October 5 - Delta’s Anti American-Made Aircraft Strategy 


Business Travel Coalition

INDUSTRY ANALYSIS


Delta’s Anti American-Made Aircraft Strategy and its Hypocritical Plea for Open Skies Protection


By Kevin Mitchell 

Last week American aerospace workers hailed the US International Trade Commission’s (ITC) ruling against Canadian-based Bombardier in its attempt to establish a US beachhead for its heavily subsidized C Series single-aisle aircraft by illegally dumping them at a deeply discounted price. It is a vivid example of the Trump’s Administration standing-up for US workers. According to the US Department of Commerce, every $1 billion in US aircraft orders creates or sustains nearly 6,000 American jobs, and when those orders go to Boeing’s competitors those jobs are lost. 

However, not everyone cheered. In an interview on CNBC on September 27, Ed Bastian, the CEO of Delta Air Lines, blasted that ruling and denounced it as “absurd.” Mr. Bastian’s “Delta, not America, first” reaction is not surprising given that Delta placed the order that is at the heart of this increasingly nasty trade dispute, and is the beneficiary of it. Delta purchased 75 CS100 aircraft with an option for 50 more. Beginning with the 36th aircraft delivered, Delta can convert the CS100s to larger CS300s. According to Boeing, and the ITC concurred, Delta allegedly paid just $19.6 million per plane for aircraft that should have been priced $33 million each. 

So, Mr. Bastian is protecting Delta’s partner, Bombardier, and the sweetheart deal that it received. He warned about the ITC’s ruling that "[w]e don't believe that will be the end of the story," He further poked Boeing in the eye by declaring the Canadian-built CS100 will “be our (Delta’s) best domestic aircraft.” In other words, Bastian believes it will be better than Boeing aircraft built by American hands.

Mr. Bastian’s disdain for US manufacturing workers, when their interests clash with Delta’s, is deeply disappointing. It also screams of hypocrisy when juxtaposed with Delta’s advocacy against Open Skies policy and the competitive choice it ensures for passengers. With its oligopoly partners American Airlines and United Airlines, Delta has waged a nearly three-year-old failing political campaign to deny consumers the opportunity to choose to fly with Emirates Airline, Etihad Airways and Qatar Airways (Gulf Carriers). There, Mr. Bastian and Delta have wrapped themselves in the stars and stripes demanding that the Trump Administration clip the wings of the Gulf Carriers in the name of protecting American jobs. 

So, how can Mr. Bastian credibly argue simultaneously that Boeing’s pro-American worker ITC victory is “absurd” but, when it serves Delta’s interest in less competition, the Trump Administration should abandon a highly successful 25-year-old bipartisan Open Skies policy in the name of protecting American jobs? Obviously, he cannot have it both ways. Moreover, Delta cannot credibly criticize the Trump Administration for taking a stand for American aerospace workers against Bombardier while, at the same time, having its richly funded lobbying mouthpiece, Fair Skies, needle President Trump that it would “make a mockery of an ‘America First’ trade policy” if the President does not abandon Open Skies as Delta demands. 

There was a popular old television game show called, To Tell the Truth. Panelists asked questions to separate the real person from impostors. Let’s look at Delta’s fleet purchases to determine which is the true Delta – champion of US workers or just a self-pleading advocate that is seeking government protection from competition and cloaking its anti-competitive intent in hollow pro-worker, flag waving rhetoric.

Delta is awash with cash boasting record-setting and industry-leading profits. According to Airfleets.net, other than ultra-low-cost carrier Allegiant Air, Delta has the oldest fleet among the 10 major US airlines. In combination, one would think Delta would be investing heavily in fleet renewal and, given its stars and stripes rhetoric in the Open Skies campaign, investing heavily in Boeing aircraft and American manufacturing jobs. However, that is not so.

The facts tell the exact opposite story. Delta appears to have a buy anything other than American-made aircraft strategy. According to Airbus’ website, Delta has 145 European-manufactured aircraft on order. That is followed by the 75 Canadian-made CS100s with 50 options. Last, but not least in the eyes of US workers, is Boeing with just 37 orders according to its website.

In November 2014, Delta ordered widebody aircraft to replace retiring Boeing 747s and 767s. Did it buy American-made Boeing widebodies such as the new 777X? No. It ordered 25 Airbus A350-900s and 25 Airbus A330-900neos. Based on the US Department of Commerce’s jobs multiplier for aircraft purchases, had Delta ordered Boeing aircraft instead, that $14 billion purchase would have created and sustained over 80,000 American manufacturing jobs. Instead, Delta off-shored those jobs to European workers. To add insult to economic injury, in a slap in the face to Boeing and GE Aviation, Mr. Bastian recently proudly proclaimed its new Rolls Royce-powered Airbus A350-900 to be the flagship of Delta’s fleet.

Then there is the snub to American workers who manufacture single-aisle aircraft. In addition to the Canadian-made 75 CS100 aircraft which Mr. Bastian predicts will be “our (Delta’s) best domestic aircraft,” Delta has on order 97 European-made A321neos. As to Made in America Boeing planes, Delta has on order just 37 737-900ERs.

Facts are stubborn things. At the end of To Tell the Truth they asked the real person to please stand up. When it comes to supporting American aircraft manufacturing jobs, Delta and Mr. Bastian should remain seated. There are champions of American aerospace workers such as the Gulf Carriers who collectively have purchased 235 of the 306 Boeing 777Xs ordered allowing that program to launch and creating or sustaining more than half a million US jobs with their 777X orders alone. Contrary to its soaring patriotic rhetoric in the Open Skies matter, Delta clearly is not a champion of American manufacturing jobs but does conveniently and opportunistically claim to be when it serves its anti-competitive political narrative.


©2001 to 2017 Business Travel Coalition, Inc..