As a part of the fifteen-year trade spat between the U.S and Europe, the World Trade Commission has granted Washington the right to impose annual tariffs on US$7.5 billion worth of European goods. The immediate consequence is that U.S. carriers who have had long-standing orders with Airbus for the delivery of passenger jets have just seen the purchase price hiked by 10%.
Many airlines have objected to the fact the levy takes effect immediately and is applicable to existing orders and not simply new orders. However, the levy is not applicable to Airbus jets manufactured at the Mobile, Alabama plant and has not been imposed on aircraft parts, which is a welcome break for independent repair shops which have been suffering from the knock-on effects of the grounding of Boeing’s 737 MAX.
Delta Air Lines and Jet blue had lobbied hard for the levy to apply only to new orders, though the majority of Jet Blue’s order can be met by the Mobile plant. JetBlue spokesman Derek Dombrowski commented: “We are concerned about the detrimental impact aircraft tariffs will have on the ability for low-cost carriers like JetBlue to grow and compete, which will harm customers who rely on us to offer competitive, low fares.”
Delta and United Airlines have the largest orders for the A350 and A330neo wide-body models, which cannot be manufactured in Mobile, with Delta having committed only last week to purchasing 14 new A350s to complement strategic growth of LATAM Airlines Group in Latin America in which it has recently acquired a 20% stake. Other notable names with current Airbus orders include the American Airlines Group, Alaska Air Group and Air Lease Corp. The 10% tariff comes as a major disappointment for Boeing who had been calling for a 100% levy on all Airbus jets.
