A US federal court has rejected a bid by an industry body of major US airlines to block $3.4 billion loan to Air India to purchase new Boeing planes.

Trade body Airlines for America had filed a lawsuit in November last year against the US Exim Bank, opposing the loan guarantee to the Indian national carrier to buy Boeing 787 Dreamliners, saying the financial support would put US carriers at a commercial disadvantage.

Rejecting the request, Judge James Boasberg of the US District Court for the District of Columbia said the trade group failed to show that American carriers will suffer significant financial loss if the Boeing jets are delivered to Air India.

“Because plaintiffs have not demonstrated a likelihood that they will suffer irreparable harm during the pendency of the lawsuit in the absence of an injunction, the court will deny their requested relief,” Mr Boasberg ruled.

The judge further noted that “none of the airlines participating in this lawsuit currently offers a direct flight between the US and India.”

He added that only two planes were scheduled to be delivered to Air India by March, pointing out that it was “wholly speculative” to assume that these deliveries would cause financial injury to US carriers.

“Any injury to plaintiffs that may be caused by the delivery of one or two planes to Air India is, at this stage, wholly speculative,” Boasberg said.

Airlines for America, formerly known as the Air Transport Association of America, had filed the lawsuit on behalf of nine of its 14 members, including Delta Air Lines and Southwest Airlines.

In a statement after the ruling on Friday, the group said, “We are confident the court will find that there is clear evidence demonstrating that the Exim Bank failed to meet its statutory requirements. Greater transparency and process reform at the Exim Bank are long overdue to ensure that US airlines are not disadvantaged by the bank’s loan guarantees of foreign airlines.”

The group had called Air India “one of the most poorly run airlines in the world” and said losses and management troubles at the carrier should disqualify it from the financing.

It had said the US loan guarantees enable foreign carriers to obtain financing for aircraft at considerably lower rates, in some cases up to 50 per cent lower, than what US airlines must pay on the commercial market.

It had asked the court to find the Air India loan-guarantee commitments unlawful, to prevent the loan guarantees from being issued and to order injunctive relief requiring the Exim Bank to comply with its statutory obligations.

The judge said the group could not prove how an increase in foreign carriers’ capacity would affect the ability of US carriers to sell seats on their own international flights.

Even if Delta had to cut every non-stop route where it competed with ExIm Bank—backed foreign carriers, “the lost revenue would represent less than 7 per cent of Delta’s business, a figure that hardly seems ruinous,” he said.

(This article was published on January 16, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.