Boeing Abuses Trade Laws to Ground Their Competition
Don't look now, but you're about to get bumped from your flight. It's a shame too, as this plane is especially comfortable, with roomier seats, wider aisles and bigger, more convenient windows that provide stunning views of the sky bound scenery.
This high-tech wonder, dubbed the C series, comes courtesy of the Canadian aircraft maker Bombardier, and also flies 50 percent quieter, is more fuel efficient, therefore less costly to operate. Another bonus from its innovative design, it saves passengers big bucks on baggage fees through larger overhead storage bins that can fit a roller-sized suitcase.
So impressed was Atlanta based Delta airlines with the C series that the U.S. carrier recently ordered 75 of the aircraft to upgrade their service on shorter routes. But if aerospace giant Boeing has their way, we'll all be taking the bus.
Boeing, who shares 80 percent of the commercial aircraft market with European competitor Airbus, claims that Bombardier is violating trade laws, selling the aircraft below cost thanks to generous subsidies courtesy of Canadian national and provincial governments. They've since petitioned the U.S. government to hit Bombardier with punitive anti-dumping penalties and stiff import tariffs. Though the International Trade Commission has agreed to hear Boeing's complaint, it's abundantly clear that Boeing is abusing trade laws to rid itself of a business competitor while sticking it to consumers of air travel.
First, the irony of Boeing complaining about a competitor benefitting from government subsidies ranks pretty highly on the absurd-o-meter, roughly on par with Ted Nugent filing a noise compliant against his neighbors. This from a company who, a 2015 report found, earned the distinction as the number one corporate recipient of state and federal subsidies, receiving a total of $13.4 billion in government handouts from 2000 to 2015. Clearly this is an honor Boeing isn't eager to brag about.
Secondly, to prevail in the trade claim Boeing must prove injury, but Boeing doesn’t even make a plane that competes directly with the one Bombardier sold to Delta, which is a passenger airline of approximately 100 seats. Boeing abandoned this market segment years ago, focusing instead on larger and more profitable aircraft. In fact, Delta confirmed it didn’t even consider Boeing aircraft because they were too big and not economical for the routes Delta flies.
The closest Boeing could come to Delta's need for a 100 passenger jet is their 737, which seats 138 passengers and is too large to be economical for the passengers Delta seeks to serve. Boeing wasn't injured by Bombardier, they were injured by their decision not to serve this market. The fact that this is the basis of their trade complaint makes about as much sense as Birkenstock suing an Italian fashion designer.
While it's bad enough that Boeing's counterfeit complaint poses a direct threat to Delta's and other U.S. airlines' planned operations, ultimately this action is like a runaway beverage cart headed for the kneecaps of average consumers. As airline travelers, consumers are Boeing's true customers, since we pay the fare that buys the airplanes they build. They ought to be paying attention to us.
Forcing passengers onto inefficient, old or outdated aircraft that airlines don't prefer raises costs and takes money right from our pockets. Denying consumers innovation simply because Boeing made a corporate decision not to invest in a market segment further denies us the benefits of choice and competition in the marketplace.
Indeed, Boeing's quest for corporate favoritism spills beyond the airline industry. More than half of the aircraft includes input from companies based and headquartered in the United States. Penalizing Bombardier would necessarily hurt American jobs and businesses, and the families and communities who depend on that paycheck. Meanwhile, Boeing currently enjoys record profits per share, and is responsible for nearly a quarter of the increase in the Dow Jones Industrial Average over the last year.
The C series from Bombardier is ideal for the needs of many airlines, but the Boeing alternative is for airlines to operate with fewer routes and to incur the cost of operating bigger aircraft than they need, wasting fuel and flying lots of empty seats in the process. Obviously, the end result is either higher prices for consumers or less choice as some routes become unprofitable for airlines to operate.
Beyond the economics, the industry consensus is that Bombardier has succeeded in designing and building a plane that meets both airline and consumer demand. Not allowing this cutting edge aircraft to our domestic airlines hands foreign airlines advantages in both a superior product and technology that allows foreign companies to optimize additional routes for consumers.
If Boeing is able to thwart an innovator like Bombardier in a market segment that it chose not to serve, it will be free to stifle further development of other advances in airplane design. For those passengers who enjoy the feeling of a knee in their back and loud jet noise, well, Boeing has your back. The rest of us might like to have the options of comfort and convenience that tech innovations are providing in the airline industry. It's why Boeing's cynical abuse of our trade laws mustn't be allowed to get off the ground.
Gerard D. Scimeca is an attorney and Vice-President of CASE - Consumer Action for a Strong Economy, a free-market oriented consumer advocacy group based in Arlington, VA.