US threatens WTO action on Airbus

[GearDown&Locked]

Subsidies aside, the free market (a concept so dear to the average American) where almost every airline moves is showing that good deals always prevale, and they're not measured only by the price tag, or maintenance deals, but for other factors like:

-The builder's capacity to meet all its costumer orders, both in number and delivery planned timeline.
-The investments made on improving the existing products and the creation of new ones, using the latest technologies available.
-And probably one of the most important factors, the stability of the builder's outfit.

When a specific airline buys a new set of airframes they’ll have to be absolutely 100% sure their money is on the right horse, especially in these difficult times for the industry.
It’s a shame that Boeing is (and has been for some years) slowly skidding off track:

-The new planes look 30 years old, inside and out.
-Their stubbornness in not implementing new technologies like the FBW system, with given proofs of efficiency and security.

Hopefully the new and very nice 7E7 project will get Boeing back on track, if not for their own benefit at least for giving Airbus some healthy competition.

GD&L

[humble_dor]

FBW

somebody said
Their stubbornness in not implementing new technologies like the FBW system, with given proofs of efficiency and security

I still wonder why car manufacturers refuse stubbornly to implement new technologies like the Drive-by-wire system.
Too expensive ? Not absolutely necessary ? Useless to improve safety ? System complexity increased ? High maintenance cost ? Incident prone ?

[colossus]

Concorde Legacy

ElectroVlasic brings up supersonic transport by predictably sighting the commercial failure of Concorde, but overlooks the legacy that this “commercial” failure left us with starting over 30 years ago: -

1. The technical knowledge base and skills base that enabled Airbus to develop in the early years, to offer an alternative to what was likely to become a monopoly market
2. A hard lesson in air transport economics, passengers are primarily interested in cost of travel, not speed of travel.

Boeing choose not to learn these lessons that Concorde left the market with when it focused development efforts on the sonic cruiser project, and is now experiencing the opportunity cost of not offering the product portfolio to the customers are looking for.

Subsides aside the proof is in the order books.

[ElectroVlasic]

Subsidies aside, Airbus as an organization has executed extremely well. For instance, I remember in the 90s how Boeing said distributing manufacuring amongst many sites was the reason Airbus was loosing money, yet now in the 20xxs Boeing is doing the same thing!

I think you take it as a given, if there were no subsidies and no Concorde that there would be no Airbus, but I feel that given the presence of so much talent and experience in Europe, there still would be something like Airbus competing today. It wasn't like there were no airplanes being manufactured in Europe before Concorde. It just so happened that the tradition of government aid was there [just like the government got itself into the automobile business, etc] so they took advantage of it. I'm sure if Boeing could get the same kind of support it would take it too.

It seems that everyone feels Boeing should be embarassed about the fact that the Sonic Cruiser and the various 747 follow-ons have not gone forward. To me it shows they are working with their customers to gauge how viable a product is before they commit to it, and by necessity that happens in the public domain. They have found there was not a market for these products. That's life. I don't think they should be embarassed for trying. Should Airbus be embarassed that all its attempts so far to sell a downsized A330 to replace A300 have failed? No, they just pick themselves up, and pitch the A350, trying to find a good match between what they can build and what the customer will buy.

You seem to equate the failure of Sonic Cruiser and Concorde, yet all that was lost in Sonic Cruiser was the cost of a lot of paper, and the salaries of product development people who were were going to be paid anyways. And that money came from Boeing, not the taxpayers. In the case of Concorde, major amounts of money were lost, and the taxpayers footed the bill.

In the case of the Sonic Cruiser, I think it was a case that the airline market went from boom to bust just as they were pitching the product. It failed, and it's a good thing it failed before the big bucks were committed. I wonder what would have happened if someone offered to loan Boeing one third of the cost of developing Sonic Cruiser, and told them they didn't have to pay any of it back till if and when they sold 400 airframes, and then only had to pay it back as a royalty on each airframe, after they had been paid for each airframe. Depending on the timing of events we could have seen a Sonic Cruiser get built and then be a massive financial failure. And depending on events, we may see A380 be the same. I don't believe this is so (I think A380 with time will be a success) but on the other hand it's not too hard to think of a few scenarios where it will fail. And a large part of this risk of failure is being underwritten by European taxpayers.

--ev--

[GearDown&Locked]

humble_dor

Many European car makers are installing high-tech systems on their products, things like Anti-Blocking System, Electronic Stability Control, Anti Skidding System, computerized gearboxes that will function either by a command on the steering wheel or fully auto depending on the driver selection, computerized All Wheel Drive systems that transfer automatically the power between the front and rear wheels depending on the conditions of the road, and YES, brake and gas pedals working By-Wire, even in small cars! Shall I continue? Europeans love High-Tech stuff, it sells very well. And by the way…how many American cars have all this systems fitted?

