Delta Air Lines passengers can reach India through one-stop transfers on partner KLM in Amsterdam, but it wasn’t that long ago that the Atlanta-based carrier could reach this market of 1.2 billion people nonstop from the U.S.
Why the change? Delta’s CEO places the blame squarely on the Export-Import Bank of the United States.
Delta’s nonstop flights from the U.S. to Mumbai started in 2008 from Atlanta. The 17-hour haul on a Boeing 777 moved to New York but from there was suspended relatively quickly, leaving many travelers wondering why the airline’s commitment to the market was so short-lived.
In testimony before the House Financial Services Committee June 24, Delta CEO Richard Anderson gave a simple reason: Air India was able to offer cut-rate tickets because a deal with the U.S. Ex-Im agency gave it cheaper access to widebody aircraft than was available to American carriers.
In 2011, the bank approved a $3.4 billion to Air India to support purchase of Boeing aircraft, which might pad the bottom line of one U.S. giant, but it’s hurting his employees, Mr. Anderson said. And that deal wasn’t the first time.
“Only two years earlier Air India had used separate guarantees to secure below-market financing for the purchase of Boeing 777s and deploy them between JFK and Mumbai, in direct, head-to-head competition with Delta at significantly reduced ticket prices. Delta had no choice but to exit that market,” Mr. Anderson’s statement reads. “I personally presented this problem to the bank following the bank’s September 2011 deal, but my concerns fell on deaf ears.”
In his verbal testimony, Mr. Anderson said exiting the route cost Delta 1,000 jobs.
He stopped short of requesting that the bank be abolished, unless the bank does not enact meaningful reforms. He noted that during the last hearings on reauthorization required the bank to reform the way it calculates impact to U.S. jobs on each of its disbursements. The U.S. Treasury was also given a directive to begin negotiating with the European Union to end bank subsidies on widebody planes, a measure presumably targeted at evening the playing field for Boeing and Airbus.
Neither directive was heeded, according to Mr. Anderson and the bank’s critics.
“You tried to reform the bank in a bipartisan way the last time and your reforms were ignored, and it’s our jobs that are at risk,” Mr. Anderson said.
Delta is asking that the bank deny financing to airlines that are backed by foreign governments or are creditworthy in their own right. Mr. Anderson’s testimony included a chart showing that 14 of the 20 largest government-backed airlines are receiving Ex-Im assistance.
He noted that Delta, now the most profitable airline in the world, has not had access to the same advantages.
“There are not many airlines in the world that buy 100 Boeing airplanes and pay cash for them, so let’s make sure we put our discussions here in context,” he said, adding that the airline is hiring 600 pilots and 1,000 flight attendants per year. Delta currently employs about 80,000 people in all, carrying 165 million passengers annually on 6,000 flights per day.
Read Mr. Anderson’s full written testimony here.