WTO confirms huge aviation subsidies

26th April, 2011

The issue of subsidies to the aviation has been rumbling on for years. But it came something of a head when the World Trade Organisation WTO) delivered its findings on subsidies to Boeing and Airbus.

The WTO found that Boeing could not have launched the 787 without government, NASA and US Department of Defense subsidies has been hailed by Airbus as victory in its long-running dispute with its US rival over the legality of government aid.

The WTO, ruling on a European Union case against the USA – filed in response to a 2004 US complaint about state aid to Airbus to develop the A380 and other models – detailed “at least” $5.3 billion worth of illegal subsidies to Boeing in the 1989-2006 period.  Without illegal state support the company could not have launched an aircraft as advanced as the 787 for delivery in 2008 as promised on launch four years earlier.

The public release of the ruling follows the WTO’s similar move in October 2010 on the US case against Europe, which found that Airbus could not have brought to market airliners of the quality that it has without state aid.

However, Boeing dismisses the $5.3 billion figure, putting the total at less than $2.7 billion against more than $20 billion received by Airbus, and both sides persist in fighting talk. Appeals look certain to keep the dispute going

Whatever the exact figures, it is clear there have been massive subsidies for aircraft manufacturers. 

For more detail, see article in Flight International. The magazine has also published a special report.

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The debate has spilled over into the British press – see letter in the Financial Times:

Sir, How odd that Ulrich Schulte-Strathaus of the Association of European Airlines says that “airlines and their customers pay, in full, for their infrastructure” as his first defence against the suggestion that airlines benefit from a massive tax subsidy (Letters, April 13).

If that is the case, you have to wonder why, as the FT reported last week, the European Commission has just announced a wide-ranging review of state aid to airlines and airports “Aviation sector aid under EU scrutiny”, April 7). In 2006, Lufthansa (who should know) estimated state aid to airlines in Europe since 1991 was worth €20bn. And there’s been plenty more since then as governments across the continent have rushed to subsidise new regional airports and new routes, with the European Commission cheering them on

Meanwhile airlines have benefited from subsidised aircraft thanks to billions of euros of government support in the form of cheap loans and direct subsidies to Airbus and Boeing: the icing on the cake.

Bill Hemmings,

International Coalition for Sustainable Aviation,

Brussels, Belgium