Major: Boeing Loses Bombardier Trade Dispute

This is a major development.

In October we learned of a trade dispute between the US and Canada, or more specifically, between Boeing and Bombardier. Boeing had filed a complaint with the US Commerce Department, asserting that Bombardier was getting illegal subsidies from the Canadian government and dumping its product (specifically, the CSeries aircraft) into the US market. Delta has 75 of these aircraft on order, and clearly Boeing wasn’t happy about that, even though they don’t have a direct competitor for the plane.

The Trump administration sided with Boeing, and proposed a significant tariff on the plane, of up to 300%. Not surprisingly, Delta’s CEO said that his airline still planned to take delivery of the CSeries aircraft, and that they didn’t plan on paying the tariffs. It looked like they were considering some creative solutions, like handing over some of the planes to Aeromexico, which they own a stake in, while they figured things out.

There’s now a major update on this front. The US International Trade Commission head this case today. The US ITC voted unanimously in Bombardier’s favor.

According to reports, the meeting took all of two minutes, and the voting itself took less than five seconds.

It’s my understanding that this can still be appealed, though I think the chances of success are pretty low at this point. This is a huge win for US airlines and consumers.

Not surprisingly, the concerned parties have already issued statements about this decision. Bombardier issued the following statement:

Today’s decision is a victory for innovation, competition, and the rule of law.

The C Series is the most innovative and efficient new aircraft in a generation. Its development and production represent thousands of jobs in the United States, Canada, and the United Kingdom.

Boeing issued the following statement:

We will not stand by as Bombardier’s illegal business practices continue to harm American workers and the aerospace industry they support.

Delta issued the following statement (as the first US airline scheduled to take delivery of the CSeries):

Delta is pleased by the U.S. International Trade Commission’s ruling rejecting Boeing’s anticompetitive attempt to deny U.S. airlines and the U.S. traveling public access to the state-of-the-art 110-seat CS100 aircraft when Boeing offers no viable alternative. The airline looks forward to introducing the innovative CS100 to its fleet for the benefit of Delta’s employees, customers and shareowners.

What I find funny about these statements is that if you replaced the term “CSeries” with “Gulf Carriers,” then Boeing sounds exactly like Delta usually does, while Delta sounds like an airline that’s actually rational. Sort of funny how that works. 😉

As a consumer I’m thrilled about this development. The CSeries is a joy to fly, and Boeing doesn’t have a real competitor for the plane type. With big tariffs it’s unlikely we would have seen the CSeries flying in the US anytime soon, so… yay!


Cabin of the Swiss CSeries

Also, Boeing comes out of this looking horribly, and having lost a lot of money. Canada retaliated against the US for this attempted tariff by canceling their order for 18 Super Hornet fighter jets, which were supposed to go to the Royal Canadian Air Force. This deal was estimated to be worth up to 6.4 billion USD for Boeing.

What do you make of the US ITC’s decision?

Comments

  1. The Trump administration is embarrassingly stupid, and despite this blustering they got nothing and lost the fighter jet orders not to mention the legal fees incurred. Boeing is just as dumb if not dumber.

    Side note- does anyone actually prefer Boeing planes anymore, aside from the 787? The A320 may not sound pretty but i’ll be damned if it isn’t more comfortable inside. The new 737 MAX is atrocious, too.

  2. Boeing needs to stop boo hooing. They thought they could piggyback on the Trump “America First” agenda by bringing this action and it back-fired big time!

    BTW… I flew the Bombardier plane operated by SWISS and it’s fantastic. Blows Boeing 737 MAX out of the water – design, cabin interior and comfort plus it has bigger lavatories!

  3. @Alpha As the perspective of a coach flyer,The only boeing planes that I like now are JL’s 787, DL’s 77L and KE, NH (2-4-3 ones), JL and BR’s 77W

  4. Is It possible they killed the tariffs expecting to get the Super Hornet orders back? I wonder if Canada just used their leverage wisely.

  5. Dumb question: How does the CSeries differ from the Boeing 717? I mean it seems like a shorter version of that plane

  6. If you think for a moment that Trump Admin will let this pass…think again.
    No way they will allow these aircraft to operate in US airspace (without some huge concession from the Canadians).
    The dumping/ subsidies are far too big too ignore – this drama far from over.

  7. It’s not about the planes – they may be fantastic. It’s about the Canadian gov’t subsidizing them to make them artificially inexpensive – there is the anticompetitive action. I cannot fault Boeing for trying to level the playing field. Delta is successfully deploying a Jedi mind trick by talking about great planes rather than the real issue here – American workers being negatively impacted by foreign subsidies. Glad I fly UA.

  8. Canada should now buy the Super Hornets. If not, Trump should bomb them or get Jared to punch Justin at the next summit. After all, the US overturned itself so now Canada should.

  9. Question from Jamie: How does the CSeries differ from the Boeing 717? I mean it seems like a shorter version of that plane.

    Well, for one thing it’s in production.

  10. ^^ The C-series is lighter and has more advanced materials. Engine technology is better than in the late 90’s when the MD95/717 was designed.

    Seriously, I thought the 300% tariff was way too high. 15% would have covered Canada’s and Quebec’s cheating.

  11. According to various reputable news sources…

    Orders from the US military subsidize Boeing’s operations to a far greater extent than all the subsidies from the Canadian and Quebec governments that benefit Bombardier.

    In addition, Boeing received $457 million in federal grants, which are typically non-repayable, between 2000 and 2014.

    In addition, Boeing received $64 billion in federal loans and loan guarantees.

