Budget airlines asia

607 mots 3 pages
Boeing arguments: 1979 Civil Aircraft Industry treaty signed between the US, Western European Countries, Canada and Japan Agreement prohibits levying of import duties and quotas on civil airliners and on their parts and components Agreement designed to reduce the influence of governments on airline’s purchasing decisions Yet disbursement of subsidies to aircraft makers very flexible Ban on duties, quotas and technical trade barriers can be deemed a success but reducing the government influence has not worked 1992 EU-US agreement on Trade in Large Civil Aircraft – banned direct production and sales subsidies but allows subsidies to new projects in the aircraft industry = 33% of the subsidies This subsidy is a launch aid which has to be repaid with interest and the interest rate has to cover the government’s loan costs = reduces financial risk by the airliner – this aid is what Airbus receives as an assistance Agreement also enables indirect payments by the state to the company at a maximum of 3% of the sales volume of the domestic industry for large civil aircraft – these subsidies don’t have to be repaid Agreement was issued in 1992 to help the two airline companies but was meant to be decreased and finally cancelled but instead became common practice on both parts – agreement on both parts October 2004, US put an end to the 1992 agreement and started procedures against Europe and Airbus. US and Boeing arguments: US argued that Airbus wasn’t facing anymore difficulties in the market and the subsidies it was receiving were prohibited by the WTO Agreement on Subsidies and Countervailing Measures of 1994 Through subsidies, Airbus developed new planes Capture by Airbus of Boeing’s long standing customers with aid of billions of dollars in government loans at below market rates => violation of global trade rules Evidence of lost plane sales and lowered prices made after 2001 where aviation

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