MIAMI – Boeing claims that the deal between Bombardier and Delta Air Lines for 75 CSeries jets (with 50 additional purchase options) puts the future of the U.S. aerospace industry, and Boeing itself, at risk.

According to a report from Leeham News, who reviewed the complaints filed by Boeing with the U.S. International Trade Commission and the Department of Commerce, Boeing claims that Bombardier sold Delta the CSeries planes for $19.6 million apiece, far below the actual production cost of $33 million.

According to Boeing, this pricing constitutes “dumping” on the part of Bombardier, and it has the effect of driving down pricing on Boeing’s rival 737 MAX 7 jet. Per Leeham’s report, Boeing claims that this pricing pressure will somehow spread to the other 737 MAX models, ultimately threatening Boeing’s very existence as an aircraft supplier.

Boeing also attacked the nearly $2.5 billion in bailouts and “investments” from various Canadian government entities, claiming that these infusions allowed Bombardier to price so aggressively and thus were illegal under World Trade Organization (WTO) rules.

Accordingly, Boeing is calling for a 79% tax on each of the CS100s before delivery to Delta, which would bring the total price up to the $33 million or so that Boeing alleges as Bombardier’s actual production cost.

Conversely, Bombardier, Delta, and the Canadian government each testified last week against Boeing’s claims. Instead, Bombardier claims that its behavior is no different than that of Boeing’s when it comes to discounting to attract customers.

Delta for its part says that pricing was not the sole driver in its deal for the CSeries, instead claiming that the Bombardier jet’s superior operating economics were what won the day.

Boeing’s United deal cited by both sides

Interestingly, both sides cite the United order for 40 (later 65) 737-700s, in early 2016, as evidence for its positions. According to multiple sources, United was able to buy those 737-700s at a price point of $20-25 million per aircraft, representing a massive discount on the regular sales price for the 737-700.

United was also considering the CSeries for that purchase, and in Boeing’s eyes, it had to discount the 737-700 much more deeply than it would have without the threat of Bombardier’s pricing. At the same time, Bombardier views this as an example of rank hypocrisy on the part of Boeing, which also arguably priced the 737-700 either at or below production cost.

In a way, both sides are right. Boeing certainly would not have priced the 737-700s around $20 million if it didn’t have the competition from Bombardier. But that price point is below Boeing’s production cost in all likelihood, and pricing below production costs to win deals (the 747-8 excepted) is a reasonably common practice for both Boeing and Airbus.

This case isn’t about Bombardier, at least not directly

The real threat to Boeing isn’t Bombardier per se. The CSeries is certainly an excellent aircraft and does dwarf Boeing’s offering at the lower end of the mainline market. But Embraer and Bombardier have owned that market through the E-Jets and larger CRJs for years now – even without the CSeries Boeing wasn’t selling many 737-700s.

The future for Boeing and Airbus lies in the larger jets such as the 737 MAX 8/9/10* or the A320/A321neo. These, to use a phrase coined by Boeing, are the “heart” of the narrowbody market, and it’s not an area where financially weak Bombardier is well positioned to compete. In theory, a stretch of the larger CS300 (sometimes dubbed the CS500) might be competitive with the A320neo and 737 MAX 8 on the lower end.

Such a stretch, however, would cost Bombardier at least a billion dollars to develop, cash that it simply does not have and will not have for the foreseeable future.

Estimates of the market size that Bombardier can target with the CSeries amount to about 3,000 planes over 20 years. For the larger planes in the Boeing and Airbus families, that figure is well over 15,000. Bombardier as currently constituted poses no competitive threat to Boeing.

The problem with the Delta deal, however, is the precedent that it sets. It is inarguable that Bombardier sold the CS100s to Delta below cost, and it is more or less inarguable that they would not have been able to survive as a business without government intervention. This one Bombardier deal isn’t the end of the world, but the precedent that it sets could be incredibly dangerous for Boeing down the line.

It is well known that China has serious ambitions in the commercial aviation manufacturing space, though its initial forays into commercial production (a warmed over MD-80 called the ARJ 21 and the COMAC C919) both have been less than stellar. Over a 20-25 year period, however, it’s hard to bet against China building a reasonable commercial aerospace industry given government appetite, the large local market, and the country’s track record across other industries.

It’s not hard to imagine a scenario in which a next generation Chinese narrowbody (let’s call it the C939 for fun) is at least modestly competitive with the 737 MAX and A320neo. Given the Chinese government’s commitment to supporting nascent domestic industries, it’s not hard to imagine that the C939 would be at least partially subsidized (whether explicitly or implicitly) and thus able to sell below what would already be a lower production cost than that of Boeing.

These subsidies would likely be provided through a thicket and maze of Chinese financial relationships that would resemble that of the (clearly subsidized) Middle East Big 3 airlines. Proof by way of forensic accounting, even if it existed, would be nowhere near sufficient for a formal WTO case.

As a result, if the U.S. government sets the precedent that these types of aircraft orders are allowable under U.S. law, Boeing’s American business could be halved (both in volume and revenue terms) over the next two to three decades in the face of cheap, Chinese competition.

The irony is that Chinese aircraft manufacturer COMAC is actually in talks to invest in Bombardier directly, a move which over time would allow Chinese commercial aircraft manufacturing to catch up with Western standards more quickly. And China, unlike the Canadian government would have no trouble funding development of the CS500, perhaps accelerating the timeline and threat to Boeing.

When viewed through the prism of Boeing versus Bombardier, this complaint feels a bit silly. But when you consider the precedent that is being set in the wake of a future competitive threat from China, Boeing is right to be worried.

That is not to say that the U.S. government should take Boeing up on its word and apply a 79% tax or any tax on the Bombardier deliveries. Lower prices on aircraft are ultimately good for U.S. consumers (both airlines and travelers), and Boeing and Airbus have operated in a comfortable oligopoly without real competition for much too long.

Despite the threat to Boeing itself, Americans as a whole are better off if foreign companies are allowed to sell us airplanes at a discount.