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Aviation History
2004
2004-09 - 1824.PDF
FULL LIST OF READER SERVIC & ADVERTISER CONTACTS - P48 EDITORIAL +44 (20) 8652 3842 Quadrant House, The Quadrant, Sutton, Surrey SM2 5AS, UK Fax *44 (20) 8652 3840 email fliqMMernatiotiambi.co.uk Editor Murdo Morrison •44 (20) 8652 4395 murdo.momson@rbi.co.uk Editorial Assistant Andrew Costerton +44 (20) 8652 3835 andrew.costertoneirbi.co.uk News Editor Andrew Doyle •44 (20) 8652 3096 andrevi.doYle@rbi.co.uk Commercial Aviation Editor Max Kingsley-Jones •44 (20) 8652 3825 max.kingsley.jones@rbi.co.uk Defence Editor Craig Hoyle +44 (20) 8652 3834 craig.hoyie@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.sarsfield@rbi.co.uk Senior Reporter Justin Wastnage +44 (20) 8652 3B63justin.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 mS4joe.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 +1 (703) 836 3448 graham.warwick@rbi.co.uk East Coast Editor Stephen Trimble +1 (703) 836 3084 stephen.trimble@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 Jr +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 +61419 246620 Fax+61 (2) 62312795 nulka@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@fiightinternational.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 ATIAirTl ir 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 Closed Windows Airbus's decision to drop its support for Microsoft in a European antitrust battle is a welcome relief for its own supply chain As Flight International closed for press, Airbus reversed its earlier decision to publicly support Microsoft in its antitrust battle against the European Commission. This is the right deci sion for Airbus, which has done much to free its own suppliers, and for whom Microsoft would have made an odd bedfellow. This week's case, an injunction, is a sideshow to the main clash. Microsoft is appealing against the EC's March ruling that it broke competition laws by abusing its position as dominant supplier to kill competitors. The EC not only proposed a hefty fine, but also ordered "remedies", including opening up source code for its Windows operating system and forcing the company to sell Windows in Europe minus add-on applications. Airbus had been cleared to offer testimony in support of Microsoft. But why should Airbus have been be bothered by the ruling? It says all industry in Europe is worried In such a scenario, Airbus could have power of life and death over suppliers about the precedent the ruling sets, and that it is merely taking an interest in a landmark case, rather than taking sides. Certainly, if applied to other sectors, companies might not be allowed to add value to their products in a ..bid to gain market share, some fear. . The EU Court that hears commercial cases requires all interveners, or expert witnesses, to come down in support of one of the two par ties - in this case either the EC or Microsoft. The software giant had previously welcomed Airbus's support as a sign that it is an issue that affects more than just the computer trade. On the surface Airbus need not worry too soon about possible EC sanctions. The Microsoft case is based on market dominance; Windows sits on over 95% of all desktop com puters. Airbus on the other hand vies with Boeing to control the market for large commer cial airliners. Furthermore, decentralised Airbus has a different business model to Microsoft, which develops and designs all of its software products in-house, often acquiring software houses whose skills it lacks. Indeed, Airbus has long been a model for vertical disintegration, a champion of the sup plier-vendor relationship. By jumping into bed with Microsoft, albeit tacitly, it could have sent the wrong signal to its supply chain. Take for example a possible future scenario where Airbus were able to see off Boeing's 7E7 with its A350. Boeing's future survival in the civil market hangs to a large degree on the success of the Dreamliner and it is not impos sible to imagine that the airframer would be reduced to bit-part player without it. If that were to happen, Airbus could rise to supply over 80% of commercial airliners, the theoreti cal definition of market domination given by the EC. If Airbus were then to take away air lines' right to pick and choose specifications, this would certainly damage airline profitability. This is where the issue of "bundling" comes in. The EC argues that although there are rival software products available, the fact that Microsoft's own products come pre-loaded dis suades casual users from changing. If Airbus, in a future hypothetical dominant position, were to offer only, say, cinema-style seats on all A320s, then it would be hard for other furniture suppliers to break into the market, given that air lines would have to replace the seats. Market forces currently push both Airbus and Boeing to supply whatever specification the airline requires. However, in the nightmare scenario envisaged above, where Airbus had a stranglehold on aircraft orders, then there would certainly be a temptation in Toulouse to raise the value of each aircraft and thus max imise shareholder return. Anything else would be bad corporate governance. In such a scenario, Airbus could be left with power of life and death over suppliers. There is already some resentment about the growing importance EADS subsidiaries have in the supply chain, to the detriment of independents. In the early 1990s, Airbus was likened to Apple, Microsoft's erstwhile rival. Airbus was the underdog, arguably with a superior prod uct. Unlike Apple, whose Macintosh system has comprehensively lost the marketing battle, Airbus has been able not only to break into the market, but to acquire a majority share. In doing this, Airbus has revolutionised the supply chain and accelerated innovation in the commercial aircraft sector. One would imagine that it would be supportive of any ruling designed to open virtual monopolies to com petition. The EC decision to reopen the software market will have far-reaching implica tions for other sectors, including aerospace. But as Airbus grows, it shouldn't seek to emu late Microsoft's supplier relationship and was right to withdraw its support. SEE HEADLINES P8 www.fliqhtinternational.com FLIGHT INTERNATIONAL 28 SEPTEMBER - 4 OCTOBER 2004 5
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