The Situation

This is alarmingly naïve. The aviation manufacturing industry will never ever be a "level playing field." Boeing, Airbus, Bombardier, Embraer, Comac all receive generous benefits from their governments - the optics of these generous benefits vary, but nonetheless, all of these entities are subsidized by their governments. Given the barriers to entry into the industry and the capital required relative to the risks of developing a new product line, it would be impossible for any of these entities to survive without government subsidies. That being said, for companies that are all heavily subsidized by their governments, given how many aircraft all of these manufacturers sell, the competition and the pricing does not seem to be uneven or unfair as a result of subsidies, but as a result of differences in the manufacturing process and cost of labor.


I don't think there is a single person on here that would want Boeing to fail, especially considering that I would assume most of the people on the Delta forum live in the U.S. and given the number of jobs and GDP that Boeing generates, a failure of Boeing would likely drive the U.S. into recession overnight. I think criticism of Boeing is more due to the fact that once-upon-a-time, they produced the best aircraft, then Airbus moved slightly ahead from the passenger's perspective. Boeing didn't respond with products that keep up with Airbus's products. Management for both companies made some poor decisions, but Airbus's bad decisions were in capital investment and Boeing's bad decisions were partially in capital investment, but mostly in operations. You can move forward a lot easier from a bad investment in an A380 (painful as it may be) than you can from decisions lead to your competitor having a more efficient manufacturing process and lower labor costs. Now Airbus has a competitive advantage and Boeing simply needs a kick in the butt to get it moving in the right direction again, for passengers' and the nation's sake. Short term pain for Boeing will be better in the long term for everyone.

C W

Very well said, fantastic analysis! ^

24left

Absolutely. +1

readywhenyouare

Wow, it appears I am one of the few supporters of a free market on FT. It's quite alarming that you think the taxpayers should be supporting private industries.

KDCAflyer

Grow up. Free market does not mean the world of Ayn Rand. For industries critical to the nation (like aircraft production), government is going to play a role (and it should frankly).

C W

I'm a staunch free market and free trade supporter. But I don't let it turn into dogmatism that clouds my ability to see how complex markets and geopolitics actually work. The Situation has done a superb job of laying out some of the realities of the global aerospace industry and the simple truth is that all major aerospace companies will be subsidized by their respective governments for the foreseeable future as a matter of economic and military national security. It cannot be just simplified as you've suggested to:

readywhenyouare

If the support was equal you might have a point. It isn't. Favorites are being played.

flyerslc

How are you going to compensate for the fact that most of these foreign companies have virtually no costs in employee benefits such as health care or pension/retirement benefit costs? That is a taxpayer funded subsidy, if you will. Corporate taxation is another national variable that cannot be equalized very easily. The idea that you are just going to produce a "level playing field" by fiat is a notion that only your apparent orange-haired hero would hold.

readywhenyouare

What a nasty comment. You should be ashamed of yourself. Leave politics out of this.

flyerCO

Yes because US companies don't unload their pensions onto the US government instead of funding them.

Mountain Explorer

But this whole thing is all about politics. I think it's fairly safe to say that without the current administration's anti-trade policies, this deal likely would not have happened last week and none of us would be discussing it now.

A level playing field is a noble goal, but not a realistic scenario.

readywhenyouare

Hypothetically, if Boeing were to refuse any future tax breaks would you side with them or would you still defend Airbus no matter what?

Mountain Explorer

I don't defend Airbus no matter what. I have no dog in this fight. Last week I defended Boeing when I felt some of the comments went too far the other way.

Dawgfan6291

I can't think of a recent program that was directly paid for by tax payers from Boeing, Airbus or Embraer. Tax breaks? oh hell yes, but a failing program that gets a government bail out and its two biggest orders are from 1) an airline who was going to by the EMB but changed because BBD was offering the model below cost 2) an airline that didn't really want the CS or EMB but its government was going to force it to bring its maintenance back in-house and in Canada if they didn't order the new government jobs program in the CS. (and force its maintenance to be done in Canada).

as for this competitive advantage Airbus supposedly has, Boeing and the 737 and Airbus and the A320 are basically tied as far as orders go. I know FT likes to think that extra half inch of seat width matters, it doesn't.
I'll bet anyone who wants to bet that Delta ends up with both the MAX and NEO in the fleet.

24left

(bolding mine)

Those words you wrote were quite the reveal. It seems for you, it's about taking sides and your interpretation of which is the right side.

Some eloquent FTers above, notably @The Situation @C W @Guava and others, have pointed out details which have explained many things, aircraft purchases, geopolitics, trade among them, yet you continue to focus on sides.

The side you should be on is Delta bought a fantastic aircraft which meets its service needs.

You are certainly entitled to dislike Airbus or comments made by others or articles written in aviation publications.

But it isn't about sides.