UPDATE 1-Airlines want 20 pct export financing cap

* 24 European and U.S. airlines propose export aid reforms

* Move highlights growing subsidy spat with Gulf carriers

* Dubai airports chief attacks “parasitic” Western taxes

(Adds details, background)

By Maria Sheahan and Tamara Walid

FRANKFURT/DUBAI, Oct 13 (BestGrowthStock) – Leading airlines have
called on Europe and the United States to cap export credits on
the sale of passenger jets at 20 percent in the latest ripple of
a growing spat over multi-billion-dollar subsidies.

U.S. and European airlines say their Gulf rivals get
subsidies and export credits that allow them to grow at a
breakneck pace and take market share.

But Dubai is leading a vigorous defence against the charges
and the head of its airport, which is home to Emirates, hit back
on Wednesday with suggestions that the real problem for Western
airlines was their own governments’ “parasitic” taxes.

The proposal for a financing cap comes in a letter by 24
airlines, including the world’s largest carriers such as Delta
(DAL.N: ) and Lufthansa (LHAG.DE: ), ahead of international talks on
the rules for financing Boeing (BA.N: ) and Airbus (EAD.PA: ) jets.

Airlines in the countries where Airbus and Boeing planes are
made say they are unfairly locked out of a system of export aid
which reduces costs for Emirates and others. [ID:nN07162741]

The export credits are provided by the United States for
Boeing planes and by France, Germany, Spain or Britain for
Airbus, which is owned by European aerospace group EADS
(EAD.PA: ).

Airlines in those countries cannot get export credits even
when U.S. airlines are importing Airbus planes or Boeing jets go
to airlines based in the four nations which are home to Airbus.

“Export credit is a specific tool that can have many adverse
impacts on the market,” the airlines said in the letter to
governments, a copy of which was obtained by Reuters.

The role of such financing has increased sharply as private
financing dried up during the financial crisis, pushing the
contribution of financing by export credit agencies as high as
one third of the value of aircraft sales, according to Airbus.

Governments will disuss the issue at the Organization for
Economic Co-operation and Development on Oct. 20.

In addition to limiting volumes, the signatory airlines said
terms of credit should be less favourable than those of
commercial bank finance to avoid giving some carriers an unfair
advantage and the maximum loan-to-value ratio should be lower.

The agreement should also take into account political and
country risks that limit airlines’ access to commercial markets.

“It is a distortion of commercial markets to use official
export credits to enable aircraft sales to creditworthy
borrowers merely because conditions in commercial markets are
relatively unfavourable,” the airlines said.

Emirates airline president Tim Clark on Tuesday defended the
use of export credits and denied the airline received subsidies
either from exporter funding schemes or locally. [ID:nLDE69B200]

Dubai’s airports chief said the biggest regulatory threat to
U.S. and European airlines came from their own governments.

“The only thing Dubai is guilty of is providing an
environment that actually supports aviation,” Dubai Airports
Chief Executive Paul Griffiths said on Wednesday.

“Most governments around the world treat aviation as a
pariah, choking its growth with costly, misdirected regulation.
…They then compound the problem with parasitic forms of
taxation that usually flow straight out of the sector.”
(Editing by Tim Hepher and David Holmes)

UPDATE 1-Airlines want 20 pct export financing cap