I think it’s a question of mentality differences, be it cars or airplanes.

ElectroVlasic

The Sonic Cruiser is a direct consequence of the market laws. The A380 and the Sonic Cruiser projects were known more or less at the same time, and the market chose one of the concepts as it would have better chances to become true after the (euro)bucks start rolling. Should Boeing be embarrassed? Of course not. They came up with their best ideas for a high capacity long haul, and they didn’t get the market too excited about it. Should they quit trying? Only if they want to close their business. But you’ve got to admit that Airbus has got the b@lls to move forward in spite of the uncertainty of most buyers economic health when finally the bird’s delivery arrives. But then again, the higher the risk, the higher the gain.

GD&L

[colossus]

ElectroVlasic

Apologises, perhaps I did not make it clear as regards my views on Boeing’s Sonic Cruiser project. The opportunity cost is the real issue, whilst as a you rightly say the expenditure on Concorde was of a different order of magnitude, however the design team should have be directed by management to focus on bringing the core product offerings up to date.

If they had perhaps focused on either the 7E7 or the next generation of aircraft for the 737 / A320 market slot, they doubtless might have been close to making the first test flights / deliveries imminently.

Commercially embarrassing, well frankly yes, for the long-term advancement of aviation, perhaps not.

[ElectroVlasic]

GD&L:
But you’ve got to admit that Airbus has got the b@lls to move forward in spite of the uncertainty of most buyers economic health when finally the bird’s delivery arrives. But then again, the higher the risk, the higher the gain.

Airbus has excuted extremely well, and has a wonderful product line that has great commonality, great technology, great safety, and covers every part of the market. They've shown the way on many things for the previous market leader, Boeing, and I say, good on them!

I think they've taken risks, but I think one must admit the launch aid makes this a lot easier to do. Basically one third of the money is given up front and with no need to start repaying till 40% of your anticipated production run has been achieved. This generous loan, and the implied support of the government should things go way bad (they'd rather shore things up a bit than losing their whole nut, no?) makes it a lot easier to gather the rest of the sum required.

But I think the talk of changing the 1992 agreement will amount to nothing. I think a change can be justified, given how Airbus has overtaken Boeing, and how Airbus is now in the defense space too, etc. But the US side is asking for a concession, and isn't offering anything in return. And given the (justified) anti-American stance most Europeans have, I can't see why the EU would make such a concession, unless they get something in return, or they just happen to feel a twang of guilt.

Financing aside, I'm glad Airbus has taken the risks they have. Who knows when Boeing would have gotten around to FBW if Airbus wasn't around?

Colossus:
If they had perhaps focused on either the 7E7 or the next generation of aircraft for the 737 / A320 market slot, they doubtless might have been close to making the first test flights / deliveries imminently.

Thanks for the clarification. I do agree Boeing has stumbled around a bit, and has some egg on the face to show for it. I do see the lost opportunities, but I don't think the company is feeling too bad about that. I think that instead they are darn glad they didn't commit to Sonic Cruiser and sink the company doing so. Sometimes the best deal is the one you do not make.

I think Boeing if anything is getting more conservative with time. They wil tend to not do anything that might sink the company, and will work to hold the middle of the market rather than the edges. The 777 was about DC10 and L1011 replacement, and the 7E7 will be about 757/767/A300 replacement. A large target, one that should be relatively easy to hit. Hopefully their attempts to push the state of the art with composites will be successful.

I think a lot of Boeing's motivation to talk about launch aid is to make Airbus more sensitive about and exposed to market risk, so both are on an equal footing that way, but I don't see the status quo chaning any time soon. That's probably a good thing for Airbus, and may or may not be a good thing for European taxpayers.

Thanks to both of you for your civilized discourse on this topic!

--ev--

[BahrainLad]

You seem to equate the failure of Sonic Cruiser and Concorde, yet all that was lost in Sonic Cruiser was the cost of a lot of paper, and the salaries of product development people who were were going to be paid anyways. And that money came from Boeing, not the taxpayers. In the case of Concorde, major amounts of money were lost, and the taxpayers footed the bill.

And in turn, Boeing spent more US government money on the B2707SST than the UK and France everspent on Concorde.

Aviation is a high-profile, high-value industry that directly employs many people and is indirectly crucial to the entire functioning of the world marketplace.

Whether it's airframes, engines or the airline industry itself, there's bound to be a degree of politicisation....everywhere.

Look at:

1.) Boeing military contracts.
2.) US airline federal loan guarantees.
3.) Historical EU support for failing flag carriers.
4.) Distribution of Airbus manufacturing = distribution of white collar 'knowledge working' across EU countries
5.) The fact that Emirates is owned by Dubai, Inc.
6.) The fact that Singapore is owned by Singapore, Inc.

....the list goes on (and we haven't even covered bilaterals!)

