A federal judge in Washington today ruled against an airline industry trade group in a case that questioned the propriety of loans that help foreign companies purchase U.S.-made airplanes.
The Air Transport Association of America sued the U.S. Export-Import Bank last year in Washington over whether loan guarantees to Air India were harmful to domestic carriers in the competition for airline routes.
U.S. District Judge James Boasberg earlier this year declined to issue an injunction against the bank, an independent federal agency that has long sought to boost the foreign purchase of American goods. Boasberg said today the airline group has standing to sue and that judges can review the loans. He stopped there.
"But after winning these battles, plaintiffs lose the war," Boasberg wrote. "When all is said and done, the Bank’s decision to approve the Air India commitments was neither arbitrary and capricious nor contrary to law."
The Export-Import bank is a federal agency that, among other things, issues loan guarantees that help foreign airlines buy U.S-made airplanes. Between 2005 and 2010, the bank financed or guaranteed financing for the foreign purchase of $34.5 billion in domestic aircraft.
The airline group challenged $3.4 billion in preliminary and final commitments for Air India's purchase of jets from Boeing, which was not a party in the suit. Boeing, however, supported the U.S. Justice Department's defense of the benefit of the Export-Import Bank loans.
The air transport organization, representing the interest of some domestic carriers, including Delta, sued over the loans. The group's lawyers, including Michael Kellogg of Kellogg, Huber, Hansen, Todd, Evans & Figel, argued the financing harms domestic carriers that terminate routes and lost jobs. The suit also alleged the bank failed to fully assess the potential adverse effect of the foreign loan transactions.
Boasberg earlier this year rejected the air industry group's request for a preliminary injunction, ruling that the plaintiff had failed to show how the loans were harmful. Today, however, the judge said in his ruling "the new planes are very likely to compete directly with service provided by ATA's members."
Boasberg said he was not "untroubled by the possibility of a foreign airline transaction of such a kind and on such a scale that it would have massive adverse effects on domestic industry and nonetheless fail to qualify for additional economic-impact scrutiny."
The air trade industry's case, Boasberg concluded, "does not embody such a situation." The judge said "there remain significant external checks on such hypothetical transactions: Congress not only has a recurring opportunity to decline to reauthorize the Bank, but it also gets the chance to review new commitments of more than $100 million before they take effect."