Tuesday, January 18, 2005

"Old Europe" takes to the skies - almost

It is virtually open season for farmers, with their elaborate CAP subsidies, but what price the aviation industry – specifically Airbus? For the one project, the "super-jumbo" A380, the launch costs are estimated at €10.7 billion, which has to be stumped up by the participating countries – or their taxpayers - before the first aircraft leaves its hanger.

And, in a deal that would have any businessman drooling, if Airbus Industries is unable to make back the money from selling its product, what are nominally loans do not have to be paid back. This is a business in name only – it is entirely risk-free. No wonder the Americans are complaining. Anyone can take a risk when their money is not on the line.

It is doubtful, however, that it is this "ramp" to which Gerhard Schröder was referring when he boasted at the ceremonial unveiling today of the first aircraft that, "There is the tradition of good old Europe that has made this possible".

But "old Europe" it certainly is: subsidy-ridden and protectionist, with sales reliant as much on government purchases and international pressure (for instance, Thailand is effectively being blackmailed into buying Airbus airliners in return for a favourable EU deal on tariffs).

However, in another sense, it is hardly "Europe" at all. Only four nations are involved, the UK, Germany, France and Spain, working together on a co-operative basis.

Once again, though, in its reporting of the events, the BBC excelled - somehow managing to avoid any mention of start-up costs.

Highlighting the claim that the aircraft was a testimony to "old Europe", business reported Jorn Madslien instead gushed about the A380's attributes, describing the unveiling ceremony as "reminiscent of opening ceremonies for Olympic Games, complete with dancers resembling angels, floating through blue smoke clouds; towering over them a tall, god-like figure, exhorting the audience to 'remind yourself that everything is possible'."

He cites l'escroc Chirac, saying it is "truly magnificent human endeavour," and has Tony Blair burbling: "Now we see this final product and we are amazed." For Noel Forgeard, Airbus chief executive, however, is reserved the most inane comment: "Under the name Airbus, Europe has written one of its most beautiful pages of its history."

For all that, the A380 is an aircraft that has never left the runway and its first flight is not due to take place until this spring. Commercial service is expected in 2006.

Interestingly, compared with Boeing's alternative, the 7E7 "Dreamliner", there is another "old Europe" aspect to this project. Boeing is going for a smaller aircraft, capable of servicing regional airports, transporting people directly from place to place. The idea is to give passengers a greater choice of starting points, routes and destinations, enabling them to avoid the inconvience of travelling to the congested, high density "hubs".

Airbus, on the other hand, is going for massive centralisation, putting even more pressure on the central hubs, as its operating carriers will be forced to increase passenger traffic to meet their costs. That rather epitomises the very nature of "old Europe" – an inflexible, centralising construct, divorced from the needs of the people.

As well as the hardware, therefore, we are also seeing an ideological battle and competition between two opposing commercial concepts. My money is on the New World.

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