Comments

  1. Agree. Such claims are ludicrous, self-serving nonsense. Just like Trump’s tax plan for the “average worker” where vast majority of tax cuts benefit the rich (particularly billionaires – what a coincidence!)

  2. Capitalism is ridiculous. Most Capitalism is about making money. Not making money fairly, but just making money period.

    That we even argue about this after the grand bailout of 2008 to 2012 shows that most people don’t have strong thinking skills.

  3. These claims are for the kinds of trump deplorable, who are too ignorant to understand what is truly happening and continuously act against their own self interest.

    If it worked for trump, why wouldn’t Delta and others use the same unethical tactics?

  4. Hypocrisy abounds for all players involved here but I really don’t think Boeing has thought through all of their actions. For their business, Delta has determined that 100-110 seat mainline jets works really well for them, hence why they are the largest operator of the 717. Boeing hasn’t made that in over 10 years so it leaves Delta looking else where. Certainly the CS100 makes a lot more sense in places they want to upgrade from regional jets.

    Delta still has a bunch of 737-9s on order to go along with A321 in replacing 757s and MD 88/90s. Boeing has pretty much killed any chance they had for Delta coming back with more orders for that or any widebody AC. Before the Northwest merger, Delta didn’t operate any Airbus widebody jets but going forward that’s all you’ll see from them.

  5. TM – Huge companies don’t tend to hold grudges. If the Boeing widebodies are Delta’s best option, they’ll buy them.

  6. The problem is that you could easily argue that, in one shape or another, most airlines in the world have some sort of subsidies. The US is king of subsidies. So I just find it really hypocritical that a US airline can talk about subsidies as if they don’t benefit them selves.

    Anyways they don’t make the same size aircraft so its hard to see how they where harmed. It just smacks of desperation.

  7. @Callum- I don’t know the reasons why Delta never went with any 787s, but the fact that they are one of the largest airlines(not counting LCCs that only fly one type) that doesn’t operate that aircraft seems to me that they just aren’t that interested in it. Their newest 777s have been in the fleet sine 2010 too. With almost 50 A330neos and A350s on order, it could be a while before they have any need to look at Boeing widebodies. Of course, Boeing and Airbus are constantly competing for ‘the next best thing’ so 5-10 years from now it could be totally different.

    Boeing has nothing to worry about with 737. Those orders will always be there.

  8. Everything about the C series subsidies is “Trumped up” “fake news” by the king of balderdash.

    There are no subsidies to Bombardier. There certainly are subsidies to Embraer in Brazil which has been proven time and again in the world trade court.

    But Trumpet has no quarrel with Embraer and I cannot see why.

    What is Boeing trying to accomplish with this asinine complaint?

    Canadian airlines should immediately cancel all orders for Boeing aircraft or the Canadian Government should immediately impose 220% duties on them as well.

  9. Another symptom of our Trumpian world. The man can’t tell you the weather without lying about it and then blaming it on Barrack Obama.

    The US, like the UK, is being ruled by a minority of small minded idiots.

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