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Aviation History
2004
2004-09 - 1754.PDF
ERTISER CONTACTS - P52 EDITORIAL +44 (20) 8652 3842 Quadrant House, The Quadrant, Sutton, Surrey SM2 5AS, UK Fax +44 (20) 8652 3840 email fliqMMematioml@rbi.co.uk Editor Murdo Morrison +44 (20) 8652 4395 rmirdo.morrison@rbi.co.uk Editorial Assistant Andrew Costerton +44 (20) 8652 3835 andrew.costerton@rbi.co.uk News Editor Andrew Doyle +44 (20) 8652 3096 andrevt.doyle@rbi.co.uk Commercial Aviation Editor Max Kingsley-Jones +44 (20) 8652 3825 max.kingsleyjone5@rbi.co.uk Defence Editor Craig Hoyle •44 (20) 8652 3834 craig.boyle@rbi.co.uk Operations/Safety Editor David Learmount •44 (20) 8652 3845 david.learmount@rbi.co.uk Business & General Aviation Editor Kate Sarsfield +44 (20) 8652 3885 kate.sarsfieid@rbi.co.uk Senior Reporter Justin Wastnage +44 (20) 8652 3S63justin.wastnage@rbi.co.uk Technical Reporter Rob Coppinger +44 (20) 8652 3843 rob.coppinger@rbi.co.uk Spaceflight Correspondent Tim Furniss +44 (1237) 477883 tim@spaceport.co.uk Senior Technical Artist Giuseppe Picarella +44 (20) 8652 S054joe.picarella@rbi.co.uk Editorial Artist Tim Brown +44 (20) 8652 8043 tim.brown@rbi.co.uk EUROPE/MIDDLE EAST Israel Correspondent Arie Egozi +972 (3) 9413132 Middle East Correspondent Gerald Butt Russia Correspondent Vladimir Karnozov mr00079@east.ru AMERICAS Washington DC Office Fax +1 (703) 836 8344 Americas Editor Graham Warwick •I (703) 836 3448 graham.warwick@rbi.co.uk East Coast Editor Stephen Trimble +1 (703) 836 3084 stephen.tritnble@rbi.co.uk West Coast Editor Guy Norris +1 (949) 252 8971 Fax +1 (949) 252 8972 guy.norris@rbi.co.uk Brazil Correspondent Jackson Flores J r +55 212439-6062 Fax +55 212349-6090 fubar@uol.com.br Canada Correspondent Brian Dunn ASIA/PACIFIC Singapore Office Fax +65 6789 7575 Regional Managing Editor Nicholas lonides +65 6780 4311 nicholas.ionides@rbi.co.uk Deputy Asia Editor Brendan Sobie +65 6780 4309 brendan.sobie@rbi.co.uk Regional Reporter Leithen Francis +65 6780 4314 leithen.francis@rbi.co.uk Australia Civil Aviation Correspondent Emma Kelly +61 (8) 9454 4987 emmajkelly@bigpond.com Associate Editor (Defence) Peter La Franchi +61419246620 Fax+61 (2) 62312795 nuika@ozemail.com.au EDITORIAL PRODUCTION Group Production Editor Graeme Osborn +44 (20) 8652 3828 Group Art Editor James Mason +44 (20) 8652 4994 Chief Sub-Editor Chris Thornton +44 (20) 8652 4997 Deputy Production Editor +44 (20) 8652 3850 Sub Editor Simon Rees +44 (20) 8652 3848 Photographer Mark Wagner +44 (20) 8944 5225 WWW.FLIGHTINTERNATIONAL.COM Webmaster Sheena Buchanan +44 (20) 8652 4432 webmaster@flightinternational.com SUBSCRIPTIONS +44 (1444) 445454 rbi.subscriptions@rbi.co.uk THE FLIGHT COLLECTION kim.hearn@rbi.co.uk © and Database Rights 2004 Reed Business Information Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission in writing of the publishers 477! f Air Transport Intelligence (ATI), Flight International's sister online service at www.rati.com, contains the full text of Flight : International'and Airline Business since 1996. Full text of the magazines can also be found online with Lexis-Nexis, Dialogue, FT Profile, IAC and Reuters. Editor Kieran Daly +44 (20) 8652 3837 Reed Business Information COMMENT Grow up While the USA and Europe continue to distort the aerospace market, whether through subsidies or Chapter 11, can there be any winners? It was a week headlined by two events that came as no surprise at all: the return of US Airways to Chapter 11 bankruptcy protection; and the failure of Europe and the USA to reach agreement to end subsidies for large civil air craft. That both events were so predictable is a sad reflection on a civil aviation sector that is not displaying the maturity that should be expected of an industry 100 years old. Washington's beef is that European govern ment support for Airbus distorts the market for large civil aircraft, yet the cynical, cyclical use of bankruptcy protection by US airlines is also a marketplace distortion. If launch aid has helped Airbus reach parity with Boeing and should be stopped, then Chapter 11 has helped airlines