It was revealed today that Delta Air Lines is using a loophole to avoid paying millions of dollars in US tariffs imposed on European imports, including Airbus aircraft. To sidestep the levies that came into force last year, Delta has been basing its new Airbus planes overseas and using the terminology of the tariff regulations to avoid the payments.
Delta exploits a loophole
As reported by Bloomberg on Tuesday, November 17, Delta Air Lines is avoiding paying millions of dollars in import tariffs on new Airbus planes. Donald Trump imposed the levies in October 2019. Since then, the Atlanta-based airline has taken delivery of seven Airbus aircraft, but instead of flying them to the US, it has based the planes overseas in locations such as Amsterdam, El Salvador, and Tokyo.
The loophole is that, under the rules of the tariffs, a new aircraft is defined as one with “no time in service or hours in flight other than for production testing or for delivery to the US.” That means that, once an aircraft has flown a non-US route for any other purpose, it is no longer new. The carrier can then bring it into the US as “used” without being subject to the tariffs.
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Delta’s new Airbus planes tour the world
Delta’s new Airbus planes include a German-built A321 that was first routed to El Salvador, where it stayed for over two weeks. The aircraft was then used on routes to Canada before being parked in Mexico as the pandemic reached its height. Since August, it has carried passengers between Atlanta, Montego Bay and Jamaica.
The carrier’s new wide-body planes, assembled in Toulouse, France, were first sent to either Amsterdam or Japan. Two A350s delivered in September have been flying to cities including Amsterdam, Atlanta, Detroit, Paris and Seoul. The four remaining aircraft are A330s, three of which are parked in Tokyo and Nagoya, Japan. The other has mainly flown between Seattle and Seoul, Tokyo or Amsterdam.
Simple Flying reached out to Delta for comment, and a spokesperson told us,
“We have made the decision not to import any new aircraft from Europe while these tariffs are in effect. Instead, we have opted to use the new aircraft exclusively for international service, which does not require importation. The aircraft are being treated the same as our foreign competitors’ aircraft which allows us to remain competitive in the global markets we serve.”
Trump’s trade wars
In a long-running dispute over Airbus’s subsidies, the Trump administration, with the backing of the World Trade Organization, initially imposed a 10% duty on Airbus planes. It was later raised to 15%. In return, the EU this month announced tariffs on $4 billion in US goods after winning a WTO case of its own against subsidies for Boeing.
A high priority for Joe Biden’s incoming administration will be repairing US ties with European allies that have been eroded under Trump. Removing the punitive import tariffs on both sides should be on the agenda for the next president.
Delta is Airbus’s largest US customer
Delta is the biggest airline customer for Airbus and, by avoiding the tariffs, the airline has made significant savings. Based on the listed prices of aircraft, Delta could have saved as much as $270 million.
Airbus has been increasing its operations in North America, and Delta Air Lines took delivery of the first US-assembled A220 in October 2020. The carrier has since received a steady stream of the aircraft. Despite the battering that the aviation industry has taken this year, Delta is showing signs of confidence in the recovery of the market.
What do you think of Delta not importing new planes from Europe to avoid the tariffs?