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Emirates warns US-EU jet-tariff war will drive up travel costs

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Tuesday 15, October 2019 BY Kuda Muzoriwa

The US said that it will introduce a 10 per cent levy on European jetliners following a World Trade Organisation (WTO) ruling that Airbus benefited from illegal state aid.

Dubai’s Emirates, the world’s biggest long-haul airline, has warned that a face-off between the US and European Union over jetliner tariffs risks making travel more expensive for passengers, reported Bloomberg.

Tim Clark, Emirates’ President, said that tit-for-tat import duties on Boeing and Airbus planes would ultimately increase the cost of the aircraft and hence also fares.

“In the end, the prices of what we get charged as a result of tariff imposition will be passed through as they have to, to consumers, so prices are likely to rise,” said Clark.

The WTO is considering a similar case against Boeing that is due to be decided next year and the EU says it will introduce tariffs of its own if the US acts now.

Bruno Le Maire, the French Finance Minister, said that he does not want aviation to become the latest front in global trade wars, but that the bloc will hit the US with sanctions if a settlement is not reached in the long-running dispute over aircraft aid.

Airbus has said it favours a negotiated settlement to the spat after the WTO authorised $7.5 billion in tariffs against the EU.

The US plans to target duties at goods including aircraft, though not jetliner parts, leaving the door open for Airbus to minimise the impact of the levies by supplying as much of the American market as it can through its assembly line in Mobile, Alabama.

Clark is no stranger to speaking out over thorny issues affecting airlines. The industry veteran last month hit out at Airbus, Boeing and their engine suppliers over under-performing aircraft, saying he’s no longer prepared to take delivery of planes that do not meet specifications.

Additionally, Clark urged Boeing to test the re-engined and re-winged 777X for up to 16 months before commencing deliveries following delays and casting doubt on whether Emirates will receive any of the 777-9 variants it has ordered in 2020 as planned.

“By the end of next year we were to have eight of them, now it doesn’t look like we will have any,” said Clark. Emirates has a 150-jet order for the 777X.

Clark said Emirates earnings have considerably improved from a year ago, though the collapse of Thomas Cook Group has weighed on the Dnata ground-handling division, which counted the UK tour operator as a client.

Emirates has curbed capacity and rationalised routes in response to a slowing economy, which has seen a flattening in our growth, added Clark.

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