The EX-IM debate: Not a fair fight

Passenger carrying Aviation in the US has been a fragile operation ever since gas prices dragged down price margins for the major carriers. Because of this, we have seen the fall of quite a few players in the market and even more so we have seen builders of aircraft go from at least a dozen different companies to effectively two. An issue that appears to have been overlooked is the Export-Import Bank of the United States and their role in today's aviation world

The Export-Import Bank, or EX-IM for short is in a nutshell a export credit agency that assists in financing the export of US goods to places around the world. The way they go about this is offering foreign companies great financing on products in order to promote US production overseas, as well as insurance, loan guarantees and direct loans. www.exim.gov/about/. On the governments website they claim to have "supported more then 600 billon dollars of exports"

The specific issues with US carriers is that this has resulted in huge orders for large jets from Boeing, including 777's and 787's, Boeings most expensive products from foreign carriers. This allows them to have the newest and up to date aircraft, while due to the global recession and the shockwaves from 9/11, and including the after mentioned fuel prices puts US carriers at a distinct disadvantage on international flights. ALPA and the US carriers have both pointed this problem out repeatedly http://centreforaviation.com/analysis/ata-criticises-us-ex-in-bank-support-for-foreign-carriers-singling-out-air-india-loan-guarantees-63548 

ALPA: http://www.alpa.org/Portals/Alpa/PressRoom/PressReleases/2013/11-17-13_13.62.htm

With that being laid out, my input into the matter is that the playing field is clearly not leveled and we are not doing ourselves any favors. The basic structure of the EX-IM is sound, it helps US companies compete with other producers overseas and that is good for US manufacturing jobs, and is great for Boeing but its a great harm to our own carriers. It doesn't make sense to offer such steep discounts and funding to foreign carriers at a time when US carriers need to both get back on their feet and have nearly no support from the US government to run their routes. Its a bad position to put ourselves into because if we don't offer the loans or financing, then we lose manufacturing jobs, but if we do we lose airline market share, which represents even more jobs and additionally is one of the few ways left in the world that America is still a leader in

The best way to solve this in my eyes would be not the elimination of the financing for foreign companies but to give every US carrier the same options. It doesn't make any sense to give the foreign carriers huge advantages when they are also state operated and as a result can theoretically operate at a loss just to force others out of the market. Not only would giving US carriers the same options re-level this problem, it could result in the sales of even more aircraft to US carriers to replace their old ones. This would be a great boon for manufactures, it would directly impact the use of less fossil fuels due to more efficient designs and may even lead to a reduction of pricing, thereby increasing profits even more. The biggest hurdle would be implementing this sort of deal however, as Airbus would need to be granted the same sort of deal Boeing would be offering and it would need to be done on a semi-quiet basis, something very difficult in todays world.

It is something that needs to be done however. Most of the big US carriers make huge profits on their overseas routes and while we need not protect their routes from other carriers, we shouldn't start them off on a huge disadvantage as well.