Airbus to the Rescue

How does Airbus boost the U.S. economy by competing with Boeing?

August 3, 2001

How does Airbus boost the U.S. economy by competing with Boeing?

In many ways, the New York-Washington Shuttle serves the key power axis of the United States. In both cities, there are plenty of people whose job it is to advance America’s prosperity. Their hectic jobs, however, are often made more difficult by the daily pitfalls of modern civilization. Take the mad rush to the airport to catch the last plane. This is where Airbus enters the story.

Now there’s no denying that for quite a few years, Airbus has been a dirty word for many U.S. Members of Congress, government officials and business executives. They see Toulouse-headquartered Airbus Industrie as a typical product of the state-oriented Western European political establishment.

Indeed, the multinational consortium came into being 1967 by government fiat — as politicians in Paris, London and Bonn (then the capital of the Federal Republic of Germany) decided that Europe needed its own passenger airliner business.

With a proper leg up from domestic governments, a consortium like this would hopefully be able to muscle in on the lucrative franchise that Boeing and a handful of other American companies had all to themselves back then, the thinking went.

Since its inception, Airbus has been a favorite bête noire for U.S. complaints about unfair trade practices in Europe. Starting from scratch, Airbus Industrie worked hard to improve its product and raise its market share. In the process, it put so much pressure on the sector that McDonnell Douglas, America’s No. 2 player in the aircraft industry, was driven into the arms of Boeing.

Over those years, puzzled U.S. officials complained about such infringements on fair trade as equity infusions, soft loans, debt forgiveness and preferential access to domestic airports and air space.

Moreover, this trade dispute is truly a bipartisan issue. The Clinton Administration complained about government subsidies for the new super-jumbo aircraft, the A380, just as much as the Bush Administration has done since it took office.

But, of course, the Europeans feel that they have plenty to complain about on their side as well. They claim that the large volume of Boeing/McDonnell Douglas sales to the U.S. military provides built-in subsidies to civilian aircraft production.

Boeing, they argue, is also a major research contractor for NASA. This allows the company to maintain engineering staffs and conduct research at government expense that may be used for the development of civilian aircraft.

The latest dispute into which even the Bush Administration has been drawn centers on European subsidies to develop the A380 double-decker super-jumbo jet.

In part, the problem stems from the fact that Boeing, which decided not to develop its own super-jumbo at least for now, appears to have missed a potentially highly lucrative market niche.

Airbus has already secured over 50 pre-orders for these mega-planes capable of carrying up to 850 passengers. And it plans to build some 700 of them in coming years.

For their part, U.S. officials complain that as much as $3 billion out of the total $11 billion development cost will come from government loans. But far more interesting is where this money will be spent.

Just like any other major sophisticated industry, aircraft manufacturing today is a truly global undertaking. Fully 40% of the A380 components will be manufactured in the United States. For instance, BF Goodrich alone will get $2 billion for building the landing gear.

Altogether, Airbus has over 800 subcontractors in the United States, where it places orders amounting to $6 billion annually. It even plans to start assembling planes in America. Undoubtedly, this move — at least in part — is designed with those in mind who wrap themselves in a patriotic mantle when they lobby on Boeing’s behalf. Airbus managers don’t want U.S. politicians to forget all those U.S. voters working on Airbus projects.

The final issue that has poisoned transatlantic relations in recent years has been “the noise about the noise.” The European Union has decided that so-called hush kits, which have been fitted on older U.S.-made aircraft, don’t reduce noise pollution enough. It therefore planned to ban them from landing in European airports.

“Blatant protectionism,” cry American trade professionals. That’s because so-called Stage Three engines, which are used on the newer Airbus airliners, don’t need those hush kits to meet noise reduction requirements. Enforcing the ban on hush kits would exclude a number of U.S. airlines from flying to Europe — or, better yet in European eyes, obligate them to buy newer planes from Airbus.

Whatever the outcome of this particular debate, it surely represents an ironic twist of fate. After all, for many years, Americans complained about the noise level of another collectively designed European plane — the Concord supersonic jet.

Beyond that, however, there is yet another even more tantalizing irony involved in the situation. U.S. Airways, one of the two American airlines that run shuttles between New York and Washington, a while ago upgraded its fleet with A320 Airbuses.

The airline was attracted to the A320 because its 75-decibel noise emissions affect 10 times less ground area around the Ronald Reagan National Airport in Washington than the previously used Boeing 727 did. The new plane thus easily meets strict noise level requirements at the National Airport, allowing it to land in Washington even after 10 p.m. US Airways also added a 6 a.m. shuttle serviced by its new A320s.

All those Washington lawyers and lobbyists breathlessly shuttling back and forth between D.C. and New York in pursuit of their vision in the bowels of the great globalization game now benefit from a tremendous improvement in their quality of life.

Anybody who has ever raced to the airport in the evening to make the 9 p.m. shuttle flight back to D.C. had to pray that the everything would go smoothly. For if there was just a slight delay, due to noise restrictions in Washington, aircraft were not allowed to land at even 10 p.m.

This put a lot of existential pressure on all those “shuttlers” — and their already stressful family lives. Due to the downtown airport’s central location, even if an airplane were to land only one minute after the 10pm curfew, it was a no-go.

The punishment in all cases was as swift as it was severe. It meant being rerouted to landing at the area’s international airport, located far outside the town. In effect, this seemingly little rerouting measure adds at least an extra hour in the time required to get home that night.

Considering that everybody aboard those shuttle flights was pretty beat from the rigors of the day anyway, that powerful crowd is very, very thankful to Europe’s Airbus Consortium for having succeeded in quieting America down in moments that truly matter — even to Washington’s powerbrokers.

With quiet Airbus gear, you are virtually assured to get home in time to catch a good night’s sleep. Boeing, undoubtedly, must be working overtime to match Europeans’ performance on this vital matter.

And, by the way, the A320 burns about 40% less fuel than the B-727 — which may be of interest to Dick Cheney, the energy guru in the Bush Administration.