Who is the real loser in the government dispute between Airbus and Boeing? Many say the consumers are the real victims. The tariffs stem from a 15-year-old dispute between the U.S. and Europe over government subsidies paid to aircraft manufacturers Boeing and Airbus, respectively.
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The U.S. on Wednesday announced tariffs on Airbus planes after winning a World Trade Organization dispute over subsidies received by the aircraft manufacturer. ravelers may end up paying higher airfare as a result.
The WTO on Wednesday authorized the U.S. to impose tariffs on $7.5 billion of European imports, opening the possibility of a rapidly-escalating tit-for-tat trade war between the E.U. and the U.S.
Airlines balked after the U.S. said it would implement 10% tariffs on Airbus planes starting Oct. 18 as it would drive up their costs. Airlines for America, a trade group that represents airlines including Airbus customer American Airlines and JetBlue Airways called the tariffs “unprecedented” and that they could “would negatively impact the U.S. commercial aviation industry as well as the overall economy.”
Airlines purchase planes years in advance and sometimes order models that are still in development, so switching contracts to another supplier would be extremely difficult.
Delta Air Lines, which has purchased European-made Airbus A350 planes to revamp its long-haul, wide-body fleet, as well scores of smaller Airbus jets for shorter trips, said the decision would “inflict serious harm on U.S. airlines, the millions of Americans they employ and the traveling public.” The Atlanta-based airline has about 170 Airbus jets on order, according to a spokeswoman.
JetBlue, like Spirit, has a fleet of all Airbus narrowbody jets, with dozens of new planes on the way, fretted about its ability to grow if aircraft costs rise due to the tariffs.
Airbus produces its wide-body planes in Europe, while it’s single-aisle jets are made both in Europe and at a factory it has recently expanded in Mobile, Ala. Airlines take delivery from various facilities.
Higher airfares are on the horizon making airline passengers the victims.