From: rdd@cactus.org (Robert Dorsett)
Newsgroups: rec.travel.air
Subject: Re: Govenment subsidy: Was Re: Aircraft Age
Date: 2 Oct 92 12:11:54 GMT
Organization: Capital Area Central Texas UNIX Society, Austin, Tx

In article <92275.235833RFRANCIS@ESTEC.BITNET> C R Francis <RFRANCIS@ESTEC.BITNET> writes:
>says:
>>
>>But the U.S. military buys a product, they don't give charity contributions
>>to MD or Boeing, etc the way the europeans support Airbus. Also, a little
>
>Do I detect a litle xenophobia here ?  The clear implication in this thread
>is that European products (planes in this case) are intrinsically bad, and
>the only reason a US airline would buy them is if European governments pay
>them to.

No, I don't think that's the point at all.

A few years ago, Qadhafi decided that Libya, as a socialist Arab utopia,
had to have a heavy industry.  He decided upon steel processing: refining,
production, etc.  Several hundred million dollars later, Libya has what
may be the most modern iron-processing facilities in the world.

Unfortunately, it lays idle, because Libya has no iron deposits, and 
nobody in their right mind would send anything to Libya to be processed.
Moreover, the facilities would be run at a perpetual loss, never being able
to compete with the rest of the world if they charged properly.

The situation with Airbus is somewhat similar.  A decision has been made
to produce airplanes.  This has wide-ranging ramifications for the European
economy, of course: applications of aerospace technology ranges wide and far.
I'll assume that this is the intended reason (as AI executives and planners
claim) for the existence of the consortium.  So it produces its airplanes,
hoping the trickle-down effect of technology to other industries will 
strengthen the European economy as a whole.  Which is an uncertain position:
the "trickle-down" of the American infrastructure certainly doesn't stop
at US borders, efforts of Raygun notwithstanding; any copy-cat aerospace
industry in Europe is likely to emerge as a prestige project, with short-term 
benefits.

UNDOUBTEDLY at tremendous losses, though.  For an example of "real" R&D
and machining costs, weighted against a few hundred airplanes, see what
the B-1 and B-2 bombers have and are running the American taxpayer (not to 
mention the C-17 or the Presidential 747's).  Yet Airbus miraculously produces 
airplanes that have "sticker" prices in the same range as American-built
aircraft, with the usual set of incentives thrown in.  

If one is a Euronationalist, or even a consumer airline, this is a positive
situation.  Well, maybe not if one's a Euronationalist, even: the final bill
might arrive sooner rather than later, and there may not be the money to
pay for it.  

However, if one is a producer, especially a producer that evolved in
a free-market economy, this is not a fair situation.  And this is where 
the contention lies.  EITHER AI will opt to operate in a free market, or 
it won't.  I could care less if it GIVES its airplanes away, but if this 
affects a player with a more "legitimate" past, then it should be fought.  

Which leads to the invariable counter-argument of:

>This betrays a somewhat simplistic view of the way the world works.  It is
>of course true that Airbus offers attractive financing packages on its
>aircraft.  It's also true that Airbus does not have any miliatary
>forerunners or derivatives of any of its aircraft (unlike Boeing or MD)
>--- and it is naive to believe that government work, particularly in the
>defence field, is equivalent to commercial competition.

Perhaps not in Europe, where the lines between aerospace companies and
governments are blurry, indeed, but the rules are a bit clearer in the
United States.  There IS competition for government contracts.  The dozens
of major players that have bit the dust over the past 40 years are test-
imony to that.  Corruption and patronage in government do exist, but are
not institutionalized, as is explicitly the case with Airbus.

Few (if any) companies have ever had the unadulterated pampering that Airbus 
has enjoyed, except *possibly* during World War II.  And ALL companies,
in their civilian ventures, must weigh the consequences of every new
program very seriously, indeed: look at the near-disaster of Boeing with the
747 (and the government's indifference to Lockheed, if you think it would 
have come rushing to its aid).  Yet with Airbus, there will always be the 
safety net.

I would also ask you to define what, precisely, the "military" edge is
supposed to have given the American manufacturers?  Technology?  Airbus 
produced a fine airplane, the A300, in the early 70's.  It obviously had 
the same technology base, at that time, that the Americans did.  Finances?
Again, look at Boeing's margins.  So what is it?  And what warrants the 
CONTINUED funding of this socialist high-tech public-works program, for 
ANOTHER 20 years?

The bottom line is: do you believe in fair competition?  If so, stop the
complaining about "military subsidies," force Airbus to uphold its pledge to
"go independent," (it HAS publicly stated it's on a technological par with
Boeing, and has indicated its intention to properly maintain its books), and 
sever ALL safety-nets, including competitive financing through central banks.  
Give them a few billion in petty cash, to pay the rent for a couple of years.  
Then, let's see who lasts the next ten years.

But the point, of course, is that the issue ISN'T competition.  Airbus
is maintained for other purposes.  Its sponsors obfuscate the issue by
insisting it's one of economic fair competition, and the American government
continues to turn a blind eye to what is a VERY damaging attack on a major 
strength of American industry.


>And there are other factors than subsidy.  Who remembers the saga of the
>Microwave Landing System (MLS) which was played out in the seventies. There
>were two competing solutions for the (then) new worldwide standard, one
>from a UK compasny, one from the US.  The British system had been built and
>was demonstrated at one difficult airport after another, around the world.
>It has since been installed at British miliatary airfields.  The US system
>existed as a simulation.  The selection was made by international
>voting, with much lobbying and other interesting tactics.
>
>Guess who won, and ask yourself why MLS is still not a worldwide
>standard (we use ILS today) when we had a working system 15 years ago.

Because alternative technologies, including GPS, have inclined the primary
potential CONSUMERS of this technology--i.e., the airlines--to block or
impede further development, until such time that the technology stabilizes
and a more economical alternative manifests itself.  There's no conspiracy
there.  FAA's position is acknowledged to be in the minority.  But it
won't change it, because no majority alternative exists.




>Government assitance exists, explicit and hidden. There are also
>other ways of promoting national hi-tech industries. And please don't
>forget ---- Europeans products do also have technical merits.

So does that Libyan steel mill, the finest German technology can produce.
:-)





---
Robert Dorsett
rdd@cactus.org
...cs.utexas.edu!cactus.org!rdd