Comment: February 2012 Archives

A love letter from the US Federal Communications Commission to the aviation industry arrived on Valentine's Day. Unlike the flowery prose penned on many perfume-spritzed cards, the FCC's declaration was terse, but brought joy to many heavy hearts.

"The Commission will not lift the prohibition on LightSquared," it wrote, ending a year of doubt hanging over the relationship between GPS and aviators. In January 2011, the FCC conditionally approved LightSquared's plan for a broadband network experts said would divorce aviators from GPS information they have come to love. The approval required LightSquared and the aviation industry to figure out whether GPS and the new network could live together in harmony.

Over the past year opinions gave way to hard data gained through thousands of hours and millions of dollars in tests and analyses, showing that indeed the two are not compatible - at least for the higher-precision aviation receivers that are bedrock safety devices for avoiding terrain and obstacles.

Jilted suitor LightSquared went into denial. "LightSquared recognises, however, that this is just one step in the process, and it remains committed to working toward a resolution," it said in its response to the FCC. One can only hope the FCC has the wisdom to stay the course as LightSquared makes its final plea for reconciliation.

The apparent backpedalling by Airbus over A330 freighter conversions - after it claimed, barely three months ago, that such a scheme was "far down" its to-do list - is hardly surprising, given that the airframer's freighter strategy appears to have been directionless for the past five years.

While Airbus's success in the passenger market is beyond question, the closure of the A300 freighter line in mid-2007 effectively began the manufacturer's drift into the cargo wilderness. Integrators UPS and FedEx had kept A300 production alive, but the halving of UPS's huge backlog of 90 hastened its end as a new-build type.

It also illustrated in stark terms the maddening unpredictability of the cargo market, in which limited opportunities for new-build aircraft sales - compared with the passenger sector - already mean that a tricky path must be negotiated.

When Airbus was planning to halt A300 production it showed off the A330-200F, the long-intended replacement, and talked about offering A320 conversions and the prospects for a cargo version of the A380.

However, initial enthusiasm for the A380F disappeared, and took the orders with it, and the A320P2F programme collapsed last year without much of an explanation - beyond opaque statements about economic considerations - as to precisely what had gone wrong. All of which left the A330-200F, whose sales have hardly been stellar, as the last freighter standing.

Despite goading from the Middle East, Airbus has been unwilling to explore the only other avenue along which it might find its way back into the freighter business: a conversion programme for the A330.

The airframer's dilemma is obvious. The new-build A330-200F is barely two years out of certification, so Airbus naturally wants to protect its investment. But there are potential customers whose interest in the A330 as a freighter does not extend to buying them off the production line. Airbus has claimed that - given the demands of the A350 and A320neo - it lacks the resources to develop a conversion. It is probably closer to the truth to suggest that Airbus has simply been lacking the will.

About-face might be a difficult direction, but it is better than none at all. Regardless of whether the uncomfortable Qatar Airways press conference in Dubai helped prompt a rethink or some other consideration spurred its decision, Airbus might just have done its freighter strategy a huge favour.

(This article appears as Flight International's main leader piece in our 28 February issue)

Supply and demand is the most fundamental concept of economics and when it comes to aviation biofuels, demand is most certainly there. However, suppliers are faced with the double-edged challenge of scraping together large enough quantities of alternative fuels while bringing down the cost to a more palatable level.

In terms of making clear their desire to purchase alternatives to kerosene to reduce their carbon footprint, airlines deserve a hefty pat on the back. But unless they are willing to stump up a premium for greener fuels, that desire amounts to little more than a public relations exercise.

Proponents of alcohol-to-jet fuel are touting this as being the next big thing in making aviation more environmentally friendly. But we've heard all this before about alternative fuels derived from plant oils and animal fat. In the end, airlines that have carried out much-publicised flights using the latter have concluded that while their performance cannot be faulted, there is not enough of them and they are too expensive.

Realistically, airlines are businesses and are unlikely to willingly pay more for something when they can continue to buy a similar product for less. What's really needed is some kind of government incentive to really get these potentially game-changing fuels off the ground, together with some brave investors with extremely deep pockets.

(This appears as the second leading article in Flight International 21 February)

Neither Airbus nor Boeing likes to give quarter in the fierce battle for aircraft orders. Yet, when even Airbus's chief salesman John Leahy concedes that 2012 could be a better year for his fierce rival, about whom he hardly has a good word to say, maybe the tide could just be turning in favour of the US airframer.

First up, let's put things in context. Airbus is coming off a record year for orders, and has a healthy backlog. Delays to the Boeing 787 led to more orders for its A330, and the A380 is still more popular that the 747-8 in the superjumbo segment. Most significantly, it beat Boeing to the re-launch of its narrowbody aircraft. The hugely popular re-engined A320 has had some 1,300 firm orders, and not just "flaky commitments" as Leahy likes to point out in an irresistible dig.

Yet, not all is well in Toulouse. At the Singapore air show, it was Airbus that was on the back foot following its mishandling of the issue of cracks in the wings of its A380, with boss Tom Enders acknowledging "mistakes". It is still not clear if the A350 programme will stay on its revised schedule, and sales of the A330 could slow down with the Dreamliner finally in the market. Just like Boeing several years ago, Airbus has to tackle several issues at the same time.

