By Tyler Jiang
When jetting around the world, air travelers typically associate their journey with how long the security line was, or how bland the airplane food. But little do passengers know, the real battle is between airplane makers as they vie for market shares. In the wide-body and narrow-body fields, American Boeing and European Airbus dominate the market. But in the smaller regional jetliner category, the Canadian company Bombardier has recently released their 100 seat C-Series jet, a market where Boeing has no product in.
The dispute began in April 2016 when Bombardier sold 75 C-Series jets to Delta Airlines. One year later, Boeing filed a petition accusing Bombardier of selling the jets to Delta below their production cost in a case of dumping and accused the Bombardier of receiving illegal subsidies from the Canadian government.[1] The petition was met with immediate backlash against Boeing, with the criticism focused on how Boeing’s smallest jet, the 737-700, was outside of the 100-125 seat category that the C-Series filled.[2] During preliminary rulings, the U.S. Department of Commerce placed a 300% tariff on Bombardier’s jetliner, but ultimately, in a surprising move, the U.S. International Trade Commission ruled against Boeing and lifted all duties placed on the C-Series jets on January 26, 2018.[3]
Though the trade dispute is now resolved, the case highlighted how complex and far reaching international trade disputes can reach. After the 300% tariff was levied against Bombardier, many nations stated their displeasure at the ruling, especially Britain. The British backlash was economically motivated, with a Bombardier factory in Northern Ireland that employs thousands of workers.[4] The dispute also highlighted the continued struggle between Boeing and Airbus for dominance in the aviation market. During the dispute in late 2016, Airbus announced that it would take on a majority stake in the C-Series jets, allowing Bombardier to utilize its Georgia factory to produce jets for the American Market.[5] Though this move was expected for a long time, Boeing’s response shed more light on the dispute.
In early January 2018, it was revealed that Boeing has been in talks with Brazilian airplane manufacturer Embraer to merge the companies.[6] Though Embraer produces defense equipment, its commercial aviation wing focuses on regional jetliners, in the same category as the C-Series. It is possible that Boeing wanted to clear out Bombardier from America’s markets and open the door for Embraer jets, which are already prevalent throughout American airlines’ fleets. But this deal has seemingly been put on hold, as the Brazilian government is opposed to a complete takeover of Embraer by Boeing, a move that may put Brazilian defense assets at risk. But a deal may still occur, with Embraer eager to cooperate with Boeing to access new markets, but there are still many hurtles for both parties to overcome before a deal can be reached.[7]
This dispute brought together the four aviation manufacturing giants into one extended conflict. Though Boeing ultimately lost, a victory for them may have costed both the company and the United States. The dispute may have damaged economic relations with Britain where the factory in Belfast would have been severely hit. The deal also has damaged relations with the Canadian government which scrapped plans to purchase more fighters from Boeing. Even though this dispute was at the corporate level, governments that had a stake in the dispute made their stance known, which muddied the waters. If a spat between airplanes can cause such an international uproar, what else can.
Tyler Jiang is a senior at Rowan University where he studies International Studies and History.
Sources
[1] Boeing Petition against Bombardier, https://leehamnews-5389.kxcdn.com/wp-content/uploads/2017/04/BBD-Complaint-042717.pdf.
[2] Flight International, “OPINION: Boeing’s CSeries trade complaint lacks credibility,” Flight Global (May 6, 2017). https://www.flightglobal.com/news/articles/opinion-boeings-cseries-trade-complaint-lacks-cred-436886/
[3] Leslie Joseph, “Boeing loses trade case over Bombardier passenger jets,” CNBC, (January 26, 2018). https://www.cnbc.com/2018/01/26/boeing-loses-trade-case-over-bombardier-passenger-jets.html
[4] Reuters staff, “Relief for UK workers after Bombardier trade dispute victory,” Reuters, (January 28, 2018). https://www.reuters.com/article/us-usa-itc-ruling-britain/relief-for-uk-workers-after-bombardier-trade-dispute-victory-idUSKBN1FG0EW
[5] John Mulgrew, “Bombardier tie-up with Airbus on its CSeries jets going ‘full steam ahead,’” Belfast Telegraph, (January 31, 2018). https://www.belfasttelegraph.co.uk/business/northern-ireland/bombardier-tieup-with-airbus-on-its-c-series-jets-going-full-steam-ahead-36548265.html
[6] Phil LeBeau, “Boeing, Embraer working to clear hurtles to deal,” CNBC, (January 5, 2018). https://www.cnbc.com/2018/01/05/boeing-embraer-working-to-clear-hurdles-to-a-deal.html
[7] Brad Haynes and Anthony Boadle, “U.S. trade ruling piles pressure on Boeing-Embraer Deal,” Reuters, (January 31, 2018). https://www.reuters.com/article/us-embraer-m-a-boeing-analysis/u-s-trade-ruling-piles-pressure-on-boeing-embraer-talks-idUSKBN1FK2GI
