Government Intervention: Airbus and Boeing
Government Intervention at Boeing and Airbus
Towards the beginning of aircraft manufacturing, Boeing and McDonnell Douglas stood as the leading aircraft manufacturers on a global scale. Working alongside the U.S. Department of Defense, Boeing received multiple contracts aiding the industry with tax breaks and infrastructure support. Meanwhile, Spain, France, Germany, and Britain formed an alliance to help start the second most leading aircraft manufacturer, Airbus. Since democratic socialism was the current system in Europe, it was customary for the government to play such a large role. Thus, Airbus received billions of Euros in subsidies and soft loans from these founding governments. Not only did their money nurture the birth of Airbus, but also helped this company to continue to succeed and compete against Boeing. In their defense, EU officials claimed that this stimulated approximately 53,000 jobs, created a large capital in Europe, and generated massive tax revenues. By the 2000’s, Airbus ended up exceeding Boeing’s sales, which led the United States to bring the case to the World Trade Organization. On the contrary, EU came back with a counter-claim stating that the United States had massive defense contracts with Boeing, and even an alliance with Japanese business partners such as Kawasaki and Mitsubishi. The Japanese partners, alone, funded $1.5 billion in soft loans.
The heavy subsidies and soft loans provided by the EU can be considerably unfair in the development and success of Airbus. With the support of the four countries Spain, France, Germany, and Britain, Airbus is practically incapable of failing. The main issue to be argued is not how the governments of the four founding countries helped the birth of Airbus, but how the millions of dollars in aid and “loans” are allowing Airbus to quickly gain market share and help surpass Boeing’s annual sales. Airbus has several advantages in terms of gaining such a healthy support from the EU governments.
Towards the beginning of aircraft manufacturing, Boeing and McDonnell Douglas stood as the leading aircraft manufacturers on a global scale. Working alongside the U.S. Department of Defense, Boeing received multiple contracts aiding the industry with tax breaks and infrastructure support. Meanwhile, Spain, France, Germany, and Britain formed an alliance to help start the second most leading aircraft manufacturer, Airbus. Since democratic socialism was the current system in Europe, it was customary for the government to play such a large role. Thus, Airbus received billions of Euros in subsidies and soft loans from these founding governments. Not only did their money nurture the birth of Airbus, but also helped this company to continue to succeed and compete against Boeing. In their defense, EU officials claimed that this stimulated approximately 53,000 jobs, created a large capital in Europe, and generated massive tax revenues. By the 2000’s, Airbus ended up exceeding Boeing’s sales, which led the United States to bring the case to the World Trade Organization. On the contrary, EU came back with a counter-claim stating that the United States had massive defense contracts with Boeing, and even an alliance with Japanese business partners such as Kawasaki and Mitsubishi. The Japanese partners, alone, funded $1.5 billion in soft loans.
The heavy subsidies and soft loans provided by the EU can be considerably unfair in the development and success of Airbus. With the support of the four countries Spain, France, Germany, and Britain, Airbus is practically incapable of failing. The main issue to be argued is not how the governments of the four founding countries helped the birth of Airbus, but how the millions of dollars in aid and “loans” are allowing Airbus to quickly gain market share and help surpass Boeing’s annual sales. Airbus has several advantages in terms of gaining such a healthy support from the EU governments.