US, Europe airlines cry foul over export loans

US and European taxpayers are subsidising foreign airlines to the tune of billions of dollars by helping them buy Airbus and Boeing jets with loans denied to domestic carriers, airline lobbyists said.

The claim marked the start of a concerted lobbying campaign by airlines on both sides of the Atlantic challenging the rules for government export measures. which have smoothed the sales of jetliners to high-growth markets in Asia and the Gulf, reported Reuters.

The reason for airline anger is an agreement which allows the home governments of US manufacturer Boeing and Europe's Airbus – France, Germany, Spain and the UK – to give export financing to some, but not all carriers.

World trade officials say export credits, effectively discounted loans, do not necessarily contravene trade rules.

But an informal agreement between the five countries involved means the export credits cannot be offered to airlines based in any of the five countries where Boeing and EADS subsidiary Airbus are based, executives said.

That means an airline in an Airbus home nation, such as British Airways, would not qualify for US credits when buying a Boeing in the same way that a US airline buying an Airbus would not secure European export credits, the Association of European Airlines said.

"There is a situation here whereby European taxpayers are funding the sale of planes to our global competitors who are getting conditions that we can't get," said the association's spokesman David Henderson.

Some 20 airlines were due to sign a letter to governments calling for a more rational export funding system, executives said.

"Why should the sale of an aircraft be that much different from the sale of other goods?," said Marc Verspyck, finance director of Air France, part of Franco-Dutch Air France-KLM.

The campaign includes some of the world's biggest airlines including US majors Delta and United, many of whom have slashed jobs during a severe industry downturn.

Proponents of the change did not name airlines or countries, but their resentment is clearly directed at major carriers in the Gulf and Asia which have grabbed market share from older rivals by filling large new jets with people bound for new hubs.

The shift in industry power was dramatically highlighted when Dubai-based Emirates ordered 32 Airbus A380 superjumbos, the world's largest airliner, at the Berlin air show in June in a challenge to Air France-KLM and Lufthansa.

But Tim Clark, president of Emirates airline, dismissed the lobbying campaign and said US and European carriers would do better to question why so many of them struggle to make money.

"We are an airline and these are government initiatives that have been in place for a very long time," Clark told Reuters.

"If the governments decide to change the home rules it's up to them. To say we shouldn't take advantage of those is absolute nonsense," he said, adding Emirates did not in any case always take advantage of financing from Export Credit Agencies (ECA).

"To say we are successful because we get cheap credit is complete nonsense," Clark said.

The row is separate from a larger trade fight pitting Airbus and Boeing against each other over mutual accusations that they received illegal subsidies from the United States and the same four European nations involved in the export credit dispute.
(Source:www.cargonewsasia.com)