Tax proposal could hurt some big buyers of boeing’s south carolina-made planes business electricity names superheroes


A proposed tax bill working its way through Congress could hurt some of Boeing Co.’s biggest customers, including one that recently placed the largest single order yet for the 787-10 Dreamliner that will be built exclusively in North Charleston.

A provision in the tax legislation specifically targets Middle East airlines that have drawn the ire of their counterparts in the United States. Led by Atlanta-based Delta Air Lines, some U.S. carriers complain that Middle East rivals such as Emirates and Etihad Airways have an unfair competitive advantage because they get billions of dollars in subsidies from their oil-rich governments.

A provision in the bill would require foreign carriers to pay corporate income tax if they are based in a country that doesn’t already have a tax treaty with the U.S. and has fewer than two weekly arrivals and departures by U.S. airlines. While it doesn’t specifically mention any carrier, the Middle East airlines would fall under the proposed rule.

Emirates, for example, committed to buying 40 of the 787-10s that will go into commercial service in 2018 during last month’s Dubai Airshow in the airline’s home city. That’s in addition to the carrier’s 289 orders for Boeing’s 777 wide-body. Etihad Airways — based in Abu Dhabi — has ordered 120 Boeing wide-bodies, including 30 787-10s. And Qatar Airways has ordered 195 Boeing planes over the past two decades, 60 of them Dreamliners.

The tax legislation is being considered less than two months after Boeing’s North Charleston campus hosted Yousef Al Otaiba, the ambassador from the United Arab Emirates, who touted an existing Open Skies treaty that allows unrestricted flights by airlines between his country and the U.S.

"It’s sad that Sen. Isakson’s office swallowed Delta’s claim that those markets are closed to U.S. carriers without checking the facts," said Kevin Mitchell of the Business Travel Coalition, an advocacy group that supports the Open Skies pact.

"No one is preventing U.S. airlines from serving Doha, Dubai or other Gulf cities," added Saj Ahmad, an aviation analyst with London-based StrategicAero Research. "The only ones preventing U.S. airlines from flying there are the U.S. airlines themselves."

Middle East governments could retaliate by creating financial penalties for U.S.-based cargo airlines that regularly fly to the Gulf. And some worry that the proposed tax bill will have unintended consequences by hurting fledgling airlines in Latin America and Africa, where few countries have tax treaties with the U.S.

Boeing assembles its stable of 787s at its North Charleston campus and in Everett, Wash. The 787-10 is made exclusively in North Charleston because its mid-body is too large to transport to the Pacific Northwest on the 747 cargo planes the company uses to ferry Dreamliner parts around the world.

Boeing chose North Charleston for its second 787 campus in 2009. It is now one of the Lowcountry’s largest employers with nearly 6,900 workers and contractors. In addition to its Dreamliner facility, the company has a research campus and sites that design and build engine parts for the 737 MAX and interior parts for 787 cabins.