Case Discussion Questions- Airbus and Boeing

Airbus’s subsidies in its early years may be justified under two circumstances; firstly, if it is found that Airbus is paying the loan. Since the claims are that the subsidies were given in the form of a loan, Airbus must pay back. In such a case, then the subsidies will be justified. Secondly, if the four European governments fail to justify that they did not grant Airbus any support, its subsidies may be justified. The concerned governments should be able to give valid reasons that Airbus did not receive the loan. If not, then Airbus might have received the subsidies.

I think Boeing benefited from the US Department of Defense and NASA’s grants in the 1960s. The reason is that developing the 707 back in the 1960s could have required too much money that the company could not have accomplished without support. However, the subsidies may not be justified because they received them indirectly in the form of grants. If Boeing and Airbus continue to receive subsidies, other upcoming companies might not be able to penetrate the aircraft market because Airbus and Boeing will turn out as monopolies.

Both Airbus and Boeing benefit from government subsidies because the EU governments support Airbus while the US and NASA support Boeing. The national government should subsidize new technology if the relevant organizations cannot afford to fund themselves or the technology to be developed is expensive. The ongoing trade dispute may lead to a decline in the global economy. The primary reason is that the global economy highly depends on the transatlantic trade between the US and the EU. The EU is one of the US’s largest trading partners, and if the dispute continues, then the trade may be halted, and a decline in the global economy will be recorded.