US Support of Sales of American Aviation Products versus Advantage to Foreign Carriers competing with US Carriers? Good Policy Question Worth Resolving

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ARTICLE: ALPA Files Third Joint Lawsuit Against Ex-Im Bank

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ALPA, Delta and Hawaiian have appealed a decision by the Export-Import Bank to guarantee loans for aircraft manufactured by US companies to Etihad Airways, Korean Air Lines, LATAM Airlines Group, and Lot Polish. Their argument is that this action by the US Government lowers the cost of these aircraft to foreign carriers. The Chairman of the bank says that the program is designed to level the playing field. The products from foreign countries get pricing support and place the US aircraft at a disadvantage. Fred Hochberg of Ex-Im Bank is quoted as saying that airlines “have a choice, they can fly Boeing-built airplanes or Airbus-built airplanes.”

The US Chamber of Commerce was aggressive in its support for the reauthorization of the program. So much so that Ex-Im Bank gave the Chamber’s Chair an award for his lobbying.

The people who work for Boeing, Pratt & Whitney, GE Engines and other major aviation manufacturers are heavily unionized. ALPA is, therefore, opposing support for brother members of the AFL/CIO.

Both A4A and ALPA have called for a National Aviation Policy. A4A is silent on the subject of financing the purchase of of American products by foreign competitors; whereas ALPA is opposed.

Articulation of national policies is a difficult, if not impossible, task. A position of the US government in its addressing regulatory, legislative, taxing, security, etc. issues involves so many considerations. A single integrated aviation “constitution” would require balancing of interests—unions v. management, security v. tourism, tax revenues v. need for federal funds, safety v. unnecessary burdens and trade policy v. domestic competition, to name a few conflicts. The agendas of ALPA and A4A would require the resolution of such assemblies of policies. This pairing demonstrates the divergence of two players; the aviation “boxing ring” would include many more.

Resolving conflicts expressed by the three groups mentioned above may be within a simple analysis. Perhaps a detailed financial/economic analysis can calculate

  • the value of converting a loan guarantee’s reduction of interest to a foreign carrier into an advantage over US carriers in operating margin

VERSUS

  • the loss of US manufacturing jobs caused by the loss of the Ex-Im bank’s program

and identify a clear policy decision. Perhaps the bank has already analyzed this calculus. It is never clear whether US Courts of Appeals are great forums for positing experts to define the relevant financial and economic numbers; courts concern themselves with issues of procedures rather than ab initio calculations. Congress or an inter-agency group would be better suited for this conflict resolution.

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