Agreement Would Be Positive Step toward Reducing Subsidies to Foreign Airlines
WASHINGTON, Dec. 16, 2010 /PRNewswire-USNewswire/ -- The Air Transport Association of America (ATA), the industry trade organization representing the leading U.S. airlines, called on the U.S. government and the other parties to the Organization for Economic Cooperation and Development (OECD) to conclude a new Aircraft-Sector Understanding (ASU) on official export credits in order to begin neutralizing the impact of subsidized financing provided to foreign airlines by the U.S. Export-Import (Ex-Im) Bank.
"Although the proposed new ASU will not eliminate the cost advantage that foreign airlines – including many of the world's most profitable airlines – enjoy from subsidized export credit financing, as it should, it is a significant improvement over the current ASU," said ATA President and CEO James C. May. "Today's below-market, subsidized financing of foreign airlines by the Ex-Im Bank puts U.S. airlines at a clear disadvantage. Failure to conclude a new agreement will mean more U.S. subsidies of foreign airlines, continued market share loss by U.S. airlines and more job loss by U.S. airline workers," May said.
The OECD is on the verge of concluding a new ASU.
May added claims that the premiums under the new agreement are too high merely prove the point that many airlines and manufacturers have come to view subsidized financing as an entitlement, instead of stop-gap financing to help manufacturers when aircraft buyers do not have access to credit markets. "Export financing should not distort competition by making below-market financing available to healthy, creditworthy airlines," said May.
In addition, May emphasized that the U.S. and other OECD parties should resist efforts to embed overly generous transition rules in the new agreement in order to "grandfather" airplanes on order under the current agreement – and even under the terms of the prior agreement. "The time has come to conclude this agreement, promptly end the subsidies under the current and prior agreements, and begin to allow both airlines and manufacturers to compete on the basis of their products," said May.
Annually, commercial aviation helps drive more than $1 trillion in U.S. economic activity and nearly 11 million U.S. jobs. ATA airline members and their affiliates transport more than 90 percent of all U.S. airline passenger and cargo traffic. For more information about the airline industry, visit www.airlines.org and follow us on Twitter @airlinesassn.
SOURCE Air Transport Association