Major carriers protesting subsidies for rival airlines

Major US and European carriers are jointly opposing the financial support their governments give rivals.

Travel Insurance News - 07/10/2010

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<p>Major carriers based in Europe and the USA are working together in an attempt to stop subsidized financing they say unfairly helps rival carriers in other countries to buy aircraft. The export loan guarantees are intended to support export trade by Airbus and Boeing but US and European airlines are unhappy about a practice they say is unfair to them and is hurting their businesses.</p>

<p>Airlines banding together in opposition to the practice include Air France-KLM, British Airways, American Airlines, Delta and Southwest. The Air Transport Association, a trade organization representing major US carriers, says it is about to provide a detailed argument to senior officials in the US government.</p>

<p>The practice of giving export loan guarantees has for a long time been seen as vital to the health of aircraft producers Boeing and Airbus. Banks are generally unhappy to lend to airlines, most of whom suffer from low credit ratings. However, a side agreement means major US and European airlines do not enjoy the benefits of the subsidized financing their governments provide to competitors in other countries.</p>

<p>The airlines complain that just as they are digging themselves out of the economic morass of the last two years, they are forced to handle higher rates for financing fleet purchases than many of their biggest competitors. They also say these subsidies are producing industry overcapacity.</p>

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