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Aviation History
1959
1959 - 3404.PDF
FLIGHT, 18 December 1959 What PriceState Aid? INSIDE the cockpit of the Douglas RB-66B Destroyer twin-jet reconnaissance bomber displayed statically at the ParisShow was a small metal notice-plate mounted in a positionwhere the pilot could see it: — This aircraft cost us $2,440,819*00 PLEASE HANDLE WITH CARE This was a fascinating piece of information, not least becauseof the fastidious accuracy and the revelation that an RB-66 costs nearly half as much as a JT4-powered, domestic versionof the Douglas DC-8. This fact in itself is not merely an intriguing triviality, for it provides a key to one of the most important andpotentially controversial issues in British air transport: who should pay for the pre-operational development costs of newairliners—Government, Corporations or manufacturers? This question is one around which a host of misconceptionshas gathered, and the case for State payment of development costs is usually based on the argument that (to quote the recentSelect Committee report) "American airline operators have the advantage of having development flying done for them by theServices." Because the United States Air Force placed large orders for commercial aircraft, the Select Committee concludedthat the civil user was spared much of the development cost. But an examination of the histories of post-war U.S. airliners willshow that exactly the opposite is true: in most cases it has been the civil users who have had to bear the brunt of early teethingtroubles, while large U.S. military orders have not been placed for production airliners until after they had been in service forsome rime, and their early teething troubles rectified. In fact, it is more true to say that in "ordering off-the-shelf airliners theU.S. Air Force and Navy have been able to take advantage of development flying done for them by the airliners. Frankly, it is difficult to understand why the misconceptionthat the commercial success of American airliners owes so much to military backing has taken root so firmly. Possibly it is becausewe have tended to excuse our past mistakes with the comforting and complacent half-truth that whereas the British have the ideas,the Americans have only the money. Be that as it may, it is worth examining two U.S. airliner case-histories in some detail, becausethey demonstrate to an unusual degree the fallacy of the idea that large-scale military backing is an open sesame to both a trouble-free commercial career and large export orders. The Douglas DC-6 prototype first flew in U.S.A.F. markingsas the XC-112A-DO on February 15, 1946, and was followed by a second, commercial prototype. Apart from the 29th, deliveredas a C-118-DO V.I.P. transport for President Truman, there were no military orders for the DC-6 and first commercial deliverieswere made to American and United. Following the loss of a United DC-6 which caught fire in the air on October 24, 1947,and the forced landing of an A.A. DC-6 in New Mexico 18 days later (again through an in-flight fire), Douglas requested thegrounding of 97 DC-6s then operating, and the type remained grounded for four months. As a result, United, American, National, Braniff, Panagra andSabena lost something like $12m between them while their DC-6s were grounded, while Douglas spent more than $7m on putting theDC-6's troubles right. First of the DC-6 series to gain large military orders was the DC-6A, 167 of which were supplied to theU.S.A.F. and U.S. Navy, and this version of the DC-6/DC-7 series, fully cured of the DC-6's early troubles, was the only oneof the series (of which more than 1,000 aircraft were built) to have the benefit of large military orders. Even so, it is interestingto quote a Douglas official's statement to the Hebert Committee in 1956 that over 400 DC-6/DC-7 aircraft were delivered beforethe company broke even. The Lockheed Constellation was another instance in whichairlines, and not military users, suffered most from early teething troubles. Although designed to T.W.A.'s requirements, theConstellation entered service with the U.S.A.A.F. in 1944 as the C-69, and 22 of these military transports were built in 1944-46;most of them later became L.049 Constellations, of which 88 altogether were built. This version entered airline service withT.W.A. in February 1946 but was grounded in July of that year for about a month as a result of engine fires and trouble with thecabin supercharger drive shaft. Even though a certain amount of military flying had been done by C-69s before the Constellationentered airline service, this did not save it from being grounded; and similarly military experience with the Boeing KC-135Stratotanker has not ensured a trouble-free commercial life for the 707. It is important to remember also that the 707 is the only newAmerican airliner with military experience behind