Ex-Im Bank Subsidies Fly with Flydubai, But They Shouldn’t Fly Here
The National reports that Flydubai, an airline founded in 2008 by the Government of Dubai, is likely to make a profit for the first time, at least according to the airline’s chief executive Ghaith Al Ghaith.
Why should you care? Well, if you’re an American, you have a vested interest in this airline flourishing, because $117.5 million of your taxpayer dollars have gone to finance the airline’s purchase of its first of three Boeing 737-800NG aircrafts. And your vested interest is not of your own volition, of course; it’s thanks to the Export-Import (Ex-Im) Bank of the United States.
Make sure to keep your financial seat belts fastened until the captain turns off the Fasten Seat Belt Sign. That’s not likely to occur, however, because Mr. Al Ghaith said that, in addition to local banks, the airline would continue to look to the Ex-Im Bank for financing. This is despite the fact that “the financing market in the UAE [has] improved since the airlines inception,” giving the airline other financing options than simply using sale and leaseback agreements and Ex-Im Bank funding, which it has done in the past.
Incredibly, though, there’s a flip side to Mr. Al Ghaith’s thinking; while he accepts loans backed by American taxpayers courtesy of the Ex-Im bank for his company, he champions conservative financial principles in the same breath:
“[Airline subsidies are] not sustainable because the airline can make lots of money but it can also lose lots of money. So if you hide the cost or try to protect it, suddenly you are faced with costs you cannot control… It’s better for sustainability if you can make money.”
His statement is a powerful testament to the attractiveness of sound conservative financial thought. Unfortunately, it is to be expected that when many millions of American-backed taxpayer dollars are being made available to his company, he is going to accept and seek out such funding, contrary to the sound financial intuition he demonstrated in the above statement.
That’s why the buck has to stop here.
Ending the Ex-Im Bank is vital to American interests. Heritage’s Brian Darling explains how financing foreign competitors of U.S. companies affects us:
“Even loans that don’t go bad often wind up hurting U.S. employers and consumers. Chris Chocola of the Club for Growth notes that the Ex-Im often subsidizes foreign competitors of U.S. firms. Writing in the Richmond Times-Dispatch, he gives the example of the bank financing “foreign airlines that in turn purchase American aircraft, allowing them to compete against U.S.-based carriers. These foreign companies use our subsidy to offer lower prices since American companies cannot qualify for this corporate welfare, and they, in turn, lose business.”