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Aviation History
1995
1995 - 0053.PDF
EDITORIAL UK Editorial Enquiries Editorial Fax Editor Allan Winn Editor's PA Barbara Raine Deputy Editor Forbes Mutch News Editor Andrew Chuter Operations/Safety Editor David Learmount Business Editor Kevin O'Toole Commercial Aviation Editor Kieran Daly Defence Aviation Editor Douglas Barne Technology and Industry Editor Simon Elliott +44 (81) 652 3838 Aviation Research Editor Jennifer Pite +44 (81) 652 3847 Editorial Assistant Kate Sarsfield Production Editor Chris Thornton Design Editor Mike Wells Layout Sub-Editor Annabel Wells Technical Artist Tim Hall Technical Artist David Hatchard Technical Artist Giuseppe Picarella Spaceflight Correspondent Tim Furniss Photographer (Europe) Mark Wagner EUROPE/MIDDLE EAST European Editor Julian Moxon +44(81)652 3842 +44(81)6523840 +44(81)652 3882 +44(81)652 3882 +44(81)6523852 +44(81)6523843 +44(81)6523845 +44(81)6523835 +44(81)6523837 +44(81)6523834 +44(81)652 3842 +44(81)6523850 +44(81)6523828 +44(81)6523848 +44(81)6528047 +44(81)6528047 +44(81)6528054 +44(237)451756 +44(81)9445225 COMMCNT +33(1)46 2947 61 [Fax+33 (1)46 29 47 49] Munich Correspondent Andrzej Jeziorski +49 (89) 6891041 [Fax+49 (89) 6891045] Paris Correspondent Gilbert Sedbon +33 (1) 48 25 52 61 Israel Correspondent Arte Egozi +972 (3) 9671155 Moscow Correspondent +7 (095) 393 4717 Alexander Velovich [Fax +7 (095) 393 4717] AMERICAS American Editor Graham Warwick +1 (404) 587 2927 [Fax+1(404) 5941534] Washington Correspondent Ramon Lopez +1 (703) 836 7443 [Fax+1(703) 836 8344] West Coast Correspondent Guy Norris +1 (714) 252 8971 (Fax+1(714) 252 8972] ASIA PACIFIC Asian Editor (Singapore) Paul Lewis Australian Correspondent Paul Phelan +65 2263188 [Fax+65 2271769] +61(70)532 791 [Fax+61 (70) 533 003] DISPLAY ADVERTISEMENT SALES UKandBUROPE Display Advertising Enquiries +44(81)6523315 Display Advertising Fax +44 (81) 652 8981 Group Advertisement Manager +44 (81) 652 3319 Trevor Parker IRELAND, ISRAEL, UK Deputy Advertisement Manager +44 (81) 652 3892 Nick Wilcox EAST EUROPE, GERMANY, SCANDINAVIA, UK Senior Area Manager Robin Gordon +44 (81) 652 4998 NETHERLANDS, PORTUGAL, SPAIN, UK Area Manager Janice Lowe +44 (81) 652 3316 Secretary Lisa Devlin +44 (81) 652 3315 Advertisement Production Display/Classified +44 (81) 652 3267 Howard Mason FRANCE Sales Director France Pierre Mussard +33 (1) 46 29 46 29 [Fax+33 (1)40 93 93 37] ITALY Representative Romano Ferrario NORTH AMERICA Vice-president US Sales John Tidy Fax Sales Director East Coast Robert Hancock Sales Director Mid-West & Canada Gene Glendinning Traffic Manager Debbie Kolb AFRICA Nick Wilcox MIDDLE EAST Robin Gordon JAPAN Representative Shoichi Maruyama +39(2)66034435 [Fax+39 (2) 6603 4367] +1 (714) 7561057 [Fax+1(714) 756 2514] +1(703)836 7444 [Fax+1(703) 836 7446] +1(708)304 5588 (Fax+1(708) 304 9559) +1(212)5455376 [Fax+1(212) 679 9455] +44(81)652 3892 +44(81)6524998 +81(3)32342161 [Fax+81 [3) 32341143] ASIA. AUSTRALIA Singapore Account Manager Karen Kwan +65 226 3188 [Fax+65 223 6960] CLASSIFIED & RECRUITMENT Advertisement Manager Gareth Pask +44(81)6524814 International Sales Executives MoButtivant +44(81)770 3032 Judith Slann +44(81)7703011 Classified Sales Executives Valerie Hall +44(81)7703010 Liz Houghton +44(81)7703002 Colin Hampden +44(81)7703030 Raymond Berry +44(81)7703027 Enquiries +44(81)6616373 Classified USA Gail Tavelman +1 (212) 545 5403 Classified Asia/Pacific Karen Kwan +65 226 3188 Publisher Gavin Howe +44(81)652 3675 THE NUMBERS GAME For the first time in decades, there is an argument over which company sold the most new airliners in 1994. At headline level the dispute is, of course, irrelevant in a business whose timescales are so long. Underneath, however, the fact that there is an argument at all sug gests that at least part of the industry is far more healthy than the gloomy headlines of the last couple of years would