it. The DC-8, Electra, Friendship, CV-880, and CV-600 are all being operation-ally developed entirely by the airlines. Recent experience with the 707 has demonstrated (even moreforcibly than did the DC-6 and Constellation over a decade ago) that pre-operational military flying does not necessarily ensurefreedom from troubles in airline service. And herein lies the significance of that plate in the Douglas RB-66B's cockpit: it isnot so much in large military orders for proven, off-the-shelf airliners that the U.S. industry's advantage lies; the Americanindustry's real advantage lies in having a backlog of military orders for combat aircraft and missiles large enough to enablesuch projects as the DC-8, Electra, Convair 880 and 600 to be tackled without initial Government support. Missilesand military aircraft accounted for no less than 78.7 per cent of Douglas sales during the fiscal year 1958, with commercial salesmaking up the remaining 21.3 per cent, and it may well be that airliner orders will contribute an even smaller proportion toDouglas business in the future. A less obvious but just as important point is that customers whoorder new airliners before they enter service do so because they feel that the competitive advantages to be gained from the newequipment, especially if it is jet- or turboprop-powered, are great enough to make the risk of revenue losses from early teethingtroubles well worth while. In other words, manufacturer and airline should have confidence in each other, particularly in theformer's ability to produce the aircraft on time and in the latter's ability to operate them successfully. In this context it wouldappear that B.O.A.C. wants to have its cake and eat it—in the sense that the Corporation, by pressing so persistently for Stateaid, wants to have all the competitive advantages that such types as Britannias, Comets and VClOs can offer without any of therisks or penalties associated with the introduction of new and untried equipment. Lack of Confidence? One feels that B.O.A.C.'s repeated requests for State paymentof the pre-operational development costs of new British airliners not only does the British aircraft industry a grave disservice byshowing a lack of confidence in it, but also diminishes the Cor- poration's own stature as an airline. For invocation of State aidtends to imply that the Corporation is not quite confident of having sufficient technical and commercial know-how to sponsora new airliner unaided, and that it tends to regard itself as having been made, against its better judgment, into a sort of giant FlightProving Unit for British airliners rather than an airline aiming to make a profit. Those sections of the current B.O.A.C. reportdealing with this question speak of the Corporation's assistance to the industry, both in direct orders and in enhancing exportpossibilities. But is this entirely true? However desirable State aid in this sphere may be from theshort-term viewpoint, it will surely have unfortunate long-term effects, both psychological and political. The former will fostera shop-window approach to air transport, and prospective foreign customers are unlikely to take much interest in new British trans-port aeroplanes if they feel that these will automatically be ordered and operated by the Corporations regardless of commer-cial considerations, even if the aircraft have to be bulldozed into a commercially acceptable state by large-scale expenditure ofGovernment money. It is very important to remember that it was the airlines, not the State, who have borne revenue lossesfrom DC-6, Constellation and 707 troubles; surely this is one instance in which we would be wise to follow America's example. The political effect of State aid in this field could be muchworse than its bad psychological effect. This is because both Corporations would continually be under Government pressureto order and operate new types which they had not originally intended to acquire; and while this may not matter too much nowit certainly will matter with a supersonic airliner. Supposing a decision is made to go ahead with a British aircraft of this type—and such a "go—no go" decision will have to be made fairly soon —then B.O.A.C. is bound to be the first operator. Yet if the Cor-poration feels that it is not strong enough financially to risk the razor-edge economics and great technical and operational prob-lems of supersonic ooeration, is the Government to cancel the project, thereby wasting perhaps as much as £100m and makingmany workers redundant; or is it to compel B.O.A.C. to operate sut>ersonically and make considerable losses? Neither solutionwill benefit the taxpayer, still less the industry; for if the latter's products are forever to be the subjects of political controversy,then confidence in them will dwindle. One can pay too heavy a price for State aid. M. J. HARDY
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