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ATA sues over Air India deal

By control on November 17, 2011

The Air Transport Association of America has taken legal action against the Export-Import (Ex-Im) Bank of the United States to prevent Air India from receiving a $3.4 billion loan. The money, which would be used to finance aircraft for the carrier, comes at entirely too high a price, ATA President and CEO Nicholas E. Calio remarked.

The ATA filed the suit with U.S. District Court of the District of Columbia, asking the court to deem the Ex-Im Bank’s loan-guarantee unlawful. According to ATA officials, the Ex-Im Bank has already approved a $1.3 billion loan for Air India, with an additional $2.1 million pending consideration; the loans would support the carrier’s acquisition of 30 aircraft, including 27 Boeing 787s.

With this lawsuit, ATA officials hope to prevent foreign carriers from receiving drastically lower — up to 50 percent — financing rates than U.S. airlines. After all, an ATA spokesman revealed, the discounts afforded to these carriers have certainly added up.

“Having received more than $52 billion in U.S. taxpayer-funded loan guarantees over the last 10 years, foreign carriers have added capacity and gained market share,” he remarked. In fact, such Ex-Im Bank guarantees have enabled these airlines to increase their capacity on U.S. routes by 12 percent, he said.

The overcapacity has also forced some American carriers to reduce their flight schedules and cut jobs, two actions Calio hopes to prevent with this injunction. “ATA has no choice but to seek judicial intervention in order to prevent our members from suffering irreparable injury,” he said in a statement.

Calio slams the loan as putting American carriers at a vast disadvantage. “While we support the goal of expanding U.S. exports, it cannot come at [this] expense,” he said in a statement.

“Commercial aviation in the United States drives $1.2 trillion per year in economic activity and more than 10 million jobs; we cannot do that if we continue to face a harsh and punitive tax and regulatory environment that, along with this proposed action, puts us at a competitive disadvantage,” Calio continued. “It’s time to level the playing field.”

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