Global Airlines

The United States airline industry is facing major competition from the international market, especially from the Gulf region. This is primarily due to government subsides given to international airline by U.S. government as well as their own governments. U.S.

Two long-haul foreign carriers that receive government subsidies are Emirates and Qatar Airways. Qatar Airways is the national airline of the State of Qatar and Emirates is Dubai based airline wholly owned by the government. Over the past 10 years, Qatar and the UAE have provided more than $42 billion in subsidies to Qatar airlines.

Long-haul carriers such as Delta, to American Airlines, and United have received government subsidies in the past. In 1999 all three major airline carriers received 71.5 billion dollars in government subsidies. “The independent Risk Advisory Group found that the vast majority of the $71.48 billion granted to American Airlines, United and Delta has been paid since 2000” (businesstraveller). American Airlines, United and Delta have also benefited from bankruptcy protection, which relieved United $26 billion and Delta $4.6 billion, and American of $6 billion dollars of debt. Risk Advisory has estimated that United Airlines received $44.4 billion, Delta $15 billion and American $12 billion in government subsidies. This study also shows that the three major carriers have also benefited from a federal jet fuel tax of 4.4 cents per gallon instead of the 21.9 cents that other carriers pay. In addition to the other government subsidies Delta Air Lines received a total of $761 million from the state of Minnesota to build a fleet maintenance facility. In 2003 the State of Missouri awarded American Airlines $80-85 million in redevelopment funds. 6.3 million dollars was given to United Airlines in the form of a tax credits from Colorado.

The Import Export Bank of the United States is the official export credit agency of the United States federal government (EXIM). The mission of the Import Export bank is to create and sustain jobs in the United States by facilitating the export of goods and services from the U.S. to international markets (EXIM). The bank’s guarantees give an unfair cost advantage to foreign rivals, particularly carriers from the Persian Gulf that have been aggressively building up their fleets with jets like the Boeing 787 and 777 (NYtimes). Between 2000 and 2010, the bank provided more than $52 billion in guarantees to help foreign airlines buy Boeing aircraft, providing the financing for 950 jet planes (seattletimes). The sad thing about this is domestic airlines are not eligible for such subsidies even though they are some of Boeing’s largest customers.

Reference

Export-Import Bank of the United State. (n.d.). AUTHORITY HAS LAPSED. Retrieved from http://www.exim.gov/authority-has-lapsed/

Boeing use of Export-Import Bank can fly at cross purposes. (2012, February 22). Retrieved from http://www.seattletimes.com/business/boeing-use-of-export-import-bank-can-fly-at-cross-purposes/

Clark, N. (2014, July 13). Boeing Optimistic That Export-Import Bank Will Get Funding. Retrieved, from http://www.nytimes.com/2014/07/14/business/international/boeing-optimistic-that-export-import-bank-will-get-funding.html

US carriers 'have received $71.5 billion in state-aid' - Business Traveller. (n.d.). Retrieved, from http://www.businesstraveller.com/news/101647/us-carriers-have-received-dollar-71.5bn-in-stat