Airbus Seals Deal with VietJet Amidst Trade Tensions and Tariff Rollback Hopes: Paris Air Show 2023

At the Paris Airshow on Tuesday, Airbus announced a deal with budget airline VietJet for up to 150 single-aisle jets, a move that comes amid ongoing trade tensions between the U.S. and other countries. The deal was struck during a time when industry leaders were hoping for a return to tariff-free trade, a sentiment that was given a boost by U.S. Transport Secretary Sean Duffy. Duffy expressed his desire for civil aviation to return to the 1979 zero-tariff trade agreement, signaling that the Trump administration may favor such a move. However, he also acknowledged that the White House is aware of the complex tariff situation, stating that "free trade has been remarkable for them and it's a great space of net exporters." The U.S. President Donald Trump's 10% import tariffs have caused headaches for the aviation industry, which is already facing supply chain challenges and fresh turbulence from last week's deadly Air India crash and conflict in the Middle East. In early May, the U.S. Commerce Department launched a "Section 232" national security investigation into imports of commercial aircraft, jet engines, and parts, which could lead to even higher tariffs on such imports. Airlines, planemakers, and several U.S. trading partners have been lobbying Trump to restore the tariff-free regime under the 1979 agreement. As part of the deal with VietJet, Airbus will supply 100 A321neo planes with an option to buy up to 50 more in the future. VietJet, Vietnam's largest private airline, operates an all-Airbus fleet and has not yet taken delivery of any of the around 200 MAX planes it has ordered from Boeing. Airbus is the main supplier of jets to Vietnam, accounting for 86% of the planes currently operated by Vietnamese airlines. However, the Southeast Asian country is under pressure from Washington to buy more U.S. goods. The scale of VietJet's orders is backed by plans to develop a major aviation hub in Vietnam, which Airbus says has seen its aviation market grow by 7.5% a year. The deal for 150 A321neos could be worth around $9.4 billion, according to estimated prices provided by Cirium Ascend. The agreement is the latest in a flurry of business announced by Airbus at the world's biggest aviation trade fair, where it was also expected to reveal Egyptair as the airline behind a recent unidentified order for six more A350s. However, its hopes of using the event as a showcase for its first significant deal with Royal Air Maroc faded after the airline postponed plans to announce a larger Boeing deal, delegates said.