    In addition, the state of Washington provides tax breaks for Boeing, and last year the
    World Trade Organization (WTO) ruled that Washington state’s business tax reduction, worth $800 million to Boeing through 2016, is an illegal subsidy.

  12. I think the harm to Boeing in bringing this action will go far beyond the cancelled fighter jet order.
    The greater harm will come from having pushed the C series into the arms of Airbus. Bombardier is remarkably inept at marketing their products (and I say this as a proud Canadian) and Airbus will get this into way more airlines than Bombardier ever would have.

  13. And Boeing hasn’t received government subsidies and massive tax breaks? The difference – Canada is transparent about it.

  14. It was the right decision for the US. Delta gets planes, and American workers will build them. Boeing looks like a crybaby and handed an unintended leg up to Airbus, so this blew up in their face.

  15. I hope they put a CS100 on LAX-MDW, preferably…

    LAX 9:20am – 3:40pm MDW
    MDW 4:30pm – 7:00pm LAX for night APAC connections to Australia/Seoul/Guangzhou

    If they want to max utilize one plane then also the following but they serve the daytime APAC (China) markets out of DTW already…

    LAX 11:00pm – 5:00am MDW because Southwest doesn’t have redeyes
    MDW 5:50am – 8:30am LAX for the daytime APAC connections

    Although I don’t know if two crews in LAX are enough for that.

  16. Meeting took 2 minutes? Vote took 5 seconds? Sounds like a Kangaroo court to me. At least there are a lot of people on the ITC so it would have been impossible to bribe all of them. Oh wait, it was 4 guys?

  17. Rob, they get the evidence presented long beforehand. Are you really that dumb that you can’t even read up on how the ITC works? Boeing shills are working overtime tonight

  18. Boeing, come on! You never been credible! Funny how you easily made a fool of yourself… the world still doesn’t understand how rationally you could have sustained this! Good for Bombardier and good for your too big ego!

  19. I wonder now if Boeing will continue to try to buy Embraer…

    That’s what Boeing’s attack on Bombardier was really all about; they are going to buy Embraer and by slamming Bombardier with high tariffs they virtually eliminate their competition in the United States.

    @Rob, present your proof that Bombardier bribed the UNITED STATES ITC ROFLMAO. Come on now, we are waiting, you in a public forum formally accused a foreign corporation of bribing four officials of the United States government, so let us see your evidence lol.

  20. Good. Hopefully more will boycott Boeing. This should knock some sense into those “patriotic” protectionist rubbish-spewing nonsensical Americans.

  21. Boeing were being very underhanded.

    Embraer’s E190-E2 jet, has the same nautical range as the CSeries, making Boeing’s argument that its 737 competes “head-to-head” with the CSeries weirdly incorrect.

    Boeing demanded that the U.S. government ignore Embraer’s role in the market, while they secretly sought to buy Embraer! Very sneaky.

  22. It is so sad to see how much the US is drifting into shithole territory. Poor Americans feeling so vulnerable by dirty foreigners from Canada, Mexico, from the Middle East, Germany, Australia, doesn’t matter. All bad. All of them.

    It used to be a place people from elsewhere looked up to.

  23. Please people. Enough with the sanctimonious routine. None of you know who is right either. You are not privy to the details. You just want cheap flights and are not intellectually honest enough to admit that is your motive. Tariffs exist because there are circumstances where they are appropriate. And the threat that they might be exerted is sometimes enough to keep folks playing fairly. Maybe it is all a ruse to pressure bombardier and maybe it isn’t and Canada was trying to get away with something. But, stop pretending you know which it is.

  24. Forgot about that new 787 plant in South Carolina that didn’t cost Boeing very much after calculating all the “incentives” Trump’s UN Ambassador handed them. Or the “incentives” Illinois and Chicago gave the company to move its HQ. The US government also paid the cost of WW2 assembly plants for Boeing, Lockheed, Douglas and Convair which then continued operations building those companies’ commercial aircraft in the 50s and 60s.

    The big winner though is Airbus. Not only did they get half of the C-Series (and greater economies for their Alabama assembly plant, they got a huge order for their own New Gen narrow bodies from DL.

  25. @Rob

    If you want people starting to play fairly, maybe Washington state should stop giving tax incentives to Boeing. Maybe Boeing should not have accepted the >$900 million in tax incentives from the state of South Carolina. Maybe the US government should stop tailoring defence contracts that leave only Boeing as the winner.

    That’s why Boeing’s complaining is so ridiculous. They use them same unfair practices and should have STFU.

  26. @Jamie,

    The C-Series is a serious leap in capabilities over the 717.
    – Newer, far more efficient wing resulting in a better service ceiling. Remember, the 717’s wing was more or less unchanged from earlier McD designs due to cash flow issues affecting R&D.
    – Newer, far more efficient engines.
    – Super long range. This will allow various iterations of the C-Series to eventually fly routes like Denver- Hawaii. Imagine super long, thin routes that are currently out of reach of most narrowbodies, or aren’t economical to operate. The C-Series will be able to do them. This will add an immense amount of flexibility to airline operations, linking city pairs (especially small ones) that would have never had direct flights before.

    Where the 717 possibly wins is in it’s inherent McD virtues – it’s built like tank and its engines can really take abuse from the quick turnarounds like Hawaiian does. Whether the C-Series will eventually show us that type of raw ruggedness time will tell. I’d like to think that a newer plane would be just as hardy, of not more so.

    That’s just what comes to mind. I’m sure others know more.

  27. @RG, I think we need to ask Boeing to take subsidies just like Bombardier – that will make it a level playing field. Oh wait, they already do…in billions of dollars in subsidies/tax breaks from the city of Seattle, state of Washington and the federal government. Does that make it fair for you?

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