Finally delivering the first 787 to ANA last year was probably a turning point for Boeing. It is still adjusting its production schedule for the aircraft and dealing with teething problems, but getting that monkey off its back appears to have rejuvenated the company. And orders are coming in for the aircraft, with JAL signing for 10 additional 787-9s and converting 10 787-8s to the larger variant last week.

Boeing has also finally responded in the narrowbody market, with several large commitments for its re-engined 737 Max. Lion Air provided a major fillip at the show by confirming an order for 201 and launching the -9 variant, and more are on the way. Boeing is also firming up plans for the new variant of the highly successful 777-300ER. And with Airbus tying up many of its existing A320 customers in 2011, Boeing could do the same in 2012 and edge ahead in the battle for orders.

It is perhaps ominous that Airbus did not have any passenger airliners in the static display, with a military tanker and business jets the company's only representatives. The 787, however, was the highlight, with huge crowds forming long queues to get a glimpse inside the headline-grabbing widebody. You can read too much into these things but there is clearly a sense that the tide may have finally begun to turn, starting in Singapore.

(This appears as the main leading article in the 21 February issue of Flight International)

The investigator of the Manx2 Swearingen Metro crash at Cork in Ireland, has been able to release enough facts to confirm the accident was not caused by a technical failure.

However, there was a fault the company had not noticed - or had chosen to ignore as being of little consequence: when the power levers were advanced, one engine provided slightly more power slightly more quickly than the other.

The flight-data recorder showed this disparity had existed for some time. The Irish Air Accident Investigation Unit (AAIU) is now trying to determine whether that slight power asymmetry had a material effect in causing the loss of control that occurred almost exactly at the moment when the crew demanded power for a very late go-around. When the crew advanced the throttles, first the left wing dropped, then the right, and it was the right wing hitting the runway that precipitated the crash. But just before that point the aircraft was already on the verge of stalling, and the essential question is why the crew, having intentionally continued the approach beyond the decision height with no sight of the runway, allowed that situation to develop.

Behind it all remains the question of whether the "virtual airline" structure of the entire operation was material to the accident. The AAIU statement indicates it is keen to examine that possibility, and so it should.

(This appeared as the second leading article in the 14 February issue of Flight International)

One intriguing measure of the health of the aerospace industry is the level of mergers and acquisitions activity. By that measure the indicators are good. According to consulting firm PwC's annual report on aerospace M&A, 2011 was a record year in terms of deal number, at 341, and total value, at $43.7 billion.

In value terms, such heights were last reached in 2007. But even without the $16 billion United Technologies (UTC) acquisition of Goodrich, 2011 is easily the second-biggest year by value ever.

What makes this activity encouraging is that while the number of $1 billion-plus mega-deals is rising - and the UTC-Goodrich deal is the biggest in sector history - it is small deals of less than $50 million driving the volume. For 2012, PwC expects further growth.

A buoyant M&A market points to a healthy industry, in part because M&A is a mechanism for the so-called creative destruction that drives improvement in technology, operating practices and management thinking. In aerospace, deal volume has been trending strongly upward through a decade of dramatic industry growth, in line with surging global demand for aircraft.

Fortunately, PwC observes no signs of an increase in distress sales by companies facing financial crisis. But crises, as history shows time and again, often strike with little warning. And, if there is one salient fact that prevails in 2012, it is this: aerospace is an island of growth in a global economy that is otherwise perilously fragile. Much of that fragility stems from a long-running liquidity crisis. Big companies such as Airbus and Boeing have large cash stockpiles, but their supply chains are characterised by smallish firms with little cash cushion and slender working capital margins.

As those firms are asked to invest in production capacity, many will find banks' willingness to lend does not match the big airframers' resolve to whittle down order backlogs by raising build rates. At that point, airframers and their biggest suppliers may well be forced to step in and buy troubled links in the supply chain.

Such moves are not unknown - in 2008 and 2009, Boeing purchased 787 fuselage plants from Vought and Vought/Alenia joint venture Global Aeronautica, and last year Airbus bought A350 supplier PFW Aerospace - but they should ring alarm bells. The big players may have cash, but they should think carefully before becoming angels who step in where banks fear to tread; for all their mistakes of recent years, bankers remain better at risk than manufacturers.

(This is the main leader piece from the 14 February issue of Flight International)

Defence budget planners cannot be too careful. While arbitrary swings in fiscal priorities upset their models, acquisition system failures frustrate their maths. To compensate, they take what the system gives, and dispense with underlying strategy.

The US military's new budget request is a monument to strategic indecision. Caught between shrinking funding and galloping personnel and equipment costs, the budget makers eschewed bold decisions and made do.

Thus, the US Air Force is to "divest" its entire L-3 Communications/Alenia North America C-27J fleet. Most air forces do not know the luxury of owning 38 of probably the world's best small airlifters. But the USAF can dispense of them with a shrug.

Only the USAF has bought 14 high-altitude unmanned air vehicles: Northrop Grumman's RQ-4 Global Hawk Block 30. Only the USAF has decided to retire them before officially declaring them operational.

And only the US military can afford strategic indecision regarding the Lockheed Martin F-35 Lightning II. It refuses to kill the programme, but will not allocate the funds required to approach the original ambitions.

The US military has no peer, but perhaps not in the way it is often thought. There is no force on this planet willing or able to waste so much money simply to avoid making hard decisions. The question is: can even the Pentagon avoid them forever?

New Delhi has moved its decade-long search for a next-generation combat aircraft to the final stage, and kept faith with Dassault. Closing the deal could transform Europe's fighter sector