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  • War in Washington: U.S. Airlines Vs. Boeing
    Posted by Joe Anselmo 10:03 PM on Nov 21, 2011

    Nicholas E. Calio is not afraid of a fight. As the White House’s legislative affairs director under U.S. President George W. Bush, the longtime Washington insider secured a string of victories on Capitol Hill, including congressional authorization for Bush to wage war on Iraq. And when Calio in January became president and CEO of the Air Transport Association (ATA), he was expected to bring some much needed vigor to the U.S. airline industry¹s lobbying organization.

    Calio has not disappointed. On Nov. 16, ATA declared war on Boeing, filing a lawsuit against the Export-Import Bank of the United States to block $3.4 billion in government loan guarantees -- a mechanism used to stimulate exports -- for a pending sale of 30 jets to Air India. The suit, which is pending in U.S. District Court in Washington, argues that underwriting aircraft sales to Air India would provide favorable treatment to a foreign carrier, harming a domestic airline industry that employs five times as many people as Boeing’s Commercial Airplanes unit. ATA also claims that Boeing, the nation’s largest manufacturing exporter, is not the jobs machine it claims to be because many of the structures and components on its newer jets are sourced overseas.

    That may be the case with Boeing’s new 787 jet, which notably flies with wings made in Japan. But why wage battle over Air India? ATA charges that aircraft loan guarantees the bank made for the carrier in 2006 created a surplus of seats between New York Kennedy and Mumbai. Underwriting more airplane sales to Air India would only add to the oversupply, it argues. But it’s hard to see how a struggling carrier that has lost more than $9 billion since 2007 poses a major threat to U.S. airlines. Certainly the airline jobs at risk do not match the number that would be lost at Boeing and its suppliers if the airframer was unable to compete in India, one of the world's fastest growing aviation markets.

    The real reason for the suit, industry observers believe, is to draw a line in the sand. ATA has watched in dismay as European government export credits flowed to Middle Eastern carriers such as Emirates to stimulate the sale of new Airbus jets. Those jets in turn were used to compete with European legacy carriers, cannibalizing their traffic. “The concern is that Europe is sacrificing its national carriers to help Airbus,” says Teal Group analyst Richard Aboulafia. “ATA may be trying to avoid a repeat of what¹s happening across the ocean.”

    But in taking on Boeing, ATA also is going up against the Aerospace Industries Association. AIA’s president and CEO, Marion C. Blakey, is also a formidable Washington insider, having served as FAA administrator and chairwoman of the National Transportation Safety Board. AIA’s initial response to the suit was muted, but it is hard to imagine it will not punch back. Calio versus Blakey? This could get very interesting.

    Tags: tw99, AWCOL, Boeing

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