Upcoming Reauthorization Offers Key Opportunity For Reform

The Air Line Pilots Association, Int’l (ALPA) on Wednesday called on the U.S. House Financial Services Committee to seize the upcoming U.S. Export-Import Bank reauthorization as a key opportunity to make certain that the bank’s widebody financing decisions do not harm U.S. airlines or threaten U.S. airline industry jobs.

“I don’t take issue with the historic mission of the bank, but it has lost its way,” said Capt. Lee Moak (pictured), ALPA’s president, in his testimony released by the union to the media. “Now, the bank is being used to provide subsidies to foreign companies that not only don’t need the financing but use the advantage to undercut U.S. airlines.”

Capt. Moak testified Wednesday before the U.S. House of Representatives Committee on Financial Services at a hearing titled “Examining Reauthorization of the Export-Import Bank: Corporate Necessity or Corporate Welfare?”

ALPA’s president pointed to both the rapid growth of state-owned and state-supported Persian Gulf airlines and the emergence of flag-of-convenience business practices such as the proposed Norwegian Air International as factors that already skew the playing field against U.S. airlines. The Ex-Im Bank’s widebody financing decisions add to this competitive imbalance, said Capt. Moak, who detailed that, in 2013, the bank approved $7.9 billion in financing for U.S.-made airliners that are operated by U.S. airlines’ competitors.

“Competition is good, and on a level playing field, U.S. airlines can compete with anyone,” continued Capt. Moak. “Ex-Im widebody financing is not available to U.S. airlines. As a result, the bank is effectively providing a subsidy to foreign airlines that then operate the Ex-Im Bank-financed aircraft on routes that are, have been, and could be served by U.S. airlines.”

U.S. airlines have been forced to withdraw from or not enter key international routes because of this competitive imbalance, explained Capt. Moak. He cited Air India’s using its Ex-Im Bank-subsidized airplanes to flood the U.S.–India market with extra capacity, which forced Delta out of the New York–Mumbai market in 2008.

ALPA’s testimony underscored that international flying is crucial for U.S. airlines and the jobs they provide. About 11,000 pilots at the three largest U.S. carriers fly in international operations, so their jobs are directly at risk from this competitive imbalance to which the Ex-Im Bank’s widebody financing contributes. Jobs at U.S. regional airlines that fly these international passengers to and from their final domestic destinations are also in jeopardy.

In its 2012 reauthorization of the bank, Congress directed the Treasury Department to negotiate with the European Union to end widebody aircraft financing. ALPA encouraged the committee to seek a full accounting of that effort. In addition, despite the Treasury Department’s stating that a competing export credit agency’s financing offer is not sufficient reason for the Ex-Im Bank to offer financing, the bank cited such an offer in about 90 percent of its 2013 aircraft loans.

“The bank appears to be ignoring the intent of Congress,” said Capt. Moak. “With its authorization expiring on September 30, now is the time to ensure the bank operates with maximum transparency, uses proper economic modeling, and analyzes the potential of its widebody aircraft financing to harm U.S. industry and U.S. jobs.”

Moak was one of eight witnesses called to testify before the committee.

FMI: www.alpa.org