Boeing has accused Bombardier of benefitting from government subsidies, allowing the Canadian airplane manufacturer to sell its new C-Series planes to US buyers at below cost. Boeing claims that in 2016, Delta Air Lines bought 75 C-Series jets from Bombardier for $20 million each, discounting $13 million from the list price. Neither Bombardier or Delta have confirmed the claim. According to Boeing, sales of their new 737 have been negatively affected.
The complaint was taken as a hearing at the International Trade Commission (ITC) on Tuesday, December 19. Evidence given showed that Bombardier had been taking illegal subsidies to try to flood the US market with cheaper than production C-series planes; however, there was no evidence supporting Boeing’s claim of this hurting the sales of the 737, which is backlogged of more than 4300 aircraft orders. Based only on the Delta order of Bombardier jets, the case has yet to have any basis on imports.
This is a milestone in the ITC as it is the largest case by far it has ever heard.The US Commerce Department has already ruled in Boeing’s favor, passing a 220% tariff on the Bombardier jets. Initially, Boeing only sought a 79% tariff, which reflects the duties against Chinese state-owned enterprises. If the ITC finds that Boeing has not suffered the damages that it claims, then the anti-subsidy duties against Bombardier can effectively be thrown out.
Airbus, a European manufacturer with a plant in Alabama, recently purchased Bombardier’s C-Series program for $1. Production of the C-Series in America may bypass the tariff altogether. However, the domestic production also will create 400-500 direct jobs in the United States and approximately $300 million in new foreign direct investment, as estimated by Bombardier.