survive that otherwise would not and should be more strictly controlled. The predictability of the outcome of last week's meeting between US and European trade officials over the Airbus versus Boeing The industry would be stronger if both sides stopped the posturing subsidies battle was disappointing. It was highly unlikely the two sides would shake hands on a new agreement after only a few hours at the negotiating table, but the post-meeting postur ing suggests an accord may be harder to achieve than hoped. The US challenge would be stronger if it was not so obviously motivated by Boeing's desire to protect its investment in the 7E7. The European defence would be stronger were it not for Airbus's arrogance is assuming entitle ment to government launch aid. And the industry would be stronger if both sides stopped the posturing and started discussing the meat of the matter. Neither side has taken enforcement of the agreement seriously since it was signed in 1992. The US side has complained about Airbus launch aid for years, but has only taken action at the instigation of Boeing and in a pres idential election year. It is no coincidence the challenge has been mounted only after the 7E7 was safely launched, so that any support for Boeing that might be ruled a subsidy will be subject to the same forgiveness the USA is offering for existing A380 launch aid to Airbus. The European side, for its part, has moaned for years about lack of transparency on the part of the USA when it comes to the benefits Boeing's commercial aircraft business gets from government-funded research and devel opment. But it has only raised the issue in defence of the continued provision of govern ment support to Airbus. Now, if the US side is to be believed, Europe argues it cannot deny Airbus launch aid for a rival to the 7E7 because of the massive Japanese and US state support Boeing has received for its new twinjet. Such tit-for-tat arguing will not lead to a reso lution of the dispute within the confines of existing the EU/US bilateral agreement on trade in large civil aircraft. Without an agreement, the USA may take its case to the World Trade Organisation, provoking a counter-action from the EU and a dispute resolution that could con ceivably invoke a prohibition on government support for the aerospace industry worldwide - a result no-one wants to see. Any new agreement has to tackle both direct and indirect support. The US side does not want to see the Europeans simply replace out lawed launch aid with indirect support. This implies any agreement must include strong pro visions against the very type of benefits the Europeans accuse Boeing of receiving from the US government. Alternatively, the US side sug gests, if agreement to eliminate direct support is not possible, then the US government may have to consider providing matching launch aid for Boeing - a move Airbus would not welcome. The stakes are high, too high for the entrenched thinking displayed by both sides after last week's meeting. The USA wants to move quickly - because Airbus could be only months away from launching its answer to the 7E7. The EU wants to take its time, perhaps for the same reason, but a swift resolution of the dispute - or perhaps a public commitment from both sides to freeze support until agreement is reached - is in the best interests of industry. The USA, meanwhile, would do well to look more closely at its own market-distorting actions, including allowing a carrier that has already survived bankruptcy once thanks to government loan guarantees to take refuge in Chapter 11 for a second time in two years. There are millions of people wanting to fly in the USA, and too many airlines competing to fly them. This has been recognised for years, but Chapter 11 rather than survival of the fittest has been the dominant market factor. US Airways needs to disappear, and one or two others fol low, or there will be no healthy, vibrant US airline market for Airbus and Boeing to fight over. SEE HEADLINES P6 www.flightinternational.com FLIGHT INTERNATIONAL 21-27 SEPTEMBER 2004 3
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