have suggested. Airliners are not like consumer goods whose markets can be neatly defined and are measurable year-on- year, season-on-sea- son. In developed markets, consumers buy warm clothing for the winter, and ice-creams in sum mer, and a fairly pre dictable number of them will buy a fairly predictable number of items each season. A particular airline might only order new aircraft once in five years and it might order a single aircraft, or 50. In such a small market (typically less than 1,000 airliners a year of all types), a single large order can cause such a massive distor tion as to make comparisons meaningless. One company might profit one year, another the next. The significance of the 1994 fig ures, if there is one, is that Airbus Industrie and Boeing are now sufficiently close rivals as to have almost identical sales figures after all such distortions had occurred. That is an illustration (dramatic, but no more than an illustration) of the long-term trend of the last two decades, in which .Airbus has become a key player in the market at the expense of Boeing and, to a much greater extent, McDonnell Douglas. The argument over sales figures is really one about market share, and is probably incapable of being resolved, if only because some people measure markets in dollars, and others in air frame volumes. In any case, the airliner manu facturers should know more than most, because of the experiences of their own cus tomers, that market share is at best a poor indi cator of business worth. The airline industry has proved, probably more comprehensively than has any other, that the pursuit of market share at the expense of "Airbus Industrie and Boeing are now sufficiently close rivals as to have almost identical sales figures." profit harms itself and its suppliers. The old argument used to be that loss-lead ing market share was OK, because what you lost on the initial sale you'd more than make up on spares and support later. Alas for that theory, the huge technical advances of the last couple of decades have seriously eroded the spares and sup port markets. Every part of a new aircraft is more reli able than its equiva lent of 30 years ago. Airframe design lives have probably dou bled in that time. It is likely that a new big- fan engine delivered today will stay on the wing for more than 15,000h before being removed for its first overhaul. The instru mentation in a "glass" cockpit is orders of magnitude more reli able than its electro mechanical pre decessors. Even in the relatively recent age of electronics and software, the acceptable failure rate for "level A" safety-critical software has been reduced by a factor of 100, to 10 * All that means that a manufacturer's first pri ority has increasingly to be towards making a profit on an individual airframe from day one, rather than over its whole life. T) do that, a manufacturer must, of course, sell enough air craft to cover the development costs. Those costs are ever-increasing and the amount of government subsidy goes steadily the other way, so the manufacturer has to aim for an ever-increasing rate of return on sales. The pursuit of market share through pricing will not deliver that increasing return: the only attractive option is to have fewer manufacturers sharing in the market. Having two very strong manufacturers (significantly, two with very broad product ranges) at the top of the market will increase the pressure on the rest to merge and consolidate to build or regain strength. The market is probably strong enough to support no more than six significant manufacturers across the whole range from regional/commuter air craft to the largest airliners. Perhaps now is the perfect time for the potential constituents of the four remaining groupings to get together — while the current leaders are distracted by the argument over who is top dog. 3 FLIGHT INTERNATIONAL 11 - 17 January 1995
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