The U.S. airline industry can win a fair fight on the international stage, but the fight U.S. airlines face today is far from fair. Backed by government guarantees, Ex-Im commitments allow foreign airlines to purchase aircraft on below-market terms unavailable to domestic carriers. With those financial advantages come competitive ones: Foreign airlines can increase capacity and gain market share on international routes. Those capacity increases squeeze U.S. carriers out of markets in which they could otherwise compete. The result? As many as 7,500 lost American jobs and $684 million of lost annual income.
An example: In 2006, Delta initiated nonstop service between New York and Mumbai, competing with Air India’s one-stop service. But between 2006 and 2009, Ex-Im provided Air India $3.3 billion in loan guarantees, which the airline used to finance long-range aircraft at below-market rates. Air India then used its new subsidized capacity to flood the U.S.-India market, dropping ticket prices by more than 30 percent, a level at which Delta could not compete. When Delta lost that route due to Ex-Im subsidy, its employees suffered.