Aviation and Politics are inextricably linked. Pretending otherwise is head-in-sand mentality!

[humble_dor]

BahrainLad said
1.) Boeing military contracts.

Why do people tend to forget that most european (fighter, transport aircraft) military contracts go to EADS ? Airbus is only a part of EADS.

[BahrainLad]

Fair point, but the amount of military spending by the US adds up to everyone else in the world combined, so it's a weak argument.

[humble_dor]

Fair point, but the amount of military spending by the US adds up to everyone else in the world combined, so it's a weak argument.

Is Boeing the only and unique defense contractor in the US ?

BAe Systems works for both US and EU.

[ORAC]

Why do people tend to forget that most european (fighter, transport aircraft) military contracts go to EADS ?

Belgium: F16 & C-130.
Denmark: F-16 & C-130.
Greece: F-4, A-7, F-16, C-130.
Turkey: F-4, F-16, C-130, KC-135.
Spain: F-18, C-130, B-707.
Norway: F-16, C-130.
UK: C-130, C-17.

I could go on. Apart from France, European armed forces have, and continue, to buy a large percentage of their aircraft from the USA. (JSF, C-130H, C-17 etc). Apart from the B-57, there has always been a signal lack of interest in anything going the other way and with rabid tirades from the Congress whenever it is suggested.

[VP TAA]

I dont quite understand how an outright goverment subsidy(Airbus) can be compared to a goverment military contract to supply aircraft( Boeing). Working for airbus in the design teem must be a dream come true . Design anything you want if the product does not sell, then so what, the goverment will pick up the tab anyway . Try that at boeing . Any project that has the potential to lose will not make it off the drawing board . This is a constraint that airbus does not have . Boeing have been hobbled by this agreement and its about time that it is scrapped . It was an agreement intended to get airbus going in what was then a very ineficient europe . Well Europe has changed Its fully unified and very efficient . In its unified state its larger economically than the USA and can more than stand on its own two feet . Time to remove the Subsidy

[panda-k-bear]

Dear Lord, VP, have you not read any of this?

The "direct subsidy" is a form of loan guarantee - it is repaid with interest but at a reduced interest rate.
The military spending provides a cross feed into Boeing, as does NASA research. I dare say that Airbus has something similar but given the European level of defence spending it must be substantially less - and there is no equivalent of NASA.

But look at the current press - talk about hypocrisy! Airbus shouldn't have government subsidy, but Japan getting subsidy from their government for American engine work (GEnx) doesn't count!

That there level playing field's got one hell of a slope, Elmer! An' it's goin our way.....

[Wino]

Ahhhh ORAC I finally got you for once.
How many of those aircraft are BOEING aircraft.

The answer to that question is 1 (Kc-135 and B707)

Now, how many of those aircraft have been developed in the last 40 years (in otherwords something that might benefit boeing's other products through cross polinization)

The answer is ZERO

Well, I will give you a maybe on the C-17 but that was really a mcdonnel Douglas project and R&D was done well before beoing got their hands on it

Panda K Bear,
That same work that You are whining about Japan subsidizing Airbus is already planning on Using on their gussied up A330.

So again, you gonna float launch aid to beoeing in the same format to help launch an airplane? All the aid offered to being is available to Airbus, INCLUDING NASA's research. Where do you think those nifty little A320 wingtips came from?

Cheers
Wino

[Krueger]

Wino, when you say that an F-16 is a 40+ year old design, you are only talking about the first prototype. However the later block 50 as almost nothing to do with the first prototype (new avionics, new structure, new engine,etc), so , my point is, some aircraft are of a much newer development.
The same goes for the C-130 J.

[Wino]

And neither of those aircraft have ANYTHING to do with Boeing. (Think Lockheed, a different and unconnected company that competes visciously with Beoing) And therein is the proof of why these socalled defense subisidies falls flat.

EADS's military contracts are larger than Boeings, much larger by their own admission. Though the US spends a lot of defense, we have dozens of defense contractors.

Cheers
Wino

[ORAC]

The point Wino is that whilst they are not Boeing, neither are they EADS. EADS and other European manufacturers have to compete against all the US companies such as Boeing and LM, and without their economies of scale. I doubt there is much profit in the A-400M, let alone subsidy, and you only have to look at the arguments about Tranches 2 and 3 of the Eurofighter to see there is none in that.

No doubt BAe is subsidising the wing of the A-380 on the profits from the MRA4.......

[Wino]

BUt the US defense contractors have the same problems.

So basically the arguement European direct launch subsidies are offset by boeings military contracts has been debunked. Can we agree on that?

Cheers
Wino

[ORAC]

But they don´t. The US manufacturers have exclusive access to the DOD market with each taking their turn to be awarded contracts, and they and their representatives in Congress guard it well. The USA did, after all, invent the term pork barrel politics.