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:
- The ad was intending to show how the Gulf carriers are hugely supporting the US economy by creating American jobs
- Keep in mind that Delta constantly talks about the importance of creating American jobs, while their only widebody plane order is with Airbus, and their biggest narrowbody orders are with Airbus and Bombardier, neither of which are American companies
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…