Why does Delta (and United, American, etc) pay more than state-owned foreign airlines from wealthy nations for the same Boeing aircraft? Ted Reed’s article in Thestreet.com provides an excellent overview of the “lingering puzzle” of the Ex-Im Bank’s aircraft financing practices.
ALPA led the fight for stricter rules on the Ex-Im Bank last year, and legislation was signed into law that requires the Bank to perform an economic analysis to assess the effect of bank financing decisions on U.S. airlines and its workers. However, the Bank continues to approve low-cost financing for airlines at the expense of U.S. airlines without conducting such an analysis, and ALPA is now pursuing legal action against the Bank.
As Reed points out, the airlines benefiting from Ex-Im deals are hardly struggling and this raises the question of why U.S. taxpayers should be subsidizing their purchase of aircraft. He states, “Rather, the list includes Emirates Airlines and Etihad Airways, which are owned by the wealthy governments of Abu Dhabi and Dubai; LATAM Airlines Group, operator of the largest airlines in Chile and several other South American countries; LOT Polish Airlines and Korean Air Lines. None of them are from economically disadvantaged third-world countries. In fact, all of them get more backing from their country’s governments than U.S. airlines do.”
Additionally, US airlines are ineligible from receiving any preferential financing on Airbus aircraft from European banks, which also provide Ex-Im style subsidies. Thus “the entire world can hold hands and join together in discriminating against U.S. airlines.”
Read the full article here: http://www.thestreet.com/story/11891323/1/why-delta-pays-more-than-emirates-for-boeing-planes.html