Should A US Gov’t Bank Fund Air India’s US$3.4B 787s?

The Export-Import Bank of the United States (EXIM) is the U.S. Government’s export credit agency, tasked with the mission of providing financial assistance in support of the export of products from the U.S. to international markets. The EXIM Bank allows for pre-export financing, with no transaction considered to large or small for the bank with an average of 85% of the bank’s transactions directly benefiting small businesses in the U.S.   Of course Boeing falls into the 15% of business transactions that are not a small business … and a loan of US$1.3-billion for Air India’s acquisition of Boeing 787-837 aircraft, and a further loan of US$2.1-billion as a preliminary commitment supporting the future deliveries of Boeing aircraft to Air India is not exactly a small loan.


As Air India’s first Boeing 787 delivery draws closer, the Air Transport Association of America (ATA) is protesting EXIM’s loans to Air India citing the airline’s constant financial troubles and consistent teetering on the brink of collapse.  The ATA, and its member airlines, believe Air India’s finical situation, including its loan defaults and it’s currently being arrears with multiple financial institutions, should disqualify the airline from receiving financial assistance from the U.S. Government.


While the ATA’s points on Air India are well founded, India is an ally of the United States, the two nations share a robust economic relations, and the U.S. and India share military relations, including the Obama Administration approving a US$5-billion deal for Boeing C-17 Globemaster III aircraft and GE F404-GE-IN20 engines, along with a US$2.1-billion deal for eight Boeing P-8 Poseidon aircraft.   Given the U.S.’s relations with India and Boeing’s financial relationship with India, in military and commercial business sectors including a US$100-million Boeing-Air India maintenance-repair-overhaul (MRO) joint-venture facility in Nagpur, it would be hard for the ATA’s complaint to result in EXIM reneging on its loan promises to Air India.


Should the U.S. Government be funding Air India, a woefully financially failing state owned airline?  In theory, probably not. That said,  in the political and economic realms the U.S. Government and Boeing operate in with India, failing to provide the US$3.4-billion in loans to Air India could negatively impact Boeing’s massive financial interests in India, which support the U.S. economy in a massive scale.


Former U.S. Speaker of the House Tip O’Neill is famous for saying “All Politics Is Local,” however some politics is global.


Happy Flying!




  1. The import export bank shouldn’t be involved in any aircraft financing activities whatsoever. The fact that airlines outside of the US and EU can get dirt cheap loans while US/EU carriers have to pay market rates puts them at an unfair advantage.

  2. India’s government should be helping AI not the US government. I wouldn’t be surprised if we do help financially but it would upset me since AI is a crummy airline that needs to have new management.

  3. I am not a great fan of Air India and I agree the airline should be shut down and a new one started from scratch. Air India does not constitute a threat to any of the ATA members who apparently cannot see a market beyond Europe Canada and/or Mexico. I very much doubt that any eligible aircraft purchase by an airline under EXIM rules actually constitute a threat to a USA carrier. On the contrary there are several code share agreements with ATA members that bring mutual benefits.
    Should the USA honour its commitments the answer is yes the amount of money in question is minute compared to the potential of future trade and mutual political benefits. India is large emerging market.

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